The feds are coming, the feds are coming!

Feb 2, 2018 Michael Wurzer


Andrea Brambila from Inman News reports that the DOJ and FTC have been requested to follow up on an earlier review of competition in the real estate industry, especially in terms of consumer and competitor accessibility to listing information. Though the DOJ and FTC haven’t yet confirmed any details, Andrea reports that the DOJ has confirmed a review will be conducted in the spring, which is timely given that the VOW consent decree between the NAR and the DOJ expires in November of this year.

The possibility of federal review probably is scary enough for most people, but then you add on to it wild-eyed speculation by lobbyists such as Daniel Castro of ITIF, a group Inman reports was partially funded by Zillow in the past, and pundits like Rob Hahn, about a federally mandated national listing database, and what was just scary quickly turns into all-out panic.

But let’s step back for a second, and think this through. There are two basic reasons this speculation is a lot of hullabaloo. First, consumer access to listings doesn’t seem like much of a problem today, let alone one justifying federal government spending (and, from the example of the now-shuttered AMP, we can easily see how a bureaucracy like the federal government would require a LOT of money to create a national listing database). Listings are on thousands of web sites, from ubiquitous national portals to thousands of IDX web sites. Second, as Glenn Kelman from Redfin made clear recently, the MLS creates opportunity for innovation and competition from brokers rather than hinders it. Putting these two things together, any review by the DOJ or FTC likely will find that availability of listing information is not a problem needing federal budget dollars to improve.

But, let’s pretend for a bit that the feds were going to fantasize about creating a national listing database. Once they had the database, the first question they’d have to ask is what would be the terms of use for accessing the database? Daniel Castro advocates for “open”, “free” and “unrestricted” access to listings, and cites Britain’s Open Banking APIs as an example of how such a system could work. The problem is that Mr. Castro fails to point out that in “open banking” bank customers strictly control who is allowed to access their data, the data isn’t simply allowed to be used by anyone who might want access to it.

Rob Hahn similarly speculates about a federally mandated national database that is “easily available to all data users, including consumers, Wall Street, government, and academia” but he doesn’t even attempt to address the question of what “easily available” means, including who would authorize that access.

So, the basic question remains, who would authorize access to the listing database and what would be the terms of use required for that access? If we apply the open banking model to real estate, the seller and/or listing broker would be the one to authorize access, which essentially is exactly what happens today when the seller either goes FSBO or hires a broker to market their listing for them. Now, to be clear, I know there are lots of nuances that people will be quick to put forth about whether the seller, broker, etc., should authorize access, but we don’t need to dive into all that here. The point simply is that the fantasy of  a federally mandated national listing database wouldn’t mean wide-open access for anyone to grab the listings and advertise them on any site they want, rather someone would be controlling access to the listings, which is exactly what happens today.

I also understand that improvements can be made to standardize the listings more and make APIs easier and easier to use, but, first, that’s already happening through RESO and, again, that’s not really the point. The point is that, even with the most efficient and standardized API in the world, there are still terms of use and approvals required for accessing the APIs, they aren’t going to be just set out into the wild for anyone to do whatever they want with them. So, in the end, just as I advised MLSs not to be afraid of no ghosts with AMP, I wouldn’t get too stirred up about the specter of federal intervention. Keep an eye out, just don’t get hung-over and fear the worst.

P.S. I also understand that sold and off-market listings present a different case, but that case isn’t terribly controversial, whereas the active listings is, so the above post is only concerned about the latter.