Publicly-traded online brokerage Redfin is pushing the National Association of Realtors to require every website that gets real estate listings from a Realtor-affiliated multiple listing service — including his own — to feature the listing broker more prominently and provide a link back to the listing broker’s website that search engines can easily understand.
While listing broker attribution is required under NAR MLS rules for agent and broker websites, the rules do not currently require a link back to the listing broker’s website for either MLS subscribers or the third-party sites that receive MLS data feeds.
In a phone interview with Inman, Redfin CEO Glenn Kelman and Chelsea Goyer, Redfin’s vice president of recruiting, partner programs and MLS relations, elaborated on why listings agents pocket listings, whether listing agents that pocket listings are violating their fiduciary duty, the role of incentives and fairness in the MLS system, and what “prominent” means in the policy proposals as drafted. The Q&A is below. (To read Inman’s article on Redfin’s policy proposals, click here.)
Inman: Pocket listings vary by region. Which MLS rules would vary by region that would impact why an agent might pocket listings?
Kelman: There are some MLSs like the one in Seattle that are just really aggressive about not allowing agents to promote listings before the listings are promoted in the MLS. So I think that in certain cases, the MLS has taken a really strong stand against it.
The other factors are just how much of a seller’s market it is. There’s so little inventory in Boston, there’s so little inventory in Silicon Valley, that I think you’re seeing more pocketing of listings.
There are other factors, but they’re probably less important. When you have one brokerage with dominant [market] share I think that leads to more sharing of the listing within an office instead of with other brokerages.
Inman: You mentioned San Francisco and Boston. They have really strong seller’s markets and they have low inventory. What does that have to do with listing agent attribution?
Kelman: I think the listing agent is making a calculation about whether it’s going to be easy to sell the house and what he or she can do to build their own business.
Glenn Kelman
In a seller’s market, when you’re not as worried about selling the house, it’s easier to think about how to promote yourself. You had asked a series of questions around whether we’re accusing the agent of breaching their fiduciary duty.
We don’t want to get on a high horse about this because what’s remarkable to us is how long agents have dutifully, faithfully, consistently posted their listings to the MLS even in situations when it would benefit those agents to share the listings through another channel. And our basic premise is just that we shouldn’t ask agents to make that choice between promoting their customer and promoting themselves.
There’s no reason that the MLS can’t be the best way to promote the listing and to make sure you get fair credit for it. And when we do ask agents to make those choices, it undermines an open market where the consumer can see all the homes for sale.
Inman: But do you think that an agent who is holding the listing off the MLS because they’re not getting credit for it is doing their fiduciary duty?
Kelman: There are situations where the listing agent withholds the listing from the MLS for a very good and legitimate reason. The seller may want to protect their privacy, there may be a non-arm’s length transaction with somebody across the street.
But there are other times where the agent isn’t putting the customer’s interests first and it should go into the MLS. And so yes — we are seeing situations where agents are withholding listings from the MLS when it would probably be in the seller’s best interests to market it to every buyer working with every brokerage.
Inman: If they are violating their fiduciary duty then why reward them with better listing agent attribution?
Kelman: Because that’s the way the world works. You want to create a system where people who operate in their best interests also create a fair and open market.
When you ask people to operate against their best interests, you just undermine that open market and there’s an enormous amount of behavioral economics and antitrust legal discussions about aligning economic incentives with legal rules to make sure that a marketplace really works.
Inman: But isn’t the incentive that the listing agent gets a commission? At the end of the day, they sell a house and they get a commission.
Kelman: That works when the only way to get the commission is by listing the property through the MLS. But in a market where you’re going to get the commission either way, it’s not a theoretical possibility, it’s a fact on the ground that some agents are choosing not to put their properties in the MLS.
It’s not a majority. Most of the properties for sale in the United States are in the MLS. But [to] the extent some are missing, it’s because in some cases the incentives are out of whack. And we just think that if we give the listing agent a better deal, we will see a more competitive, more open marketplace where the buyer can see all the homes for sale.
It really is miraculous that for a decade, listing agents have contributed listings to websites — including the one that I run — that sometimes compete with them or sometimes don’t operate in their best interests.
We’re just trying to address this reality that there’s a growing consensus among listing agents that they don’t feel good about the deal that they’re getting when listing a property in the MLS. And if I could wave a magic wand and just say, ‘You should do this. You should give me the inventory because I deserve it. You should give me the inventory because I’ll promote it and it’s in your seller’s best interests,’ well then we wouldn’t have to propose this change.
The change that we’re proposing will in the short term reduce the amount of traffic that comes to our site and increase the amount of traffic that goes to other brokers’ sites. And we’re doing it because we think it’s fair and we’re doing it because we think it’s the only way to create a lasting, open marketplace. The stability of that marketplace has been undermined by some of this anxiety that listing agents have that they’re not being treated fairly.
Inman: So is it fair to say that you’re advocating for a carrot approach versus a stick approach in terms of getting agents to put their listings in the MLS? You want to make it easy for them, make it feel good to put their listings in the MLS versus punishing them for not doing it?
Kelman: That’s fair, but I think it’s even more fair to say that this is just the fair way to do it. A carrot implies that this is some bonus, some extra little thing. That we’re giving a 4-year-old a chocolate. But in reality, this is the way real estate has always been practiced.
Imagine if we forced real estate agents to post yard signs that didn’t include the name of their brokerage, their phone number or their own name. And we would say, ‘You should do this because just letting the buyer know that the home is for sale without promoting yourself is the right thing to do.’
Well in those cases there would still be many yard signs, but sometimes a listing agent might not be as eager to make sure that sign was installed on day one. And the question is, given that the listing agent did photograph the house, did talk to the seller, did the work, if we’re going to put someone’s name up there, shouldn’t it be that person’s name? Because we are putting someone’s name up on the website. It just isn’t the listing agent’s name that appears most prominently.
So just imagine if we forced a listing agent to put up a yard sign that had someone else’s name next to it, that had someone else’s brokerage, and then we said, ‘As a carrot, we’ll let you include your own name too.’ I agree it’s an incentive rather than a punishment-based approach, but I think it’s also only what’s right and fair.
Inman: With the policies Redfin proposed you’re still going see other agents [next to listings]. You just want the listing agent to be more prominent, right? What does that look like to you?
Kelman: We want the listing agent to be more prominent, but just to underscore that point, first of all we’ve built a business promoting another agent next to each listing.
The reason we’ve done that is we really believe in buyer’s agents and many people who want to buy a house don’t want to work with the listing agent because they need someone on their side to tell them what repairs need to be made, to help them figure out how to deal with a low appraisal, to help them realize that they’re taking the wrong negotiating approach with the seller.
There’s a reason that consumers should have a choice whether to see who the listing agent is or work with a buyer’s agent. We just trust in the intelligence of the consumer to make that choice. And what it would look like is that you would see whenever you visited the listing on any website, whether it was a brokerage website or a third-party website, you would be able to see somewhere near the top of the page where the listing agent was and there would be a link and the link would be in plain HTML so that it would not only be visible to a human being, but it would be visible to Google.
The reason that’s so important, the reason we describe that as modern attribution is because the way Google decides which websites to put first is based on links. And some of the links that are being provided now are not visible to Google and there’s absolutely no reason for that. The only reason that those links are invisible to Google is because some websites just don’t want it to be as evident to Google. So we should just make it a plain HTML link.
That’s what those sites insist on when they send their listings anywhere, it’s what we insist on when we send our listings somewhere. That’s just the way the whole internet works. When you use someone’s information you attribute it to them using a plain HTML link.
Inman: You mentioned the listing agent appearing near the top of the page. That’s not actually in the proposed policy. It says the listing agent is prominent but that it’s going to be according to the MLS where exactly they appear. Is there a reason for that language versus specifying?
Kelman: Not really. I think prominent and near the top of the page are similar in their meaning and intent.
Inman: The policy does currently have the word “prominent” in it and I don’t think everyone has interpreted that to mean “top of the page.”
Kelman: Right. Well I think there’s just a difference between guidelines and actual policy from one MLS to another. If you look at MLS policy, it is incredibly intricate about size of fonts and placement of attribution and it varies from one MLS to the other.
I suppose we could have written the policy for each MLS at that level of detail but we thought we should at least provide high-level guidance here. The link should probably be more prominent, it should be in plain HTML, the brokers should do it, the portals should do it, we all should do it. It’ll help create a more open marketplace.
Inman: So you just want to leave it up to each MLS to decide what prominent means?
Kelman: I guess so. We’re still experimenting, just to be honest, with how to be influential in this industry. We’ve never written an NAR proposal before. For many years we didn’t have enough listings to have any standing to talk to an MLS about how listing data should be shared.
But now there are tables showing we’re one of the top five brokerages in the United States, so we do have a significant number of homes for sale, they are flowing through the MLS system and this is how we want our own listings treated. And we didn’t talk to any other brokers about this. We just said this is what would seem fair to us.
The reason that that was a hard proposal for us to make is that as many listings as we have – we’re a top five broker or something like that – we’re the no. 1 brokerage website. So we have far more traffic, far more buyers on our website than listings, and so we’re going to see some of those buyers ending up on other websites as a result.
Chelsea Goyer
Inman: There’s a part of the proposal that says with sold listings the link goes to the selling broker. Is there a reason you decided to propose that?
Goyer: The reason why we did that is simply because there is now tons of policy changes around [giving] sold pages a longer life on the internet. We felt that if we are advocating for the listing agent to get more credit we should also advocate for the [buyer’s] agent to get more credit.
Editor’s note: This interview has been edited for clarity.
