July 24, 2013 — In a nearly unanimous vote today, the National Association of REALTORS® Board of Directors approved recommendations that will help realtor.com® compete head-to-head with third-party listing aggregators on building a comprehensive site, including more unlisted new homes and rentals.
Although the realtor.com domain is owned by NAR, the site is operated by San Jose, Calif., based Move Inc. under an operating agreement between two subsidiary companies: NAR’s REALTORS® Information Network (RIN) and RealSelect, a subsidiary of Move. The site has been an undisputed leader in engaging consumers who are in the market for homes, but over the last several years, third-party sites such as Zillow and Trulia have drawn heavy attention from a wider range of consumers—from the merely curious to current homeowners looking to case their neighborhood for recent sold properties.
As a result of today’s vote, the RIN board approved amending the operating agreement with RealSelect in three fundamental ways:
Amending the restriction that says Move may display only listings that have been sourced from REALTOR®-owned and controlled MLSs or from REALTORS®. Under the revised agreement, Move will be able to obtain listings from entities that are not REALTOR®- owned and controlled and from brokers who are not REALTORS®.
Amending the restriction on unlisted properties. The revised agreement will allow the display of unlisted new homes and new home communities and will allow the display of unlisted properties that are for rent. Individual consumer FSBOs remain precluded from the site.
- Amending the requirement for listing broker’s consent for the foreclosure status of a listing to be displayed. Under the revised agreement, unless the listing broker objects, Move/RealSelect will have the ability to identify:
- Properties where notice of default has been recorded
- Auctions of distressed properties
- Short sales
- Bank-owned properties
The 756-member NAR board represents the nation’s 1 million REALTORS® and more than 600 attended today’s historic meeting in Chicago, the first special meeting of the board since 1996, when the original operating agreement was executed between RIN and RealSelect.
Since May, when the special meeting was announced, people have been speculating about what changes might be in the offing. Because Move is a publicly traded company, however, NAR maintained silence about the proposed changes until today, providing board members with only general meeting information in advance and requiring that they check their smartphones at the door to avoid having the proposal broadcast and debated via social media before the vote. Security guards were posted outside the closed-door meeting to prevent journalists from entering.
Competing in a World of Technology
For directors who weren’t at the 1996 gathering, NAR CEO Dale Stinton opened the meeting with a “walk down memory lane,” a slide show juxtaposing the past 20 years of NAR’s history with what was happening in the world and in technology. At the outset of the commercial Internet era, he said, there was great uncertainty about whether REALTORS® would maintain their roles at the center of the real estate transaction.
Indeed, in a REALTOR Magazine Q&A published in 1998, Move Chairman Joe F. Hanauer (a member of the RealSelect board then and now) argued that as Internet technologies evolved, it would be critical to have an entity that protected REALTORS® in the online space. Without it, third parties could easily change the rules, making it harder and more expensive to do business.
“Every real estate broker and salesperson knows what it's like when a new newspaper, magazine, or TV home show is launched in their market. They'd rather not support it because, if they do, it will gain acceptance and need to become a permanent part of their promotional budget,” Hanauer said. “Yet they're offered special terms and a preferred position as part of the new venture, and if they don't take it, their competitors will, and they'll have to live with a secondary position for a long time.”
By the same token, agents and brokers who’ve actively positioned themselves as content providers for today’s third-party aggregators have accrued advantages in the form of increased visibility, credibility, and leads. That’s great for them and for consumers. But it doesn’t negate the need for a partner that can meet consumers’ needs while protecting REALTORS®’ interests, according to Hanauer’s argument. “If a site can capture your listing data until it has strong consumer acceptance and then change its policy regarding protections, you've simply bought into tomorrow's problems.”
At today’s meeting, directors had a chance to see the danger of such a scenario. Curt Beardsley, vice president of business development for realtor.com, showed practices that demonstrate Zillow’s attitude toward the industry. The site, he said, leaves the real estate practitioner out of its advertising; puts inaccurate Zestimates next to list prices; encourages consumers to sell without an agent; posts inaccurate, out-of-date information; and buries basic listings behind pages of “featured” (paid) listings.
'Innovate or Be Innovated On'
Brian Boero of 1000 Watt Consulting then talked about the meaning of brand and the value of the REALTOR® brand, recently valued at $4.5 billion, according to NAR CEO Dale Stinton.
In the world of technology, Boero said, “you can innovate or be innovated on, and 17 years ago, when you started realtor.com, you chose to innovate. And because you chose to innovate, you set the standard for how listing sites operate in the United States. In the U.S., brokers do not pay to display listings on aggregator sites; the rest of the world is “pay to list.”
“And realtor.com is more than a technology partner,” Boero said. “It is a brand partner. It is an instrument of the REALTOR® brand, generating 450 million brand impressions every month through its website, mobile apps, and social media. Brand equals meaning, and real estate today equals REALTORS®. It’s in consumers’ minds. What’s happening here today is deepening that.”
Before the proposal was put before the board, realtor.com® President Errol Samuelson took the stage to show how realtor.com® is incorporating the brand into its listings, mobile apps, and advertising, and he shared some of the innovation that’s underway. He said realtor.com is preferred by consumers in the home sales space two times more than Zillow and 28 times more than Trulia, but the site is facing an eroding share of Internet traffic, particularly in markets where there are many non-REALTOR® practitioners.
“REALTORS® have invested a lot of time and millions of dollars in building information technology to give consumers online access to real estate information, and we know that consumer demand for all things ‘home’ has never been greater,” said NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif. “We want realtor.com to have the resources and flexibility it needs to give consumers what they want while ensuring that today’s buyers and sellers can continue to rely on REALTORS® for the most accurate, credible market data. We think the proposed changes achieve both goals.”
Samuelson said changes will happen at “Internet speed.”
Vision for the Future
“Clearly, the decision will change the way we operate the site,” said Alison Schwartz, vice president of corporate communications for Move. “But we want to ensure we are evaluating each new opportunity against our core value proposition, especially accuracy. In the coming months, you may see some changes on our website and mobile apps centered on new homes and rentals.”
In addition to accuracy, REALTORS® may be concerned about seeing their listings co-mingled with non-REALTOR® listings. “When the changes are implemented, the site will continue to clearly distinguish REALTOR®-represented listings and will use language that more prominently emphasizes the difference between REALTORS® and non-REALTORS®,” said RIN President and CEO Bob Goldberg.
After the vote, Samuelson expressed his gratitude. “I’ve been involved with realtor.com since 1999, and I have a great passion for what we do,” he said.
When consumers search for their dream home today, they have more tools and information than ever before, said Samuelson, who also serves as chief strategy officer for Move Inc. “Today’s historic and collaborative recommendation by the NAR board empowers us to further expand and enrich the consumer experience on realtor.com and its mobile applications with greater breadth of content, and to do so with our continuing commitment to the highest level of quality and accuracy for both the real estate community and consumers.”
Want to learn more?
- Read NAR's Q&A page (July 31, 2013)
- Read REALTOR® Magazine article's NAR Directors 'Green Light' Realtor.com® Expansion (July 25, 2013)
Correction: This article incorrectly stated the REALTOR® brand value as $4.5 million. The correct brand value is $4.5 billion. The article has been revised to reflect the correction.