High-tech brokerage Redfin thinks there’s a problem with the way many real estate listings are displayed online, and it has a proposed fix that it wants the board of NAR to adopt in November at its bi-annual conference. The change is a small but significant data standardization effort that would sweepingly impact the information that Americans see when looking up homes online.
Redfin CEO Glenn Kelman may be kicking a hornet’s nest with a proposal that could impact home searchers across America.
He’s trying to enlist the support of the National Association of Realtors (NAR), the real estate industry’s largest trade group, to change how home listings are displayed online to give listing brokers what he believes is their due. Along the way, he may face formidable foes such as Zillow Group, and his idea may catch the ire of the Department of Justice or the Federal Trade Commission, or both.
But that has not stopped Kelman from trying. For the past two years, he’s personally pushed his proposal at NAR’s midyear conference. “If it doesn’t take this time around, I’ll give the same talk next year naked, as a form of protest art,” Kelman quipped after his speech this year.
Redfin’s proposal would require every website that gets listings from one of the hundreds of multiple listing services (MLSs) owned by Realtor associations to feature the broker or agent representing each listing more prominently and provide a link back to their brokerage website that search engines can easily understand (scroll down to read the full proposal below).
It would impact big home search sites including Zillow and realtor.com (which do link back to listing broker sites when links are provided, but often not in a format Redfin says is easily indexed by Google) and even Redfin.com (which itself currently does not link back to the rival brokerages representing listings that appear on its website).
The change could also raise antitrust concerns at a time when many in the industry are looking to shake-off such scrutiny.
Nonetheless, Kelman thinks the change will benefit not just Redfin — which sources listings from the more than 120 MLSs it belongs to — but all competing national and local brokerages, their brokers and consumers.
“We need [MLS] rules to work for everyone in the industry, starting with the listing broker,” Kelman said. “Because the listing broker has this vague sense he’s getting screwed when he posts the listings to the MLS. He feels that it’s benefiting other websites, but not his own. It is almost an act of altruism for the listing agent [or broker].”
NAR’s MLS Technology and Emerging Issues Advisory Board will discuss Redfin’s proposed policies when the board meets in Chicago on August 20. From there, the advisory board may decide to make a recommendation that would then come before NAR’s Multiple Listing Issues and Policies Committee during NAR’s annual conference in November.
NAR told Inman it encourages Realtors, association and MLS staff and industry leaders to weigh in on the discussion of the policy proposals. The trade group invited comments and questions for NAR’s Association and MLS Governance Team at 312-329-8399 or email@example.com.
Why Redfin is leading the charge for change
Redfin, which now has a nearly $2 billion market cap, has used MLS data to create the most popular brokerage website nationwide — a competitor to non-brokerage home search giants such as Zillow and realtor.com. Those giants, particularly Zillow, would be forced to change the way their websites work if NAR adopts Redfin’s proposal.
Redfin receives pooled listing data from other rival brokerages — either in the form of Internet Data Exchange (IDX) feeds or more comprehensive Virtual Office Website (VOW) feeds.
Redfin gets this data from the MLSs it belongs to, as does every other brokerage that joins an MLS and chooses to display its listings electronically.
Meanwhile, Zillow and realtor.com receive their listings primarily from MLSs and brokerages at broker discretion. The difference is subtle but important: Redfin automatically gets access to all the pooled listing data from the MLSs it belongs to, while Zillow and realtor.com only get the listing data that brokers and MLSs select to share with them.
The result is that home searchers who visit Redfin’s website today can see property listings from the vast majority of brokerages in the markets where Redfin operates — not just those properties represented by Redfin agents.
Because so many consumers are attracted to the site’s comprehensive listing data, Redfin is a major source of leads for its agent employees. So Redfin is clearly incentivized by virtue of its business model to make sure MLSs have the best data and that this data can successfully drive clients to its agents.
Indeed, as Redfin’s Kelman told attendees at NAR’s MLS Forum during Midyear last month: “The listing agent has to say that the best place to market my listing is in the MLS because when I do that, the MLS protects me, it advocates for me, it gives me credit for my data and everyone outside of it that uses my data gives me credit for my data. If the MLS helps drive demand back to the listing agent, the listing agent will help drive inventory into the MLS.”
The MLS should not pick “winners” among listing sites by hammering out a custom deal with just one site, Kelman said. His point stands in stark contrast to the fact that MLSs will often negotiate one-on-one with Zillow Group.
“[The MLS] should use the same rules for all the IDX member sites, and it should have another set of rules for all the portal sites,” Kelman said. “And it should make sure that all listings that are in the market and for sale show up on all these sites because that’s what consumers want to see.”
Both Zillow Group and realtor.com say they already link back to broker websites.
“Zillow.com, Trulia.com, StreetEasy and RealEstate.com all display the listing agent along with their contact information — and also provide attribution to the listing broker, which does include a link to their site, if provided by the agent — for free,” Zillow spokesperson Viet Shelton told Inman via email.
Realtor.com, owned by News Corp. subsidiary Move Inc., said it displays the listing agent and listing broker on the listing detail page of every for-sale listed property.
“No competing agents are displayed. Our listings currently include the broker’s name and phone number as well as the agent’s name, link to the agent’s profile and link to the broker’s website at no cost. Brokers are also given the option to include their logo at no cost. In addition, the link to the broker website homepage is readily indexable by recognized search engines,” said Move spokesperson Janice McDill via email. “We are supportive of any measure that gives consumers access to more listings,” she added.
The tech behind the scenes
For Redfin, the issue isn’t the presence of links on Zillow and realtor.com, but that those links are coded in a way that Google and other search engines may not be able to see them, according to Chelsea Goyer, Redfin’s vice president of recruiting, partner programs and MLS relations.
“Our proposal is to ensure that brokerages and portals alike display links prominently, and in a plain HTML format that Google can understand. Realtor.com has just begun to offer a plain HTML link, which is wonderful,” she said.
“Zillow offers a plain HTML link to NRT brokerages, so it is certainly feasible for them to do the same for others, but they don’t. For other brokerages, the links are encoded in a way that makes it more difficult for search engines to understand.
“Google uses these links to decide which website to show first when a user searches for a listing. We want Google to recognize the listing broker as an authoritative source of information about the home because the listing broker will get more traffic as a result.”
Redfin itself does not currently link to other brokerages. This is because links to listing detail pages on listing broker sites are not included in the feeds it gets from MLSs, according to Goyer. She said third-party sites get such links directly from brokerages, not MLSs.
But both Zillow and realtor.com disputed this, saying they get links to either the broker’s homepage or the listing detail page from both brokers and MLSs. Zillow also noted Redfin does not appear to provide any links to listing agent or broker sites or contact information for listing agents at all.
“It will be important to take the time to thoroughly review the proposal and all of its implications, intended or not. As this policy gets deliberated, we believe that any new rules should allow for a level playing field and encourage fair competition. It’s important that new rules do not favor one specific brokerage at the expense of everyone else by manipulating search engines,” Zillow’s Shelton said.
But could it spark antitrust concerns of ‘group boycott’?
In pushing for this proposal, Kelman’s passion for making sure customers can easily find listing agents and brokers and their websites is tangible, but the proposal has sparked concern of anti-competitive practices.
NAR’s MLS policies have governed listing data feeds for agent and broker websites for years. But if the trade group were to adopt Redfin’s proposed policies in regards to feeds going to third-party portals such as Zillow and realtor.com, that would be a change that could potentially pique the interest of the federal regulators who have been probing competition in the real estate industry, the Federal Trade Commission (FTC) and the Department of Justice (DOJ), according to Robert “Bob” Butters, formerly NAR’s deputy general counsel and antitrust trial attorney in the FTC’s Bureau of Competition.
“For NAR to mandate that MLSs must include a provision of that type in a licensing agreement with Zillow or realtor.com or any other portal, I’d be concerned about that because it has the appearance of a concerted refusal to deal or a group boycott with MLSs saying that we collectively will refuse to deal” with such sites unless they include this provision, Butters, now a partner at Saul Ewing Arnstein & Lehr, said in a phone interview with Inman.
If he were still part of NAR’s legal team — which he is not — he would advise them to do additional research and analysis before the trade group adopts such a policy, he added.
In response to these concerns, Redfin General Counsel Anthony Kappus said in an emailed statement, “The intent of the policy is to increase competition by letting people easily find the innumerable websites listing brokers operate, and is fundamentally no different than longstanding policy that the listing brokers’ name or brokerage be displayed with each listing, so we don’t think there’s reason for the FTC or DOJ to be concerned.”
Redfin thinks better broker attribution will reduce pocket listings
At the federal government’s real estate competition workshop earlier this month, Kelman argued that pocket listings — listings not submitted to the MLS — are rising in some markets because listing agents are unhappy with their attribution on websites.
“In markets like Boston and San Francisco, you have a significant number of listing agents withholding listing data from the MLS because they feel that it will be distributed to websites where no one can see who they are, where it’s buried somewhere at the bottom of the site,” Kelman said at the workshop.
“We want the MLS to modernize the attribution so that the listing agent has an incentive to post the listing immediately to every website. If the listing agent feels like he’s getting a low-down dirty deal, if the listing agent feels that these websites are misdirecting the consumer, then you will be in a situation where he withholds the listing. Or he publishes it selectively to the place that gives him the best deal, which isn’t good for the consumer and isn’t good for the overall market or competition.”
Most, if not all, MLSs allow brokers to pick and choose which sites the MLS will send their listings to. Other reasons workshop panelists suggested for why listing agents pocket listings were the desire to double-end deals, low inventory, wanting to “test” the market and privacy concerns.
At the workshop, Kelman criticized pocket listings and argued they primarily benefit listing agents and not sellers or buyers.
Real estate agents and brokers are legally and ethically required to act in the best interests of their client and put their client’s interests above their own. Does this mean Kelman believes listing agents that don’t put their listings in the MLS because they fear being overlooked are violating their fiduciary duty?
In a phone interview, Kelman said they were, but that asking people to operate against their own best interests undermines the open market that consumers want. (To read the Inman interview and Kelman’s remarks, click here.)
The specter of dual agency
According to Redfin, consumers would benefit from the proposed NAR policy changes by getting access to the authoritative source of the listing data — the listing agent.
However, giving listing agents more prominent placement and links back to brokerage websites also potentially increases the possibility that listing agents will double-end a deal. Here’s how that would work: an unrepresented home searcher would visit a portal website, find a home of interest, and click on the link to the listing broker’s website. If the buyer wants that home and doesn’t get their own agent, they may find themselves represented by the same person representing the seller. Dual agency can be fraught with potential conflicts of interest, which is why British Columbia recently banned the practice.
But Redfin does not believe the policy changes would increase dual agency because buyers have always had the opportunity to call listing agents directly, including from yard signs. Moreover, buyers would still be able to have a separate buyer’s agent represent them if they called a listing agent directly before they got representation, Goyer told Inman via email.
“A buyer calling a listing agent does not necessarily make the listing agent the procuring cause. The listing agent might be able to represent both sides depending on state law and brokerage policies, the buyer can still get her own agent, or the buyer can remain unrepresented,” she said.
Butters said the number of double-ended transactions could “marginally” increase if Redfin’s proposed policies were adopted, but said he didn’t have a “firm view” of whether dual agency was good or bad for consumers in the abstract. “I’ve bought properties both ways,” he said.
Redfin’s drafted policy change proposal:
This is the text of the policy change Redfin is advocating for in regards to third-party websites (the language is similar for the proposed policy changes for IDX and VOW sites):
In every form of digital media where listing content is displayed, the MLS shall require all third-party aggregators to include: (i) prominent attribution to the listing broker as the source of the Listing, in a form and format that is approved by the MLS (and with any revisions to the form of attribution to be approved by the MLS in each instance); (ii) a Linkback to the listing broker’s website for the Listing; and (iii) solely with respect to sold Listings, a Link to a website provided by the selling broker, if any. With respect to different forms of digital media (now known or developed later), the MLS shall require that all third-party aggregators ensure the Link is provided in a manner designed to provide the listing broker and the selling broker, as applicable, with proper attribution, including by recognized search engines. MLSs shall ensure that neither participants nor third-party aggregators alter or manipulate any hyperlinks such that the Link is not readily indexable by recognized search engines, nor shall participants or third-party aggregators otherwise reduce proper attribution for the Listing.