Real Estate brokers and MLSs are pretty familiar with Collateral Analytics®. Collateral Analytics provides real estate brokers with a variety of tools including market trends, market share, and AVMs. Collateral Analytics is particularly interesting to real estate brokers because of the unique blend of MLS data and Public Record data. Brokers believe that MLS data introduces a level of accuracy and timeliness to analytics products, making them profoundly more accurate than Zillow Group’s® Zestimates®. Many of America’s top real estate firms also participate in the Collateral Analytics network of firms that provide Broker Price Opinion(BPO) services to the capital markets. More than any other market analytics company, Collateral Analytics has developed a philosophy and suite of products that associates the brokerage firm into the process of home valuation and market analytics.
The lawsuit discloses that Nationstar®, via their subsidiary Xome®, are customers of Collateral Analytics, and have been since 2013. It is not clear from the filing if Xome simply resold Collateral Analytics products or licensed the Collateral Analytics AVM and BPO products for use in their other software applications that Xome provides to the banking and title industry.
Specifically, the filing of the lawsuit claims that Xome provided Collateral Analytics trade secrets to Quantarium®, a company acquired by Xome in 2015. Collateral Analytics claims that Xome tasked Quantarium with making a copy of the Collateral Analytics product. Moreover, the lawsuit claims that Xome is actively reselling white label versions of products that use the stolen trade secrets to other companies in violation of their licensing agreement. Collateral Analytics indicates that they have lost two major clients to Quantarium.
CoreLogic® and Black Knight Financial® have long offered competitive products to Collateral Analytics. On the surface, the difference here is that Nationstar was a customer of Collateral Analytics first, then developed a competitive product as a result of their experience with Collateral Analytics.
WAV Group has reviewed the filing, which is heavily redacted – as you might imagine. This is very common in these types of law suits. The court marks certain information confidential because the very nature of the litigation is the protection of trade secrets. WAV Group provides expert testimony witness services in these types of litigation, but is not engaged on this case by either side.
There is quite a bit that lies in the outcome of this litigation. Should Collateral Analytics prevail, their broker partnerships (typically exclusive to a territory), will continue to accrue value. Should Collateral Analytics be unsuccessful, Collateral Analytics will have more competitors in the marketplace and likely experience a devaluation of their services. It may also impact their brokerage partnerships. Trade secret cases are very hard to argue and win unless there is clear intent and evidence procured though discovery.
WAV Group did not bother to reach out to either company to compose this article. Companies in active litigation never comment anyway.