Greg Hague is a Phoenix-based real estate broker and owner of Real Estate Mavericks. He is also an attorney. He is mad as hell at Zillow and “not going to take it anymore.” So Greg has started an on-line petition, that we are including here, in case you want to sign it. There are already A LOT of signatures, at this printing more than 12,000.
We told you about Zillow’s new “Instant Offers” program, an integrated experience which allows sellers to bypass Realtors completely and buy homes online. Certain homes. Instant Offers allows homeowners to receive all-cash offers on line from a group of 15 large investors along with a side-by-side comparative market analysis (CMA) from a local Zillow agent Zillow advertiser.
Many Realtors, like Greg, see the program as an attempt to push them aside, breaking many promises the company has made to steer clear of the transaction.
Though it’s a pilot program in Orlando and Las Vegas, many agents I talk to fear this is Zillow’s next huge march forward in taking real estate sales completely online, perhaps making the real estate agent obsolete. I spoke to Greg late last week, who says he predicted this two years ago:
“I read about Instant Offers and that was totally the last straw, ” ays Greg. “I believe that Instant Offers program has to be stopped. It has to be stopped in Orlando and Denver, it has to be stopped everywhere and the National Association of Realtors (NAR) had damn well better do something about it.”
This is, says Greg, not characteristic of him. He has never been in politics. While he thinks the Instant Offers trend may be putting agents out to pasture, he also thinks this is the worst thing that can happen to consumers. Why?
“Homeowners are getting ripped off, giving up 45% of their equity when they use Instant Offer,” says Greg. “Figure in the risk factors plus closing costs and the offers that are 13% to 18% below market value, which have to be that way in order for them to work on the flip side.”
Companies like Instant Offers and to some extent, Open Door, work by buying homes at highly discounted prices, because they have to generate a large profit to placate investors. Hague and others argue Instant Offers offers zero protection for consumers, who will see home equity dwindle to nearly nothing with such low-ball offers.
“First they charge agents to be on a platform where agents provide information, then they start the “Premiere Agents” program (allowing agents to place ads next to the actual agents’ listing),” says Greg. “Now they are taking a college education away from a kid. This is seriously hurting home sellers.”
This Zillow move damages both realtors and the public, says Greg, who says he is devoting his time to stopping Instant Offers. He plans to collect 100,000 signatures. He is going to print them out take them to NAR headquarters in Chicago and make a lot of noise.
“I’m going to keep on them until we kill Instant Offers,” says Greg, “then with those 100,000 signatures, I’ll have a strong coalition to keep all eyes on Zillow. I will have real power to lobby NAR to keep Zillow in check.”
But NAR says anti-trust laws have tied their hands when it comes to putting Zillow in check. Indeed, government regulations preclude Realtors from having a monopoly on listings, as was settled back in the 2005 NAR/DOJ lawsuit.
But NAR has said in response what plenty of other Realtors already knew — these options are non-starters because they would be illegal under antitrust laws.
“[It] would be unlawful for NAR to discourage its members from using any product or service provider; such decisions must be made independently by brokers and agents,” NAR told Inman when asked if it would comply with a demand made in the “Stop Zillow” petition.
It added that its guidelines for multiple listing services (MLSs) give brokers and agents the flexibility to withhold listings from a third-party recipient. “But, again, they must make this decision independently,” NAR said.
“NAR cannot sponsor or encourage a boycott,” the trade group added in a blog post.
The organization knows from experience what can happen if it tries to knee-cap businesses.
In 2005, the U.S. Department of Justice (DOJ) sued NAR over industry attempts to curtail the content of property listings and control what companies could publish them. Tagged as anti-consumer by the DOJ, the case was settled in 2008.
Perhaps Realtors have more of a beef with U.S. anti-trust laws, i.e. government regulation, than NAR?
Bill Lublin, a broker-owner who has served on NAR’s Risk Management Committee, said that a U.S. Department of Justice (DOJ) investigation would cost associations and members “lots of time and money.”
“Our industry is competitive and Zillow is expert at exploiting that to obtain data feeds from agents, companies, offices and MLSs,” he said in the real estate Facebook group Inman Coast to Coast.
“It would take a firm resolve and the decision of a large group of brokerages not to use that particular portal to begin any sort of trend in the industry, and even then there will be those who see some perceived competitive advantage in remaining as providers of data.”
Of course, there is a vastly different mood in Washington, D.C. now and anti-regulation fever is spreading. Could that fever trickle down to NAR? And at what point does Zillow violate anti-trust laws itself?
“I’m not wanting to take Zillow out of business, or from leveraging their huge power that we gave them, but I want to stop them from online real estate transactions,” says Greg. “Zillow better think twice about taking the bread off the table of the Realtors who support them, and harming and damaging consumers.”
In his Inman column, Zillow Chief Business Officer Greg Schwartz says the company always encourages consumers to work with agents.
“Seventy percent of our revenue is from working with more than 80,000 agents, teams and brokers who advertise with Zillow Group,”
Zillow also reports that Instant Offer is generating significant consumer interest, and at least one agent received a new listing. It has offered no information or stats on how many “Instant Offers” have been accepted and resulted in sales. He says the company comes in peace:
I promise you it’s not because of haste, idealism or lack of care. It’s because we believe change isn’t to be feared but rather directed. We believe we are at the tipping point of an enormous wave of consumer-driven change — again — and we intend to navigate it successfully in cooperation with our agent, broker and MLS partners.
A movement which we call “Integrated Experiences” is sweeping industries, and real estate is no exception. People are looking for easier, less stressful and more integrated experiences — experiences that provide transparency and control, and leverage technology to enable great outcomes. I’m not talking about technology for technology’s sake — I’m talking about responding to real consumer wants. We must, and will, address real consumer wants.
We’ve all watched with interest over the last decade as startups focused on disrupting the real estate transaction launch, and then subsequently fail. But something different is happening in the last couple years.
Silicon Valley has recently invested $1.05 billion into the notion that the real estate transaction will be disrupted by serving sellers in a more streamlined and non-traditional fashion.