Government regulators and a small number of important leaders in the U.S. real estate industry spent much of this morning debating the role that technology and data have played in changing the homebuying and selling markets in the first part of a much-anticipated public workshop held jointly by the Department of Justice (DOJ) and Federal Trade Commission (FTC).
As the first of three planned panel sessions concluded (the second is currently underway), there was widespread agreement among the participants — including top executives at Zillow, Redfin, realtor.com and the California Regional Multiple Listing Service (CRMLS) — on at least some underlying themes.
All mostly agreed that industry data is more comprehensive and flows better than it did a decade ago. But some argued that are still places where things can be improved, including as it relates to listings that don’t make their way to the multiple listing service (MLS).
“Every time we take a picture of a listing, we have to give it to people that hate our guts,” said Glenn Kelman the CEO of online brokerage Redfin, referencing the fact that as a brokerage participating in an MLS, the listing data collected by Redfin’s agents is available to competing agents from other brokerages. “And that’s the way it ought to be. When we beat each other’s brains out, the consumer wins. The consumer saves money.”
Kelman took aim at brokerages that take information and don’t share that information with the multiple listing service. These pocket listings, “whisper listings,” or other off-market listings are giving consumers a sense that they’re not seeing everything that’s out there, Kelman said.
“We want every website to have every listing,” Kelman said. “The problem is the websites outside the MLS don’t reciprocate.”
“You can post a listing on one website, and that website doesn’t have to give the listing to any other website,” he added, saying it creates a system that can be gamed.
Art Carter, CEO of CRMLS, took issue with that characterization and the idea that all listings should be shared.
There’s two consumers here, Carter said, and both buyers and sellers need to be served equally by the system. He also argued that there are plenty of reasons for a seller to withhold their listings at first, such as a home needing repairs or upgrades. Many of those listings eventually make it to the MLS, he said.
“An informed seller must have the ability to withhold their listing from whatever mechanism a real estate professional chooses to market it,” Carter added.
Kelman said he isn’t sure the DOJ and FTC need to regulate MLSs.
“I just haven’t seen any bad behavior in years,” he said.
And he’s got his eye out for small-time brokers applying for MLS data access with one listing and getting all the others in return.
“If someone so much as farted on that guy, I’d call you [FTC and DOJ],” he said.
In brief opening remarks, Inman founder Brad Inman — who did not participate further in the panel — expressed that agent advertising programs have created a lot of confusion, which then became a point of discussion for the first panel.
Inman shared an anecdote where he, “went searching for a home and found himself in the hands of not the listing agent but someone that ran an ad. Or got bombarded by emails and wound up almost being represented by an agent that lives 70 miles from the listing.”
“I’m just trying out these systems, but the point is: there’s a lot of confusion,” he added.
In a broader sense, Kathleen Philips, the outgoing chief legal officer of Zillow, acknowledged that technology has certainly changed things from the days of yard-sale advertising, but she doesn’t believe it has exacerbated confusion over who is the selling agent or how the homebuying process works.
“We have done the opposite, and created a lot of power for consumers,” she said.
In an apparent dig at Zillow and his own company, Kelman also took time to criticize how websites advertise real estate agents who aren’t the listing agent in a way that could cause consumer confusion.
“We should make it easier for a listing agent to get credit on our website,” Kelman said. “There is now a multi-billion dollar industry based on fundamental misdirection.”
Kelman’s critique came as Zillow’s Premier Agent program faces other challenges: it’s currently under scrutiny by the New York Department of State.
The panel also looked at how real estate portals and their technological advances are impacting the industry.
Kelman compared the cost of ads on real estate portals such as Zillow and realtor.com to a tax.
“For us, we view the portals as a tax we have to pay,” Kelman said. “Every dollar we have to pay the portals is a dollar we have to charge the consumer.”
In some cases, he’s seen agents paying between $5,000 and $6,000 a month to portals.
Philips however noted that having multiple portals in the industry is good for breeding competition. She said Zillow visits the other portals every day to see what they are doing differently.
The panel brought up one potential area that’s still undiscovered at this point: could portals change the way commissions are structured? Having that data public could theoretically push commissions down and create more competition. But currently, portals don’t get commission information from MLSs and, according to Carter, MLSs only track what a selling office is offering a buyer’s agent.
The panel also discussed how emergent iBuyers — companies like Opendoor, Offerpad and initiatives from Zillow and Redfin that give prospective homesellers an instant cash offer and quick close — fit into the overall market.
Kelman explained that the iBuyer model is a great way for Redfin to provide credit to consumers in an era where getting credit is difficult after the economic crash of 2008.
In the past, prospective homeowners could get a loan to purchase a new home before selling their old home, but that isn’t as easy, he explained. So the instant buying program gives them another option.
Philips explained that iBuyers simply attract a different kind of consumer, one willing to sacrifice top dollar to make the sale go quickly and smoothly, such as parents with young children or someone who inherited a home.
The panel concluded with closing remarks, including one by Carter who asserted that “the MLS is the biggest gift the brokerage community has given to the consumer” because it allows for high-quality property data to be made available to a wide variety of brokers, portals, and, ultimately, consumers.
Carter said that in his communication with other real estate professionals outside of the U.S. without MLS-type systems, all of them viewed the U.S. system as desirable.