Government regulators and a handful of industry leaders met in Washington, D.C., on Tuesday to discuss the state of real estate competition 10 years after the Federal Trade Commission and Department of Justice took a deep look at the industry.
Government regulators and a handful of real estate industry leaders met in Washington, D.C., on Tuesday to discuss the state of real estate competition 10 years after the Federal Trade Commission and Department of Justice took a deep look at the industry (having sued the National Association of Realtors [NAR] and arriving at a hugely influential consent decree).
The result of the three panels was a handful of spirited debates about compensation transparency and structure, off-market and pocket listings, multiple listing services (MLSs), agent advertising and a whole lot more.
“These events help us take a step back from our enforcement work to develop a broader view and stay current with emerging trends, learn about new business models, and ask about how consumers are faring in fast changing markets,” said FTC Chairman Joseph Simons, in his brief opening remarks. Read on to get caught up on all the big news from the workshop’s three panel discussion sessions.
Much of the discussion during the first panel focused on pocket listings, “whisper listings” or other off-market listings.
“We want every website to have every listing,” Redfin CEO Glenn 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.
Kelman also made news when he took an apparent dig at Zillow and his own company, for allowing real estate agents to advertise their services on other’s listings.
“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.”
Despite many difference of opinion, the general consensus on the day was that competition is robust in the industry. That wasn’t the sentiment expressed in the second panel by Joshua Hunt, the CEO of the flat-fee brokerage Trelora.
“We have had bricks thrown through car windows, cars egged and hate mail sent to sellers,” Hunt told moderators.
“I have a list of over 719 brokerages in Denver alone that have flat out said ‘we won’t show Trelora listings.’ We tell sellers 40 percent of agents push hard not to sell your home if you don’t offer a 2.8 percent to 3 percent commission.”
Most of the discussion centered around commissions and how consumers pay for real estate services. Panelists seemed to agree that consumers, especially buyers, did not seem to understand how paying for real estate services works.
The third panel of the day featured a host of academic and legal experts who had a number of disagreements, especially when it comes to transparency around agent performance and again, agent compensation.
“There’s not very good information about the quality of services,” said Stephen Brobeck, the executive director of the non-profit advocacy group the Consumer Federation of America.
He then went on to blast Zillow’s agent review system and Premier Agent program for being deceptive. Zillow spokesman Viet Shelton later told Inman that Brobeck fundamentally misunderstood how the programs worked.
Panle Jia Barwick, an economics professor at Cornell University, used the example of American Airlines pulling its flights from travel booking aggregator Orbitz as an example of what happens when parties that hold data discriminate on who gets access to it.
Katie Johnson, NAR general counsel, said she doesn’t believe it’s a good idea to mandate certain things that agents need to market about their services.
Johnson and Brian Larson, Texas A&M University professor and real estate attorney with Larson Skinner both said during the panel that they don’t see the need to renew a 2008 consent decree between NAR and DOJ that regulated how brokers treated virtual office websites like Redfin.
“There’s no evidence that NAR intends to make it harder to be a virtual broker once the consent decree expires,” Larson said.