Market Leader's RealEstate.com play: Welcome to Crazy Town

I am not a black and white person. I try to see the complexity in most things and work through it. I am also slow to anger. But I am angry now. 

The opinion I put forward below is strong. I welcome yours.

Market Leader, the software company previously known as HouseValues.com, bought the realestate.com domain from LendingTree about a year ago.

This week, they made some noise about what they’re doing with it.

In short, they are raising a giant middle finger to MLSs, the spirit of IDX and, most significantly, to operating brokers.

Let me break this down for you:

  • RealEstate.com operated as a brokerage when it was owned by LendingTree. They had several physical offices and practiced real estate. They were, on paper and in practice, a real estate brokerage.
  • When Market Leader bought the domain, they also acquired RealEstate.com’s brokerage licenses.
  • They have used these licenses to get IDX feeds from over 150 MLSs. But they evidence no plans to operate as a real estate brokerage. They are, seemingly, a “paper brokerage.”
  • On the IDX-powered RealEstate.com, Market Leader (quoting their press release) “features only one real estate professional per market area” who gets the business generated from these listings. Market Leader makes its money (again, from the press release) “via an industry-friendly flat-fee referral model.”

So, you have what I’m calling a “paper brokerage” leveraging IDX to grow their “lead-to-close marketing system.”

It gets richer:

Unlike Zillow, Trulia and Realtor.com, which have spent gazillions negotiating for voluntary access to listings from MLSs and brokers, Market Leader, by virtue of its brokerage licenses, simply grabs the IDX feed.

If you’re a broker, you can pull your listings from Zillow, Trulia and Realtor.com at your discretion (as some have recently). But if you’re a broker and you want to prevent your listings from being used on RealEstate.com, the only way to do that is to withdraw from IDX altogether, thus cutting off serious local marketing power and your ability to display other brokers’ listings on your own company website.

Moreover, because brokers have successfully pressured Zillow and Trulia to make their listing displays more broker/listing agent friendly over the past year, the branding/attribution/clicks they’re getting on the IDX-powered RealEstate.com is actually significantly less than what they get on the “aggregator” sites.

Finally, it should be noted that entities like Century 21, a company that is much more clearly “in the real estate business,” than Market Leader got denied from simply indexing IDX feeds from their operating brokers because they, as a franchisor, were not legal “Participants” in the MLS.

Yes. It’s not just you: we’ve just entered Crazy Town.

But it gets weirder. Say you’re a broker and don’t like this. You raise hell. Fire off a cease and desist. Sue.

Forget it. Remember that DOJ settlement? Unless you want the feds on you again, you don’t really want to try limiting access to the MLS based on what a “brokerage” is or isn’t.

In fairness to Market Leader, I should note that this business model is not new. Companies like Sawbuck and Estately have IDX-powered websites but operate largely on a referral basis. But RealEstate.com is at a different scale.

Market Leader’s message in this announcement is odd, too. There’s an arrogance here that adds to the flagrancy with which that middle finger is raised. Consider this quote:

“We are excited to launch RealEstate.com as the only real estate site dedicated to helping brokers and agents build relationships with home buyers and sellers.”

The “only” site? For god’s sakes…

What to do? What will happen? I’m not sure, really. This could start the unraveling of IDX, but that’s unlikely in the short run. It almost certainly will intensify the various murmured plans for broker-owned portals, MLS apostasy and retrenchment.

I don’t like any of it.

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