Here is news coming from the east coast that the State of New York is considering — mind you, just chatting about — regulating online real estate ads placed by agents. The focus is on third party ads such as Zillow’s “Premiere Agent” whereby an agent buys an ad on another agent’s listing. That is, the on line publication/portal,  Zillow or Realtor.com, displays a listing. You would think, or at least I did when I first discovered this process, that only the agent who is actually contractually listing that home would be allowed to advertise next to it, right? I mean, who knows the listing better than the actual listing agent?

Wrong: any licensed agent can buy the spot for lead generation.

I learned of this process when I first started writing about real estate listings at D Magazine. I’d surf the web looking for homes, amazed at how many beauties I could find out there. I’d find one, then move over to see who the listing agent was to call for more information and photo permission, etc.  Nine times out of ten I called someone who was not listing the house, and knew nothing about it for my editorial purposes. Surely they were sorely disappointed I was an editor, not an online millionaire from New Zealand wanting to invest in Dallas real estate. This bugged me — because I’d have to scroll forever to find the actual agent — until I learned what was going on. Right from the getgo, I said, I don’t think this is fair to the consumer. If they are really interested in a property, why shouldn’t they or their agent have direct access to the listing agent, not a go-between?

Apparently the state of New York thinks the same thing. (more…)

Are Zestimates an invasion of privacy?

Back in May, Zillow was sued by several flippers in Chicago who were annoyed that Zestimates were undervaluing their flips (likely because the system hadn’t caught up) and bringing in bottom feeders using Zestimates as holy writ on appraised value and therefore purchase price.

In my May coverage, I noted that Zillow seemed to have an easily winnable case because Illinois law makes exceptions for using an “automated valuation model.” Simply, because it’s an algorithm analyzing data and not someone physically evaluating a property, it’s OK.  This morning, U.S. District Court Judge Amy St. Eve agreed with me when she dismissed that count of the lawsuit with prejudice (haha). Note: “with prejudice” means it can’t be tried again … it’s done.

However she also dismissed counts II-IV without prejudice, meaning they could be tried again, even though she ranks the odds of success as slim.

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This statement just came over from Zillow. The real estate search giant says it won’t pursue legal action against Kate Wagner and the McMansion Hell blog, but Wagner agrees not to use Zillow photos moving forward. 

“It was never our intent for McMansion Hell to shut down” they say. Well, when a billion dollar company threatens you with a cease and desist, think you just keep on publishing? 

Bad PR move on Zillow to send Wagner that letter. Good move to send out this notice.

Hello, please see below for a statement from Zillow.

We have decided not to pursue any legal action against Kate Wagner and McMansion Hell. We’ve had a lot of conversations about this, including with attorneys from the EFF, whose advocacy and work we respect. EFF has stated that McMansion Hell won’t use photos from Zillow moving forward.

It was never our intent for McMansion Hell to shut down, or for this to appear as an attack on Kate’s freedom of expression. We acted out of an abundance of caution to protect our partners – the agents and brokers who entrust us to display photos of their clients’ homes.  

Emily

EMILY HEFFTER 
Public Relations Manager 

P 206.757.4439 
M 206.850.5970 

 @EmilyHeffter

Update, 6/29: I know what it feels like to be legally bullied, and it is scary as hell. I have just heard that the Electronic Frontier Foundation (EEF) is now helping Ms. Wagner! 

If you have wondered what has happened to the hilarious and often irreverent blog, “McMansion Hell,” that we have linked to on a few occasions, you’ll have to wait for the book*. McMansion Hell temporarily shut down after the founder, a 23-year old grad student at Johns Hopkins, got a cease and desist letter from none other than Zillow!

On Monday, Kate Wagner, a John Hopkins grad student focusing on architectural acoustics, found herself staring down the legal letterhead of a cease and desist order. In her spare time, she runs a popular blog, McMansion Hell, which skewers the trend of mass-produced suburban mansions. Posts on the site featured promotional shots with amenities like “doors to nowhere” and “compulsory chandeliers.” Real estate aggregator Zillow was not happy when it noticed she was using photos from its site. Wagner posted a picture of the order to her Twitter account and has since taken down the site while she seeks legal counsel.

Wagner started the blog just last year, and amid the ever-escalating obsession of Americans with real estate, it has grown and proliferated and been featured/linked to from many huge eyeball-reading sites such as Business Insider, The Independent, and Huffington Post.  Our tag line, for example, is “The people who brought House Porn to the Bible Belt.” Wagner’s is “If you love to hate the ugly houses that became ubiquitous before (and after) the bubble burst you’ve come to the right place.”

McMansion Hell was a cleverly written blog that mixed sarcasm, internet/millennial lingo, and erudition into commentary all superimposed digitally onto real estate listing photos; sometime the front of a house, often the interiors. There was copy, too.  She created a whole section of homes that are “Certified Dank™” (Texas has 3), her collection of the worst of the worst or “fugly”. Knowing how long and hard we work here at CandysDirt.com to produce quality content, I am sure Kate spent hours upon hours at her laptop.

Alas, many Texas homes have been featured on the site.

It is interesting that Zillow, arguably the biggest, most popular and influential real estate website on the planet, sent the cease-and-desist to someone making $22,000 off her blog. Because Zillow makes all its revenue and builds its business model off of using photos provided to it for free from MLS feeds across the country.

Of course, it has permission to do so, which is Zillow’s “rational” for the cease and desist:

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Editor’s Note: Jon and Candy are in Denver, at NAREE, and they are hearing a LOT about Instant Offer, Open Door, and other institutional iBuyer platforms. Homevestors, for example, told them they won’t sell a house to someone who has not physically seen it. Full deets next week!

By Alex Doubet
CEO and Founder of DOOR

Alex Doubet

There is a cottage industry in the world of real state agents of generating an uproar over the continued march of innovation. This cottage industry complains about innovation in general, and the effects of the internet on the brokerage space, specifically. The recent announcement of Zillow Instant Offers (ZIO) moved that cottage industry into full-tilt hysteria.

ZIO is nothing more than a slightly different iteration of the business model pioneered by home buying companies such as HomeVestors (of “We Buy Ugly Houses” fame). Opendoor is another recent entry into that same space.

Zillow recently rolled out ZIO as a product to connect homeowners on their web portal with investors. Real estate agents immediately screamed about Zillow “bypassing agents” and “taking our data and profiting on it.”

First things first, listing data does not belong to agents.

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You know what we are talking about: new companies (called “Platforms”)  like Opendoor and now OfferPad (co-founded by a former top producing realtor!) are being embraced by Wall Street as a way to “drive Americans to move more frequently, resulting in more home sales.” Stimulating interest in real estate. Glory be, sounds like the pre-crash days. Inman’s Teke Wiggans got his hands on an internal report from an investment banking firm called Evercore ISI. The research report, created for investors looking to maximize return for institutional investors, is fairly bullish on what they have dubbed the “iBuyer” platform. 

Such companies, which the report terms “iBuyers,” use new technology to make quick offers on homes and close in days. They could also chip into real estate commissions and help homebuilders move their inventory faster, the authors wrote.

The report underscores growing enthusiasm for iBuyers on Wall Street. Institutional investors are funding iBuyers or setting up their own, and their interest in the business model helps explain why Zillow Group created Zillow Instant Offers, which is essentially a marketplace for iBuyers.

The group is encouraging investors to familiarize themselves with this new business model, saying these iBuyers are likely to garner increased attention over the next few years.

“If successful, these iBuyers could improve liquidity in the housing market by reducing friction costs, and drive increased housing turnover (existing home sales).”

Which, they claim, will lead to real estate economic nirvana for remodeling, moving, etc. Great for everyone, in fact, except the mortgage broker and Realtor. (more…)

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. (more…)

Real Estate aggregation and data website Zillow.com is in hot water in Illinois.  Zillow has been successfully sued in the past for using photos without permission. They’ve been hauled to court over low Zestimate “appraisals” by sellers who’re listing well above the estimates. Even at the other end of the spectrum, they’ve been accused of inflating prices which resulted in some market froth.

The latest suit, seeking class-action status, was filed on behalf of builders who’re trying to sell homes that Zillow persistently undervalues.  This causes prospective buyers to low-ball the homes using Zillow as “proof” their offer is more realistic than the seller’s price.

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