Truth, Trust, and Transparency. Is Our Industry Digital Redlining? Part 2
Unfortunately, the real estate industry is experiencing significant internal division and negative messaging, creating challenges similar to those observed during the latest election cycle. The brawl between Zillow and Compass International Holdings (CIH) (among others) has gotten just as nasty.
The changes are coming fast and furious. Some are dictated by new state laws or lawsuits. So I suspect the minute I publish this, it will be outdated.
Truth.
Both Compass (CIH) and Zillow have used their significant power and money to draw other entities into the fray over control of data. Primarily, about who ‘owns’ the listing data and the buyer who inquires about said listing. Several Multiple Listing Services, Redfin (Rocket), Peerage, and a number of other brokers have chosen a side (some voluntarily, some not). The Anywhere brands and @Properties have had to drink the Kool-Aid because of their recent acquisition by CIH. Even if they don’t agree with private exclusive listings, they have to fall in line and keep their mouth shut for the most part. And that includes the independently owned franchises. But some brokers may buck the pressure and set their own internal rules and guidelines.
I’m not here to tell you who is right and who is wrong. But I am here to tell you that they are both manipulating the truth or leaving key factors out to get what they want. Each side has produced homeowner surveys that contradict one another on the success or failure of off-MLS marketing. There are behind-the-scenes deals and power plays that are creating some unlikely partners.
For the CIH family and its allies, it is about:
Controlling the inventory and supporting services, which draws more sellers and potentially more buyers to their site and their agents, since they may not be able to see their listings elsewhere.
Controlling the online leads by delivering inquiries from their own and partner websites to their agent base (sometimes directly to the listing agent)
Giving the sellers a smoke screen by not having to publicize days on market and price reductions if they don’t go into the Multiple Listing Service (MLS) (which is bad for buyers). They pass it off as consumer choice and a way for the seller to ‘test’ the market and their pricing.
Selling properties in-house without sharing commission with outside brokers. This is the root cause of all of this.
This is high-level, as there are many other reasons. But when it comes to truth, I assure you the only one mentioned in their listing presentation is #1.
For Zillow and its allies, it is about:
Same as #1 above. Controlling the inventory and supporting services, which draws more sellers and potentially more buyers, since they may not be able to see their listings elsewhere. They want consumer eyeballs by having all of the listings, and Compass is keeping that from happening.
Same as #2 above. Controlling the online leads by delivering inquiries from their website to their client agent base of Preferred or Flex agents who pay for those leads (not the listing agent).
Rewarding their loyal brokers with more leads because those agents are likely to sell that buyer if they get the lead first.
Ensuring they can continue to get listing feeds from all MLSs, available sources, and brokers so they can say they have every listing, which drives traffic to their site and supports their paying agents and advertisers.
As per Inman News, Saul Klein, CEO of San Diego MLS, said the industry is now split into four camps:
“Brokerage-controlled listing networks that want more power over their own inventory.” (That’s CIH)
“Portal-driven consumer platforms that want comprehensive public visibility on every home.” (That’s Zillow)
“MLSs are trying to preserve the cooperative marketplace while adapting to new competitive realities.” (Getting pressure from all sides, attempting new partnerships and strategies, increased lawsuits, and just trying to stay relevant)
“Regulators and lawmakers stepping into a space that used to govern itself.” (It’s only going to get worse, and sadly, it is needed)
The scary part is that, because private listings don’t show ‘days on market’ or price reductions, current sales data on their success isn't really available except from the listing entity itself, and that is kind of like the fox guarding the henhouse.
I want to be very clear that sellers have complete control over how their property is marketed and who they list with. But sellers depend on their agents to help them make informed decisions and give consent. So, a carefully crafted marketing presentation can pretty easily sway them, because the consumer doesn’t know the right questions to ask to uncover what is best for them, and that is the shame in all of this.
Trust.
I kind of feel like trust is the secret sauce right now. The average person in the market to buy or sell a home may be only peripherally aware of the above shenanigans. It has become more mainstream in the media in recent months, but let’s face it, when you are getting a home ready to sell, you are just focused on getting it market-ready until you decide who you might want to list with. And a potential buyer is blissfully hitting up Zillow, Realtor.com, and Homes.com, not realizing they may not be seeing everything on the market until they choose an agent.
Previously, there was no reason for a buyer or seller not to trust the process in place for 50 years. Previous fact: Listings that were listed by an agent were on the MLS, which meant all MLS member agents had access to them within 24 hours of listing. That meant the seller got widespread exposure, coupled with feeds to online portals and the brokerage's own website. Lots of exposure guaranteed, and there was a centralized place for that data. Because more eyeballs means more interested parties, higher probable sales prices, and shorter time on the market. For the buyer, it meant they were seeing just about everything currently on the market that met their criteria.
Now, buyers and sellers cannot trust the above scenarios. Yes, Compass’ website is public, but how many places must an agent or potential buyer visit to determine available inventory? The hardest part is that they may not know to question whether they are seeing everything out there. Because agents, brokers, and portals are working for us, right? They wouldn’t do anything that was not in our best interest, right?
When companies like Zillow and CIH have the kind of money at their disposal and lots to gain or lose, they are willing to do and say just about anything to win over a prospective client, and trust is how they spin their tale. Zillow has been a trusted online portal for 20+ years. No reason to question how they choose the agent who responds to an inquiry. The buyer just wants a response and to ensure they are seeing everything that meets their search criteria.
CIH, while a newer entity, now owns @Properties and the Anywhere brands (Century 21, Coldwell Banker, ERA, BH&G, Sotheby’s Intl., Corcoran), along with other established companies it has acquired over the last 10 years. These companies demonstrate immense longevity and brand awareness, often equated with trust and truth in consumers' minds.
These entities are challenging the consumer trust that they spent years and a lot of money to develop.
Transparency.
So I guess it all comes down to transparency. What we are seeing right now is gatekeeping with private, exclusive off-MLS listings. It is no longer an open and fair marketplace. It is properties being exposed to a select group in the broker’s chosen network who are ‘in the know’. I heard someone use the term ’ digital redlining ’ the other day. It made me gasp. Yikes, is that what is going on here? Examples of original redlining included real estate professionals steering buyers away from certain neighborhoods because of the racial makeup of the residents. Now, digital redlining excludes people who don’t know about the opportunity in the traditional manner, effectively excluding them. They never had a chance to buy it because it was not widely publicized via the MLS and fed to online portals. Redlining was made illegal with the passage of the Fair Housing Act in 1968. Are we contending with a new version?
We wonder why real estate agents aren’t revered as professionals like doctors, lawyers, and CPAs. The bar is too low for entry, and it is too easy to be ‘part-time’. The independent contractor status allows for little oversight in a business where people make the largest transaction of their lives. Brokerage’s profit margins are under pressure, and more entities are competing for fewer buyers and sellers, which is why greed and the quest for control have emerged.
How can the adults in the room demonstrate their professionalism?
Communicate your value and expertise, and use reviews and testimonials to verify
Let the legitimate statistics speak for themselves
Build trust through honest and open communication and education
Adapt your communication to address what the consumer doesn’t know about all of this in a way that is meaningful to them
Stay up to date on trends, lawsuits, changes in laws and regulations, government involvement, and technology. Some states are passing laws regarding the execution of private listings, and some are requiring detailed state-mandated disclosures to be signed by the seller.
Use your influence with lawmakers, associations, and MLSs to sound the alarm and force regulation that is in the best interest of the consumer
Ensure your customers are seeing every available property in your market. It is our job to protect consumers and their access to information.
Ensure your sellers get maximum exposure for their listings. We need an open and fair marketplace.
As relocation professionals, we need to ensure the corporations and the RMCs (along with the transferees) understand what all of this means to each stakeholder
Finally.
Oddly enough, the current litigation between these entities isn’t even about what is best for the consumer. They are focused on accused antitrust, collusion, and monopolistic behavior. Again, it’s about them, not the person most likely to be harmed, the consumer.
Tell your customers the truth about what is going on in the industry and why. Build trust by doing the right thing for them so they make informed decisions. Be transparent by openly discussing how you are protecting them, as well as other sellers and buyers. Once they truly understand the pros and cons of widespread marketing, then it is up to them to make their own decision.
We can only guess what consumers have lost by not promoting their properties to the widest audience, and what listings buyers have been excluded from seeing, until a group of savvy attorneys or homeowners files yet another class action lawsuit or the government steps in to pull back the curtain on all this infighting and ugliness, and hopefully puts some guardrails on it. But it will not only be at the expense of the consumer, but also of the brokers and agents who tried to do the right thing through all of this. Because the ones who created this situation have the money to fight it and don’t really care about the consumer in the end anyway.
As always, this is my opinion; take it for what you will.
