Once Again, Real Estate Professionals Go To War Against The Web

from the gotta-protect-those-margins dept

Last month, popular real estate site Zillow was enjoined from operating in Arizona because the site didn’t have an appraiser’s license. The action was a pretty bald-faced move by the state’s real estate appraisers to keep a potentially disruptive service from messing with their business. It looks like another similarly disruptive real estate service, Redfin (which allows people to buy and sell houses at a fraction of a broker’s typical fees), is under attack in Washington. Real estate brokers are upset about a Redfin-sponsored blog that allows non-brokers to post reviews of properties that appear in the area’s Multiple Listing Service, a database that brokers use to get information on properties. Access to the database is limited to registered participants, which Redfin is. But one of the rules is that brokers are given the sole right to manage their marketing campaigns, and the brokers aren’t happy that Redfin lets outsiders post housing reviews. The situation is a little different than the Zillow case in that it’s the MLS that’s threatening to revoke Redfin’s access to the service rather than an official state agency. However, because the real estate industry operates as a state-blessed oligopoly, the MLS’ threat basically carries the full force of the government. Because Redfin can’t afford to lose its access to the database, the site has removed the offending blog. Chalk it up as another victory for professional organizations and their constant efforts to keep disruptive tech services at bay.


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Comments on “Once Again, Real Estate Professionals Go To War Against The Web”

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33 Comments
Joshua says:

They fear the truth.

As far as I can tell, the only reason anyone would be upset about public reviews of properties is if they have something to hide in the way they use marketing speak.

Maybe they are just afraid that “This house is a rustic, single floor, fixer-upper with an open floor-plan” will be put more plainly by people without a financial stake as “This single floor house is made with outdated and inferior materials, requires heavy work to make it livable, and has no doors.”

ken (user link) says:

Re: They fear the truth.

Why so suspicious? There is a very good reason to control the use of a person’s property information. In a perfect world it would be nice to read the reviews of other people – the sad truth is, however, there is so much mischief on the web that you cannot trust an opinion to be based upon fact. If a neighbor had a grudge, if the in-laws were trying to prevent kids from moving…use your imagination.

The problem isn’t that too many people will view a home and find that the home was described to be nicer looking than it actually is — the potential problem is that people would be discouraged by false negative remarks and not view the property at all.

Why do so many people immediately suspect that Realtors are fighting against their client? It’s just not true in 99% of the cases. There’s no desire to “CONTROL” the information for the sake of control – it’s just a simple protection of their client’s interest.

Anonymous Coward says:

MLS Use

Wouldn’t MLS have acceptable use rules for subscribers? It seems they are taking objection to Redfin allowing others access.
If that’s the case it seems like something that Redfin should have to have agreed Not to do in some form of agreement when they signed up.
If it said in an agreement somewhere “You are not to allow non-subscribers access” and they did then should Redfin’s access be revoked?

Please excuse if I have this wrong – I’m no real estate guru.

Fluffy McNutter says:

Time to invest.

I had no idea that Zillow had that much pull in the real estate market. I thought the appraiser was the final judge, jury, and executioner.

By filing that lawsuit, they indirectly gave legitimacy to Zillow’s work. Bad move AZ and WA Realtors.. Things like this ultimately propel a small startup like Zillow to an IPO (Remember Napster?). Man, Vulcan Ventures may be knocking down their door this week, then the genie is really out of the bottle.

The Dukeman (profile) says:

the issue is...

The reason the MLS is trying to oust Redfin is the fact that they are undercutting “Real Estate Agents'” commissions. They charge a much lower flat rate instead of the standard 6% agent’s fee. In fact they rebate (except when not allowed to do so by local laws) any amount above their standard fee when paid the 3% from the other party’s agent. It makes the agents that charge full price look too greedy. Of course they want them out!

From the consumer’s point of view the standard 6% rate hasn’t decreased, even though home prices have escalated over the past few years. That’s a big pay raise for the agents, with no more services provided. Agents’ associations are fervently trying to get Redfin and similar internet based real estate services regulated out of business. Sadly, they may well succeed. It is now up to consumers to make sure their government representatives don’t make this happen.

Go Redfin!

Michael McMannus says:

Interesting cyclical pattern

This seems awfully familiar.
Company X has natural monopoly due to manufacture of goods or services.

New entrant Y comes with strategies to automate process and utilize internet.

X tells company Y they have no business trying to steal their customer base and sues Y on the grounds of violation of capricious [Insert: Patent/absence of license]

Company Y gets backing of a defecting member of Company X’s trade association.

Companies settle… Company X percieved as a bully, all new customers flock to Company Y.

Time passes and company X enjoys lower market share, and costs involved with re-establishing a good business name and business model.

…Eventually, sometime, possibly, maybe the customer wins.

August West says:

Of course

This is happening because real estate agents are evil. In North Carolina you can’t even take the cert test until you can prove that you’re possesed by a minimum of either 3 minor demons or 1 major one. Over time, as more and more demons inhabit your body, these agents naturally start to rise to the top of the ranks in the real estate hierarchy.
But as long as everyone is aware of this whenever we buy a house where an agent is involved, we can approach the deal accordingly.

The Puma says:

Barbarians @ the gate

My wife & I are dealing w/ this now. An agent who’s done nothing right from the beginning. Yet, they expect their full commission. After being on the market for 5 weeks now the only time our house has been shown,…I did it.

Not everyone will be savvy enough to use sites like Redfin but for those who show a little aggression in this EVIL real state market let us be. The government and organizations alike regulate too much as it is.
Trust me, real state agents will still survive.

Thanks Redfin

Larry Welner says:

Note to redfin

Sorry for straying off topic here, but Redfin.. Kick ’em where it hurts! So a few realtors saw the 60-minutes article and went online and found reviews they didn’t like. They’ve over used rule 190, and it’s about time to bring in the big guns to create a workflow that addresses the core issue.

From a high-level, I imagine that this is proposal would work within Rule 190: Redfish just needs to add an approval process to the blog that shoots the comment to the selling agent with instructions to “click here to approve”. On the listing, I would also suggest adding “# of approved reviews” in addition to “# of reviews queued”.

Net goal- show potential buyers that somebody had something to say about the property, even if it just hasn’t been approved yet, and incent realtors who adopt technology.

I love your site!

Agent in Dallas says:

As a professional realtor, I don’t know why you guys are so mad at this. This is my life, and my family depends on the money I make to bring home groceries.

I am a very ethical person and don’t have any demons in me. You guys need to get a life. I work very hard for the amount I get paid and don’t appreciate the slanderous remarks.

I also have been approached by a fellow realtor for advertizing another property without the other realtor’s permission. We have a code of conduct and RedFin needs to follow it too.

JJ says:

Re: Re:

Agent in Dallas, the argument that you have a family depending on you gives you the right to limit people’s speech about properties you sell? It gives you the right to an oligopoly? That’s completely absurd. My suspicion is that you are afraid of change. You live in fear of it. Change is inevitable. All markets change. It’s called Evolution.

Reality will force itself upon the real estate oligopoly, one way or another. Yes I do suspect you are possessed by at least one demon. 🙂 You don’t know this of course. I’m speaking about the ego and the ‘pain-body’ (look it up).

From my experience, most people live and are greatly motivated in life by fear. Fear of the future, fear of change, fear of loss, fear of pain. All actions become a motivation to avoid what one fears (homelessness, poverty, starvation, etc etc). Almost all of this fear is fictitious, a hypothetical future, created by a mind conditioned by society to fear. This is the fear of the ego.

Anonymous Coward says:

Real Estate

The real reason is this commissions.
Redfin is a discount real estate broker charging half of what a typical brokeragent does they have near no cost for what they do because they do not give service (like actually letting you into 25 different houses burning gasoline and time with every stop) While most of America would rather pay less for an agent they forget about these horrendous costs to the good buyers agent.

August West says:

Re: Real Estate

“like actually letting you into 25 different houses burning gasoline and time with every stop”

This ain’t exactly Rocket Science. Did it all myself, got a good loan officer and used the fact that there were no buyers agent fees involved to offer a lower bid on the house. I ended up with instant equity in a no money down purchase.

Not A Real Estate Con says:

Dear Dallas Agent

“I am a very ethical person and don’t have any demons in me. You guys need to get a life. I work very hard for the amount I get paid and don’t appreciate the slanderous remarks. “

uh, Yeah, we all work hard. If our jobs get outsourced or done cheaper elsewhere we don’t cry and manipulate the government, we get new jobs.

Bob (profile) says:

It's all good

As a real estate agent in southern California (talk about a ridiculous market), some comments:
1. Commissions have inched down, now often 5% or 4% on more expensive properties.
2. More competition is good for everyone. Personally, I like the idea of people posting comments and think the more feedback, the better. The only concerns I have about this are (a) someone must insure that no personal information is disclosed (“I love original Andy Warhol in the living room” — bad idea) and (b) there would need to be some contractual protection for the listing broker for the disclosure (a new form perhaps). This is a real issue: A seller could sue the listing broker for information disclosed publicly — and would win absent contractual protection.
3. Some people like to use real estate agents and some do not. Fine. For those who want to do the work themselves, great. If you get a better deal by not using an agent, I have no issue with that, but don’t blame me if you don’t use me.
4. The internet already has changed the way that agents work and homes are sold. More change is coming. Some agents already are working on a fee basis, versus commission, for example.
5. While most transactions sail through with minimal issues, this is still a complex and risky business when things get ugly — and ugly they get when you’re talking about assets this big.
6. While some agents make a lot of money, most toil for very little. We’re independent contractors, so we pay self employment taxes, 100% of our health insurance, license fees, MLS fees, association fees, E&O insurance fees, continuing education costs — all before we make one dime of commission. If we don’t sell, we don’t get paid. Yes, the industry is a many-tentacled creature that lobbies heavily to protect its position — like every other one out there. It will resist change but change it will. I believe that the net will continue to foster greater competition and better information for buyers and I welcome it. Way to go Zillow and way to go Redfin for slapping the dinosaur, but don’t be surprised that it may bite back.

Brad Kozak (user link) says:

What's needed here is a professional lobby group.

I’m a graphic designer, and was hired a while back to redesign a FSBO (For Sale By Owner) website. They mentioned the difficulties in offering their services in certain states because the real estate agents had a powerful lobby, and had succeeded in pushing legislation that kept the FSBOs out. I suggested that the FSBO sites needed to band together and form a PAC – and hire a lobbyist, both on the national level, and one that would work state-by-state as needed. If enough FSBOs pooled their resources, they could do this, and get some of the ridiculous laws that serve only to protect the traditional real estate markets thrown out.

Of course, they never did that. Until they do, the real estate lobby will continue to win.

Judy says:

Bob is Right!

I am a real estate broker in California. I love the internet and computers and the way business has changed and become more open and efficient because of it. Like all businesses today, real estate will continue to grow and benefit from zillow and redfin and so on. Knowledge is power and it’s great for people to have information at hand when they need it. I appreciate dealing with owners and buyers who want a professional to do the job for them. They are willing to pay for great service and that’s what I choose to provide for my commission.

Mike B (user link) says:

Way to go Bob and Judy

Being a Real Estate Marketing Consultant, I have learned that you need to buy in, or get out.

The internet is developing a new type of Real Estate Client. One that is smarter, more prepared, and requiring the best of service.

I’m sure we can all attest to the fact that a couple of years ago, with the market boom, that 1000’s of new agents hit the market. But once things slowed down, unsuccessful agents tried to find things to blame for their lack of deals. But I have many clients that are thriving because they get the web. They understand that they need to be at the top of their game at all times, and that the web can only help.

Bottom line, stay with the trends or get out. Why waste your time focusing on how to keep something down(technology always wins). Instead, figure out of how to use it for your business.

Nick says:

They fear the truth. by ken

C’mon Ken – so you’re saying that the average home buyer is so stupid that they cannot read a bunch of reviews for a home and make an intelligent decision about which one to ignore. Like anything else on the web, you need to know what to take at face value and what you don’t.

Do you believe everything you read on the Internet? If so, I’ve got some swampland in Florida… but wait, darn it – it actually is worth a bloody fortune now!!!

Kam says:

What a bunch of babies! The consumer's, that is.

I’ve used a real estate agent twice now and was grateful I had someone up to bat for ME! Yes, thats right. That’s really what a listing agent does…a good one, of course. I find it laughable that the people complaining are the ones who didn’t have the common sense to hire a knowledgable agent and then got mad because they hired someone who was probably more like a used car salesman. Most people spend more time buying their groceries then they do deciding on the best agent for them. If you’re silly enough to go with someone who only tells you want you want to hear instead of the truth…well…then you got what you asked for didn’t you? Blaming it on realtors as a whole is ridiculous and immature. FACT: fsbo over price their home by 10-20%. FACT: The average FSBO home sold for $180,000 and the average Realtor listed home sold for $230,000.
These consumer’s spouting their baseless negativity against realtors don’t have facts to back up what they say, only strong emotions. If you know what you’re doing as a realtor and you work for it (most do) you don’t need to discount. Realtor’s don’t get discouraged, most intelligent people know and appreciate the services you provide.

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