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All of the details you don’t know about Broker Public Portal (BPP) teaming up with Homesnap

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The Broker Public Portal (BPP), which was designed to create a national MLS consumer-facing property search website, announced today that they will be partnering with Homesnap by executing a binding letter of intent.

Rather than rebrand, BPP will push listings from 115 MLS and broker partners (accounting for roughly 500k agents), will be funded through a $1.00 per MLS member monthly fee rather than advertisements or paid agent placement, and will adhere to Fair Display Guidelines (no one but the listing agent is displayed on a property listing).

Not a reinvention of the wheel

When the BPP idea was initially proposed, it was just that – an idea. Kind of a “for the people, by the people” idea. Nevertheless, many people had heartburn over what was not even a plan, but an idea. Fast forward to a group of brokers and MLSs that pitched in $5k each to cover a fundraising goal of $250K for startup expenses. A year ago, the executive committee was formed, and today, their first big move is to unveil the plan (to partner with Homesnap to move forward).

So how will this work? They’ll roll out first with MLSs (already revealed: Midwest Real Estate Data (MRED) with ~40k members, Connecticut Multiple Listing Service (CTMLS) with ~11k members, Northstar MLS with ~16k members, and Buffalo Niagara Association of Realtors®, (BNAR) with ~3k members) and eventually brokers directly.

You probably remember Homesnap from their 2012 launch at South by Southwest as an augmented reality app allowing you to “snap” a house and instantly get details from the MLS. It was originally a product of Sawbuck, formerly a Washington D.C. based brokerage which raised $2M in 2008 and $2M in 2012.

Partnering with Homesnap instead of reinventing the wheel could put BPP at an advantage since Homesnap already has consumer traffic and a slick mobile app. The project is not without challenges, however, as we all know that getting all brokers and MLSs on board is like herding feral cats – not impossible, just tough.

Competing with traditional portals?

BPP has said all along that they’re not seeking to become a Zillow or Realtor.com competitor and all Board members we interviewed say the same, but let’s face it, today’s announcement solidifies that the goal is exactly that. What else would a national consumer-facing MLS be?

Further, it certainly appears that a group of powerful brokers and MLS execs got together to pursue a dream scenario that they wish had happened with the industry’s operating agreement with Realtor.com. They’re pursuing the dream scenario where they’re in charge instead of stock shareholders and an ad salesforce.

Currently, Z/T/R are increasingly the first point of contact for consumers, so they own that relationship (not practitioners), an issue that has been contentious for many years. BPP’s structure indicates that they want that power back, they seek to own that relationship, they want to feature only the listing agent on a listing, and that they intend on getting one step closer to the consumer.

But is that a realistic possibility with such a small operating budget compared to Z/T/R’s mega millions? If the feral cats are all herded properly, then yes, but that’s the uphill challenge BPP has taken.

How will they compete in the market?

Homesnap CEO Guy Wolcott tells us that they intend to compete not with “Super Bowl ads,” but with their “secret weapon — participation by thousands of brokers and hundreds of thousands of agents,” noting that in the past year, agents using Homesnap Pro have invited over 4 million consumers to join them and scaling that to the number of agents that will use Homesnap through the BPP partnership will handily reach the market. “Agents won’t [invite users] because we pay them, but because it will be the best way to work with their clients and prospects.”

Cary Sylvester, VP of Industry Development at Keller Williams, who also serves on BPP’s Technology Workgroup and is a Board liaison, echoed Wolcott’s sentiments, noting, “By incorporating easy to use agent/consumer collaboration tools, BPP won’t need to drive growth primarily through direct-to-consumer advertising or app store and search engine optimization, but through agents themselves.”

“Our strategy is not to get out ahead of agents, brokers and MLSs – though we will undoubtedly generate plenty of free leads – but to support them by offering a great home search experience they can use not only to acquire clients, but to serve them and keep them for life,” says Sylvester. “Accomplishing that goal will make our greatest advertiser the agent themselves.”

What about the pre-nup?

The operating agreement is not public, and since it’s a private entity and there’s no National Association of Realtors (NAR) involvement, the agreement may remain veiled. As a news organization, of course, we want to sink our teeth into it, but three sources close to the matter tell us that despite not seeing the contract, they trust the “genius” of the executive committee at BPP, which is not the normal response we would hear, so it is certainly thought provoking.

There are some unresolved issues with this BPP/Homesnap partnership, though. The most pressing is – what is the pre-nup? What happens when the partnership agreement is up for renewal, or is the agreement in perpetuity? Couldn’t Homesnap just be built up by BPP (thus brokers and MLSs) and become a legitimate player to compete with Z/T/R, and say “no thanks, we’re big enough that we don’t need you” and take all of the work BPP put into it and build relationships on the back end and go public to make it a Z/T/R/H situation?

Wolcott assured us that their model was inherently “pro-industry” so it can’t go off the rails, and that because they already operate on the BPP model of “your listing, your lead” scenario that is on an “MLS-by-MLS basis,” the goal is to never relive past experiences of other portals. “The BPP didn’t have to ask us to change our stripes. We already had the right stripes.”

John Mosey, NorthstarMLS President & CEO, elected to the BPP Board of Managers tells us, “We entered into this agreement with our eyes wide open and antenna fully raised to the risks of getting engaged, then married to the wrong partner. Months of due diligence and what if scenarios were endured to find the ground on which we felt most secure that we are both in it for the long term.”

“During the process,” Mosey adds, “one of our negotiating team commented that the experience of building the terms of this agreement was also an exercise in building trust, mutually. That trust is the foundation for a future together that neither side believes will come undone. Nonetheless, we have a mutually acceptable pre-nup in place that protects the interests of the real estate community in the eventualities that you ask about and others.”

Show me the money

Another potential concern is the flow of money. How is it split between Homesnap and BPP? Wolcott tells us all money MLSs pay them for the BPP goes toward the suite of projects, but will BPP executives not see compensation? If a broker sends listings directly, can they opt out of the per-member fee at the MLS level? Are there plans for Homesnap to acquire BPP or BPP to acquire Homesnap, or will it remain a partnership?

In an internal document (but not the “pre-nup”) obtained by The Real Daily, some answers regarding the private agreement are made clear, thus explaining the aforementioned unresolved issues. The two companies will create a new company, and the Board will be comprised of 3 Homesnap representatives, 3 BPP representatives, and 1 third party rep (chosen by BPP). Each brand will own 50 percent of the company, revenue will be split 50/50, and under the direction of the Board, Homesnap will be responsible for maintenance of the site and apps, innovations, and marketing.

All that said, will people even care about the money flow if it means a nimble national MLS that is powered by industry insiders on the cheap (for a dollar per member per month)?

The tone of all appears to be hopeful

Overall, Wolcott tells us he is most excited just “thinking about what is possible when the entire industry is all rowing in one direction – and what awesome stuff we can build at the scale this will enable.”

Of the inevitable critics, Sylvester says they’ll handle it by delivering results.

The bottom line is that the overall tone of industry insiders we spoke to is hopeful, the verdict seems to be that competition is good, and that this is a reasonable plan for the BPP project. Now that the Homesnap partnership has been unveiled, we anticipate the secrecy is over and BPP/Homesnap is about to get aggressive. Stay tuned.

#HomesnapBPP

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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Zillow gets one step closer to practicing real estate

(CORPORATE) Real estate giant, Zillow, has been testing “Instant Offers,” today expanding to include themselves in the mix of buying and selling homes.

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For over a decade, real estate practitioners have worried that their feeding Zillow endless information would empower them to eventually pick up real estate licenses and become their largest competitor. In 2007 and 2008, it was massive blog fodder an an emotional issue for many as agents and brokers rallied against it.

Zillow has always said they will never practice real estate. Ever. They’ve maintained their position that they sell ads, not properties.

But today, the company is one step closer, as SEC filings reveal they will be testing the buying and selling of homes directly in two test markets, Phoenix and Las Vegas.

They’re not the brokers of any of the deals, and this is clearly a play to compete with Opendoor which is already valued at over $1 billion, but it is certainly another inch closer to confirming the fears that caused so many to figuratively flood the internet streets with torches and pitchforks.

The company announced today that they would be expanding their Zillow Instant Offers Program to Phoenix after testing in Vegas and Orlando last year, wherein sellers could solicit cash offers from investors.

In the new test markets, however, they’ll be participants, stating they will be “buying and selling homes with Premier Agent partners.”

Zillow stated that their Instant Offers Program is “an excellent source of seller leads for Premier Agents and brokerage partners,” given that the majority of sellers who requested an offer ended up using an agent from the program.

Fast forward to today, and they’re no longer the matchmakers, they’re also planning to buy and sell investment properties themselves.

In a statement the brand said, “Beginning this spring, home sellers in the Phoenix and Las Vegas real estate markets will be able to compare an agent’s comparative market analysis (CMS) to offers from Zillow or other investors.” Adding, “When Zillow buys a home, it will make necessary repairs and updates and list the home as quickly as possible. A local agent will represent Zillow in the purchase and sale of each home, enabling agents to earn commissions.”

All of this could be one step closer to competing in the real estate market as actual practitioners, or maybe Zillow is just as enchanted with Chip & Joanna Gaines’ house flipping as the rest of us.

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Real Estate Corporate

Zillow challenges federal antitrust allegations

(CORPORATE NEWS) Zillow says they’ll “vigorously defend” themselves against allegations that Zestimates are concealed on partner brokers’ listings.

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Earlier this week, New Jersey broker, EJ MGT LLC filed a lawsuit accusing Zillow of concealing Zestimates on specific listings, implying that paying partners are given an unfair advantage in the marketplace. The suit acknowledges that Zestimates appear somewhere on all listing pages, but alleges that only certain brokerage listings do not have the Zestimate listed prominently under the listing price.

Court documents offer screenshots of listing pages with and without Zestimates as well as documentation of communication with Zillow Group staff explaining that only “certain brokers” receive “certain treatment.”

But not so fast.

Zillow points out that Zestimates simply appear on different parts of the page for different listings.

Emily Heffter, Sr. Manager of Public Relations at Zillow Group tells The Real Daily, “despite the claim in the suit, no listings on Zillow are exempt from having a Zestimate. Some listings have the Zestimate in a different place on the page.”

The lawsuit criticizes the accuracy of Zestimates, a critique the company is quite used to and typically responds by reminding people that they are not appraisals, and not always accurate across the board (some states are non-disclosure states, for example, so home sales data flows differently depending on location).

Heffter reaffirms just that, noting that “the Zestimate is not an appraisal. It’s an estimate created by a sophisticated machine-learning process, and it’s meant to be used as a starting point in determining a home’s value. Zillow is very transparent about its accuracy, and we [sic] our median error rate is about 4.5 percent.”

Typically, in times of active litigation, Zillow and other companies refrain from commenting. Not this time.

Zillow Group’s official statement: “We believe the claims in this case are without merit. The Zestimate is intended to be a starting point for determining a home’s value, which is why we provide it, for free, on more than 100 million homes across the country. As a company, we always seek to create advertising products that add value for consumers and advertisers, and we intend to vigorously defend ourselves against this lawsuit.”

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Zillow sued for Zestimates violating federal Antitrust laws

(CORPORATE NEWS) Zillow being sued for Zestimates is nothing new, but they’re now being accused of concealing Zestimates on “Co-Conspirator Broker” listings, violating federal Antitrust laws.

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The latest Zillow legal troubles again surround their Zestimates; this time they are being sued for their Zestimates violating federal Antitrust laws. The company has allegedly violated and continues to violate Section 1 of the Sherman Act, 15 U.S.C. § 1 and the New Jersey Antitrust Act, N.J.S.A. 56:9-3.

Plaintiff, EJ MGT LLC, based in New Jersey, filed suit against Zillow Group Inc. and Zillow Inc. today. In a 21-point legal brief outlining their specific violations, two things become immediately clear (assuming of course there is truth in these allegations): Zillow is giving preferential treatment to preferred brokerages (labeled ‘co-conspirator Broker[s] in the lawsuit) and Zestimates are wildly inaccurate (as many have adamantly stated since Zestimates’ conception).

The first few points of the brief explain exactly what Zillow is being accused of doing: “this antitrust action arises from Zillow’s conspiracy with certain real-estate brokerage companies to selectively conceal ‘Zestimates.’ ”Zillow’s estimate of a residential property’s “fair market value” which the lawsuit states they know “to be inaccurate,” have allowed “only select brokers to conceal the display of Zestimates on their listings to the exclusion of the general public.”

The lawsuit goes on to state that “these agreements between Zillow and certain co-conspirator brokers of residential real estate restrain trade (read: the agents/brokers being allowed to conceal unwanted Zestimates, henceforth referred to as ‘Co-conspirator Brokers’) and deprive Plaintiff and the public in general of the benefits of open and robust competition in two markets: the residential real estate market and the residential real estate brokerage market.”

In essence, Zillow and the Co-conspirator Brokers have allegedly made an illegal agreement regarding the display of Zestimates on Zillow’s site.

Zillow has long touted their Zestimates as a “user-friendly format to promote transparent real-estate markets and allow people to make informed decisions;” except Zestimates are often believed to be inaccurate and now they’re allegedly being concealed for a select group of Co-conspirator Brokers – a far cry from making real estate more transparent.

If the lawsuit’s claims have any validity behind them, it seems as though Zillow may be in for a bumpy ride. Item 10 in the suit states, “Zillow has acknowledged that it conceals Zestimates as a result of agreements with only ‘certain brokers’ who receive ‘certain treatment’” and uses a message screenshot from Zillow’s Help Center as proof these words were in fact used to explain why some listings had prominent Zestimates while others did not:

You may be wondering what brought about this lawsuit; Plaintiff, EJ MGT LLC, is marketing a property located in Cresskill, New Jersey, through an agent unaffiliated with Zillow (not a “Co-Conspirator Broker”). Therefore, their listing contains a prominently displayed Zestimate, while a similar listing in nearby Alpine, New Jersey, which is listed through a “Co-conspirator Broker,” conceals the Zestimate:

The above example is not the only one outlined in the case, however. Item 12 of the lawsuit states that further evidence can be seen by comparing a residence page for a property while it was listed with a Co-conspirator Broker versus the same residence page once the property was off the market. One clearly conceals the Zestimate, while the latter displays it clearly underneath the listing price.

For reference, the Co-conspirator Broker listing was captured on December 26, 2017 and the screenshot after it was taken off the market with the Zestimate was taken on January 2, 2018. Merely a week in between images, and yet the difference of how the ad is displayed is quite apparent:

In essence, Zillow has violated the very transparency they claimed to create.

Zillow is allegedly promoting misleading and inaccurate information while using their marketing power to charge brokers to hide this information which could negatively impact a sale, and which Zillow itself has acknowledged is sometimes inaccurate.

Also, general members of the public have no way to prevent Zillow from obtaining and posting information in this way, and it cannot be altered without hiring an alleged Co-conspirator Broker, as Zillow has explicitly refused to offer the option to hide information to individual homeowners, further deepening the dependency on Co-conspirator Brokers.

Because of their alleged refusal to treat everyone equally and “empower homebuyers with information,” they have potentially restrained trade in connection with the exchange of information regarding home valuation, and offered anti-competitive benefits to only those brokers chosen to purchase that ‘special’ service package from Zillow that removes Zestimates from listings.

Therefore, brokers are not on even footing: when a seller attempts to price check; the brokers without it could be losing out to those who have the ‘special’ package and removal of Zestimates alongside listing prices.

So far, each individual Co-conspirator Broker has not been named; they have been named as a group: Sotheby’s International Realty, Inc., Coldwell Banker Real Estate LLC, Century 21 Real Estate LLC, The Corcoran Group ERA, and Weichert Realty, according to court documents. It is unlikely that any action would ever impact the brokerages, rather Zillow Group itself.

Zillow is being sued for five counts: two counts of conspiracy to restrain trade, one count of violating the New Jersey Consumer Fraud Act, one count of slander of title/product disparagement, and one count of interference with prospective economic advantage. A jury trial has been requested.

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