I have been reading articles about Zillow Group’s positioning on Upstream and the forms licensing policy of the California Association of REALTORS® with great interest. My take away is that Zillow Group is doing and saying exactly what they should be doing and saying to positively impact Zillow’s market opportunities in real estate. Remember, Zillow has industry relations people and government relations people that want to fight tooth and nail for every advantage they can get. It’s business.
Without Property Listings, Zillow Dies
Imagine Zillow.com without property listings, or only a smattering of property listings. Would consumers go to a website that does not have all of the listings? Absolutely not. At some point, the prices to advertise on Zillow, or the policies of Zillow’s data licensing could potentially reach an inflection point whereby brokers and agents do not want to do business with them. Brokers have an agreement with the seller that outlines their relationship. If the seller and broker agree that it is not in the customers’ best interest to advertise there, the broker needs the right to not share the listing. They have that control in place today, and they will probably always have that control in place.
Take this scenario into account. Let’s say that the Zestimate is only 57% accurate within 20% of the sales price in a particular area or price point. For example, even Zillow will agree that the Zestimate has troubles working on hyper luxury custom properties. There is simply not enough data to put an AVM on a home over $25 Million, $50 Million or even $100 Million. Moreover, those clients may not want the world to know that it is listed. I can tell you that a lot of celebrities ask their LA brokerages not to put their listings on Zillow and Trulia because they do not want to suffer like the LeBron James family has suffered with their children’s bedroom photos all over the internet and an invitation for fans and foes to camp outside their home.
In my opinion, whenever the Zestimate is way off on a home being marketed for sale (either too high or too low), I think that the agent is taking a risk that may negatively impact the buyer or the seller. Regardless of the AVM, a property is worth exacting what a willing buyer offers and a willing seller accepts with a myriad of terms and conditions that have nothing to do with property facts.
Zillow is trying to get the DOJ and FTC to give them a hedge against an industry which will have factions of people that simply do not want to advertise with them. That is smart. But, I do not think that Zillow’s protests will yield anything.
Zillow’s Position on Upstream Makes Sense
Zillow purchased a company called Bridge Interactive. Upstream is a competitor to Bridge. Bridge was built years ago (think old software) to manage a problem that existed in Atlanta where brokers did not want to enter or update their listings in more than one MLS. It works fine. A few other MLSs also use Bridge to manage listing input, but for a different reason. Some MLSs want to publish listing data into a backup listing data repository as well as the MLS system at the same time. It is interesting to note that after Zillow purchased Bridge, at least one of those MLSs cancelled their agreement because Zillow’s service was not good enough anymore. That MLS built their own. Other MLSs like MLSListings and BrightMLS have also built their own Add/Edit.
The last thing that Zillow wants is to have more competitors in the market. Upstream is a competitor.
Another component of Zillow’s Bridge product is listing distribution. There was once a time when the Bridge RETS server was the most feature rich way for MLSs to manage their outbound IDX and Syndication Data feeds. If you follow the Real Estate Standards Organization, you know that RESO is no longer updating RETS standard. RESO is encouraging the industry to move to the more advanced (and nearly real time) web API protocol for IDX and Syndication data. Zillow is cool with this. They are major sponsors of RESO and they appreciate that the web API is a better way to transmit data. Yet again, if Brokers use Upstream for their listing syndication, Zillow has a competitor in the market. Moreover, the Upstream product is better (IMHO).
By the way, a huge component of Upstream is the ability to handle broker roster data – firm profiles, team profiles, agent profiles, office profiles, etc. Bridge does not have this functionality. Bridge just moves data that is already there from the MLS to wherever. Remember, many MLSs do not handle rosters – the Associations do, and they do not provide Roster data feeds. Brokers need roster management to eliminate the grey skulls on Zillow. One would think that Zillow would be happy about that.
Zillow’s Position on Open Data Is Smart
If I worked at Zillow, I would absolutely want listing data to be open. Today, Zillow manages data licensing agreements with Associations, Brokers, Franchises, MLSs, and For Sale By Owner folks that load their listings onto their platform. Their preset data license agreement is that if you give Zillow your property listing data, they keep it forever and may monetize it or sublicense it or reuse it however they like.
That type of data license is a huge driver of the value of Zillow’s data. If Zillow has a limited license to use the data during the listing agreement and not allow any competitor advertising on the listing, Zillow would be less valuable and would take a hit to revenue. Data is an asset. Brokers have long advocated for the Fair Display Guidelines and have asked Zillow to expunge the data after it has no longer under contract. Over time, because of the consumer popularity of Zillow, the industry has had less success in negotiating restrictions to Zillow’s terms.
It is super easy to get data onto Zillow – try to get it off. Zillow would prefer not to have any restrictive agreements in place. Open data means that they can get rid of all of those data licensing agreements. Of course they want that. Reasonable or not, it is smart for them to advocate for open data. They have the most to gain.
Association Forms Licensing
The real estate transaction is complicated. In years of old, every transaction involved two lawyers who represented their clients in the development of the sales contract. In today’s world where lawyers charge between $250 and $750 an hour for legal work, it would cost both the buyer and the seller thousands of dollars to transact.
Today, the Associations of REALTORS® across America have done what the REALTOR® organization does best. They have created standard forms. They used REALTOR® dues to lawyer those forms. They worked with State legislators to have those forms comply with State laws. In the State of California, members get access to a legal hotline as a member benefit and if the boilerplate contract is challenged by the courts, CAR’s legal team will join the case to defend their contract. The California Associaton of REALTORS® spent millions on developing their forms and they continue to invest in making them better and better (as to other States).
California’s forms may be used by members of the California Association of REALTORS®. Not non-members. Not For Sale By Owner. It is a member benefit. As such, they have security in place to make sure that only members access the forms. And, the forms are copywritten so that people cannot steal the forms.
CAR has gone even further. They have built a digital forms solution called ZipLogix® that insures that the forms are not stolen or altered or illegally accessed. But, you should know that they allow vendors to integrate the forms into their transaction management application via an API. When you open DocuSign or Skyslope or DotLoop today, when you need a form, you can open a window to the CAR Forms dynamically. You can fill out your form in the secure ZipForms application, and download the completed form to your transaction management application for storage as a flat file. It works just fine.
Sure, it would be better for Transaction Management solutions if they could have the forms digitized and native in their platform. The Texas Association of REALTORS® has lead the industry at licensing their forms this way. Every State Association sets their own policy regarding forms licensing. It is their intellectual property and their right. If the members of the AOR don’t like it, they can lobby the AOR to change their policy. The board of the AOR is made up of its members.
If Zillow does not like the policy, they are welcome to invest their money into lawyering their own proprietary forms for DotLoop.
By the way, it is also worth noting that CAR forms also include local area disclosures. In some cases, these are lawyered by the local AOR and licensed to CAR for inclusion in ZipForms® but only to that local Association’s members. This is a big deal in San Francisco. If you are not a member of SFAR, you cannot use SFAR’s local area disclosures. They are for members only. Imagine how SFAR members would feel if CAR gave their intellectual property to every agent in California and to FSBOs. That is just crazy.
Should Zillow object CAR’s licensing policy? Sure. I would too if I were Zillow.
So here is what I have to say. Zillow is absolutely bringing their goals to the table and fighting for what they want to ensure the long term success of their company. And, they are damn good at it. But the industry also needs to hold its own and fight for what they have built as the world’s leading real estate industry. It took over 100 years to get here and the REALTORS® and brokers have invested money, blood, and time in building what we have. Giving it away to any third party would be ignorance.
Let the battle continue!