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KB Home exec is learning to watch his tongue the hard way

(CORPORATE NEWS) Character is what you do when no one is watching and for this KB Homes exec, it is what he said that is getting him in trouble.

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Keep the shade to yo self

Need a life lesson about keeping nasty comments to yourself? Take it from KB Home CEO Jeffrey Mezger.

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This past week, KB Home cut Mezger’s 2017 bonus by 25 percent after profane comments he made about comedian Kathy Griffin came to light.

D-list drama

Mezger, in an audio recording obtained from the security cameras on Griffin’s house, called her a list of not-safe-for-work names after she called the police on him for a noise complaint. This was reportedly one in many noise complaints that she and partner Randy Bick required police assistance over.

Since the incident was reported, Griffin and Bick have filed a restraining order against Mezger.

KB Home, an upscale builder with frequent home price tags in the millions of dollars, made a statement to the press regarding Mezger’s comments, saying the CEO had apologized for his language and that it did not “reflect who his he is or what he believes.” A spokesperson from the company also reported that a further problematic incident would trigger Mezger’s immediate dismissal.

Twenty five percent of nothing

Some who believe in the power of private industry to self regulate problematic behavior hold this action by KB Home as an additional example of the shifting tide of CEO expectations.

Consumers reported in a 2016 Stanford study that it would be appropriate for a company to fire its CEO over “morally questionable behavior” even if said behavior was not technically illegal.

Uber’s former CEO Travis Kalanick was ousted by the company last year after reports of rampant sexism in the workplace were published.

However, some have questioned if this “punishment” has any actual weight behind it, or if it is just for show. For starters, KB Home did not release any data on how much of a salary cut would be–and if it would actually affect Mezger at all. In an analysis from the Los Angeles Times, columnist Michael Hiltzick found that in addition to the lack of baseline bonus information from KB Home, that the CEO has reportedly not received a bonus since 2014. As Hiltzick points out “taking 25 percent of nothing is painless.”

Repercussions to follow

Besides the question of how much the incident will cost Mezger, a larger question looms on how this may potentially affect the KB Home bottom line. Suze Orman, a TV personality and financial advisor, has already taken to Twitter to encourage her followers to not choose KB Home to receive their business.

Long run, it is yet to be seen how much this will affect Mezger and the company he runs, but for the time being it certainly serves as a nice reminder of the adage: “if you cannot be positive, then at least be quiet.”

#KBHome

Alexandra Bohannon has a Master of Public Administration degree from University of Oklahoma with a concentration in public policy. She is currently based in Oklahoma City, working as a freelance filmmaker, writer, and podcaster. Alexandra loves playing Dungeons and Dragons and is a diehard Trekkie.

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Real Estate Corporate

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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Real Estate Corporate

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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