At Redfin, we’ve long been opposed to dual agency, where the same agent represents both seller and buyer. This hasn’t always been an easy call because in some ways dual agency is more efficient. But it’s hard to represent both sides in a negotiation simultaneously, and the big problem is that it encourages the listing agent to market the property selectively to his own clients rather than broadly, to every possible buyer.
All the games that agents play with inventory were supposed to end now that that the DoJ settlement with the Realtors is being enforced. The settlement requires listing agents to publish to the web all the information about a listing that could be disclosed to a client in person. The loophole in the settlement is that the listing agent can require other brokers’ websites to register users before showing the listing, and to validate their email address.
In Long Island, where dual agency is common, a whopping two thirds of all listings on the market now require Internet visitors to register before seeing the address. The form New York agents use to list properties online includes a field indicating whether the address can be displayed without registration; for 66% of listings, the agent requires registration, overriding the default.
And overriding the default is definitely not in the best interests of the listing agent’s client, the seller. On our website last week, New York listings that freely publish their address got 42% more views than listings that require registration. If the seller discovers a registration requirement, he can ask the listing agent to remove the registration requirement, but most never find out: the Multiple Listing Service of Long Island doesn’t require seller notification or permission.
Why would a listing agent want to force Redfin to register you as a user before we can show you a listing’s address? Everyone knows that the vast majority of consumers don’t want to register, because most real estate websites are so spammy. And it has become increasingly clear that a web page requiring registration is invisible to Google — the Great Traffic Director in the Sky — whose indexing robots have no password, and no way of determining the addresses of these listings.
Perhaps some agents are old-fashioned and just don’t like listing information out on the web. Others want to protect the privacy of movie-star clients.
But withholding the address can be part of a bigger game to build the listing agent’s business, not a fiduciary duty to act in the best interests of a client. Any book on how to get your start in real estate begins with the advice to control inventory so you can attract buyers. “Listers,” the saying goes, “last.” It’s a big advantage if you can tell buyers about homes they can’t easily find on the web.
And by promoting their own listings to their own buyers first and foremost, listing agents hope to double their fee by representing both buyer and seller in the same transaction. Recently, we’ve seen this happen most often with REO properties, which have been in high demand.
And it’s not just the gangs of New York that are doing this. In San Diego, where dual agency is much less common, more than a quarter of all home-sellers still do not publish basic information about their listing to the Internet. Here’s the break-down of San Diego-area listings in our database as of this morning:
- 73.8% are publicly visible, with no registration required
- 11.3% require registration to see the address; here, unregistered users cannot even see the property on the map
- 2.6% require registration to see the listing at all
- 12.3% agent-only, where even a registered user cannot see the listing via the Internet
And in San Diego, listing clients who don’t freely publish their address pay a steeper price: public listings get 110% more views than listings that limit the address to registered users.
What’s astounding about the San Diego data is that 12.3% of clients don’t publish their listing to the Internet at all; yes, because of the DoJ settlement, this requires seller permission but a listing agreement is so complicated that we wonder if the seller signs this permission away without even realizing it.
Now some agents will respond that showing a very high-end home to every Tom, Dick and Mary on the web won’t contribute one whit to an actual sale. But especially now, when so many high-end buyers are using the web to shop from overseas, it’s hard to believe that 1 in 8 home-sellers are willing to take that chance. As of 2007, the California Association of Realtors estimated that 72% of consumers start their home-search online.
Of course, there’s a precedent for this. Back in the ’90’s, investment banks used to sell IPO shares to their cronies in exchange for a promise that the cronies would sell the shares back through the bank, doubling fees. This hurt the IPO client, because the stock wasn’t marketed to everyone for the highest possible price, but only to a particular type of buyer, one in fact who was less desirable than other clients. The bankers who did this faced criminal charges.
Today, nobody is going to jail over a withheld address. But we wish that more listing agents, and more sellers, would publish every address free and clear. And we wish that the MLSs would just do away with registration requirements altogether.
(Photocredit: Oldvidhead on Flickr)