There is some additional news and a bit of a sidebar to the story about the
60 Minutes feature on Redfin a week or so ago and the strong
reaction of the National Association of Realtors to that story.
The run-up can be read
here.
First the sidebar. This really has nothing to do with the CBS story (well nothing
overt at least) but the controversy provides a neat little "peg"
as they say in the news business to hang a new Redfin story on.
It seems that the latest feature of some on-site real estate sites is
consumer
reviews. Persons who visit a house or claim to have done so are invited
to rate that house. When we first heard about this a few months ago our only
thought was "Oh, oh." It seemed like a situation that was ripe for mischief
in all directions. A seller could log on or have an army of family and friends
do so and wax enthusiastic about a property. On the other hand, an agent with
a competing property or a vindictive neighbor could do a lot of damage with
a few malicious comments. The danger was far more in the negative direction
than the positive. As Anne Kates Smith writing in Kiplinger.com said about the
innovation "one person's backyard "private oasis" is another's "unsightly swamp"
and advised that these ratings should be viewed with a more critical eye than
directed toward opinions about a TV or a toaster."
It seems that Redfin, which had not been mentioned in the Kiplinger article,
had thought reviews would augment its site as well but did it a little differently.
The company employed a team of 15 freelance reviewers who toured open houses
in Seattle and San Francisco and then posted comments about the properties.
According to Realtor Magazine Online, "Although some reviews were flattering,
others were scathing."
Redfin Seattle is a member of the Northwest Multiple Listing Service which
covers the western part of Washington State. Northwest was not, to say the least,
happy about the situation. Although action by the MLS apparently happened in
April it just made Realtor Magazine Online last Monday. Citing that such reviews,
regardless of their content, are not allowed by the MLS under
a rule preventing brokers from advertising details of homes listed by rivals,
Northwest MLS fined Redfin $50,000, a fine Redfin is appealing. Some agents
also independently complained to the MLS that the reviews made it harder to
sell their homes. In addition to putting the kibosh on the reviews, the MLS
also told Redfin to stop posting information about the number of days a property
has been on the market, saying that such information without explanation could
be "misleading."
Realtor Magazine quoted Redfin Chief Executive Glenn Kelman as saying he was
disappointed by the disciplinary action. "The goal of the reviews,"
he said, "is to disseminate different perspectives on homes from what one might
receive from a real estate practitioner."
Redfin has also suspended its reviews in the San Francisco area even though
that is out of the jurisdiction of Northwest MLS.
We found that ZipRealty at least is still inviting comments on its MLS listings.
Readers are invited to rate properties from one to five "houses"
overall and on curb appeal, interior appeal, and neighborhood and to make written
comments as well. After looking at around 100 listings in several locations
we found three reviews on the "house" scale and no comments. As
all three were for houses in the same price range in the same town it is probable
that one person had rated all of them. Two of the three were positive.
We don't know whether other local MLS services are more accepting of
these reviews than Northwest or just haven't caught on yet. Or maybe Redfin
just raised its profile too high to get away with everything it wanted to do.
Since the initial 60 Minutes story CBS and NAR have traded shots several times.
After the initial criticism by NAR, CBS responded on May 18
by saying they thought the story had been fair as it cited the advantages offered
by traditional agents and interviewed one. The network said that they had summarized
the Department of Justice lawsuit against NAR and the latter's response so as
not to make the story solely into a legal one and that they had not interviewed
any DOJ representatives just as they had not interviewed anyone from NAR. CBS
also charged that there is no good, reliable data on actual commission percentages
to prove or refute the 6 percent commission claim and that
their characterization of NAR as the "governing body" of the real estate industry
to which NAR had strongly objected, mirrored both DOJ and NAR's own descriptions
in the court case.
The letter, signed by Richard Bonin, Producer of 60 Minutes, said that the
salient issue regarding MLS is not the sheer number of multiple listing services
(which NAR said indicated competitiveness) but the extent to which NAR policies
govern the conduct of those boards. In conclusion Bonin offered to affix an
editor's note to the CBS website amplifying on the commission and governance
issues.
NAR fired back the next day, claiming that the statement about governing the
industry arises out of the NAR code of ethics which is unique in the business
world because it "does indeed address business practices as they affect
relations between REALTORS and with consumers." Stephen Cook, VP of public
affairs and strategic planning for NAR asked, "Does the National Association
of Broadcasters "govern" CBS? Perhaps "represents" would
be a more accurate term."
Cook asked for several revisions to the editor's note presenting its
own rationale for commission figures and information that Realtors rather than
the NAR control multiple listing services because they own them.
The changes requested by NAR have not been made but, before the comments section
was closed (apparently it is always shut down 72 hours after the broadcast)
viewers had posted 153 pages of comments.