Will new virtual firms pave way for full MLS?
With online brokerages now allowed to advertise other firms' exclusives, some say listing sharing is next December 01, 2009 07:00AM By Candace Taylor
Leigh Zaph is planning on registering his three-person firm, Manhattan Homes, as a Virtual Office Web site.
A new breed of online brokerage is springing up in New York, altering the landscape of real estate sales in Manhattan and worrying traditional firms, who fear the changes may hurt their business.
In the past, New York firms have contended with Web aggregators like StreetEasy and Trulia, which gather and post information on local brokerage listings.
But thanks to a recent settlement between the federal Department of Justice and the National Association of Realtors, the Real Estate Board of New York is now sharing all of its members' listings directly with online brokerages, known as "Virtual Office Web sites."
These VOWs, as they are called, allow consumers to view those listings -- including those from other firms -- online.
Experts say the change will have far-reaching consequences for the industry in the coming year and beyond. Some believe VOWs could also pave the way for a comprehensive Multiple Listing Service, which has long been resisted here.
Eric Gordon, the managing director at Realplus Online Listing Exchange, a shared listing database that's the closest thing New York has to an MLS, called the emergence of VOWs in Manhattan "huge."
"In a lot of ways, it levels the playing field between the small and large firms," he said.
The change stems from a lawsuit filed by the Department of Justice against NAR in 2005. The suit alleged that NAR's policy of allowing brokers to withhold listings from VOWs violated antitrust law because it stymied competition.
A 2008 settlement between Justice and NAR requires that VOW users be able to choose from the same database of available homes as customers at traditional brokerages. Because VOWs' business model is to operate online rather than from brick-and-mortar offices, the settlement said, customers may browse through all of the listings a flesh-and-blood broker could access for them in person.
In essence, "the law views a VOW as the same as a storefront," explained Steven Spinola, the president of REBNY.
VOWs operate by posting listings on their Web sites and then acting as the buyer-side broker when a customer inquires about a property. Because they operate mostly online, they are able to do business cheaply, often charging customers smaller commissions.
At Manhattan's first VOW, which is known as the CBS 2 Real Estate Market, visitors to the site, CBS2REM.com, see a detailed map of the New York area. They can click on a neighborhood and scroll through a series of brightly colored sales and rental listings, including exclusive listings from firms like Prudential Douglas Elliman and the Corcoran Group.
When browsers see a home they're interested in, they enter their contact information. Within a few days, an agent with Property Strategies Group, the licensed New York brokerage associated with CBS, will call to set up an appointment and show them the home.
Because Property Strategies Group is a licensed brokerage and REBNY member, all the listings come directly from REBNY's internal database, known as RLS.
"When the consumer signs in, they can see what the brokers see," explained Diane Levine, an agent at Sotheby's International Realty and a member of REBNY's board.
By contrast, traditional Manhattan brokerages may only list their own exclusives on their Web site. If they want to receive REBNY's listings, they must first become a VOW, a process that involves paying a fee to REBNY and requires customers to register to log on to the site.
Though VOWs are now common in other regions, CBS2REM.com, a partnership between WCBSTV.com and LMG Digital Media that launched in August, is Manhattan's first. However, many other local brokerages are expected to follow suit.
Kathy Braddock -- a founding partner of Charles Rutenberg Realty -- said Rutenberg plans to become a VOW, in addition to continuing to do business the traditional way.
"I think everybody will," she said. "It's the way the rest of the world works."
The likely preponderance of new VOWs represents a vast change in how the real estate business works in Manhattan.
"Up until this point, you've never been able to market another firm's exclusives in any shape or form," Gordon explained. "[Now], when a customer goes to a firm's Web site, they can see all of the industry's listings … as opposed to just that firm's."
Experts say the change could open the door for a true MLS in Manhattan. While the Manhattan Association of Realtors currently maintains an MLS, it has only a small number of the city's listings. Many Manhattan agents have long opposed an MLS because they believe sharing listing information would mean losing business to competitors.
"MLS -- agents in Manhattan are scared of that name," said Derrick Gross, a business analyst at StreetEasy. But Gordon said the increasing transparency provided by VOWs could lay the groundwork for a shared listing database.
Now that VOWs are on the scene, he said, many New York firms have been asking him for software for an IDX, a feature traditionally offered by MLS databases that allows brokerages to voluntarily post listings on other firms' sites. Unlike with VOWs, visitors don't have to sign in to see IDX listings.
The IDX concept "is going to grow in popularity now that the concept of one firm being able to market another firm's exclusives is something people are willing to accept here," he said.
Small firms say becoming a VOW will help them by allowing customers on their Web site to view all of the industry's listings, not just their own.
"It's great," said Leigh Zaph, president of three-agent firm Manhattan Homes, which is planning to become a VOW. "It allows every broker to be able to present their customers the full database to search."
But other brokerages, especially those that have large numbers of exclusive listings, stand to lose their competitive advantage.
"It doesn't benefit the large firms," said Gordon. "If it was up to them, [VOWs] wouldn't be here."
Brokers also fear that VOWs will make it harder for them to do direct deals. "These people are not being paid a salary," Braddock said. "They eat what they kill."
Still, even with VOWs, the Manhattan market has a long way to go before it becomes fully transparent.
Earlier this year, ZipRealty, the nation's largest VOW, approached REBNY for a listing feed for its Web site, but ultimately decided against it.
Pat Lashinsky, the CEO of Zip Realty, said because REBNY listings aren't regulated by the same strict rules as an MLS, the data wasn't as comprehensive as listings in other areas.
"Manhattan is a really unique market relative to the rest of the country," he said. "We were able to get much better information and tools in Long Island and Westchester."
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Comments
New York City is too exnsive for no reason.
Manhattan is too expensive to rent or buy an apartment. These brokerage firms, realities are evil people. These over priced apartments and homes in New York City is a form of legal discrimination and racism. In Washington DC you can rent a very nice size 1000 sq. foot apartment for around $1500 - $2000. In New York City, the same apartment will be about $4,500 -$10,000 a month. I boycott all these brokerage firms. My mother said it best, if it doesn't come with a backyard and picket white fence. Then its not a good deal.
Comment #1 Posted By: New York City is too exnsive for no reason. 12/01/09
Anonymous
Overpriced apartments are in NO WAY discriminatory. There is no protected class (Federal, State, or City) that covers this. In fact, "amount" of income, affordability, and credit history are about the only things that you can legally discriminate on. You live where you can afford to live! I live in the boroughs as I can't afford Manhattan, but I don't feel discriminated against or the need to complain about it on a public REAL ESTATE website.
Comment #2 Posted By: Anonymous 12/01/09
Anonymous
People have the tendancy to make silly comments b/c they simply don't "KNOW" Manhattan! They have lovely picket fences down South please stay there.
Comment #3 Posted By: Anonymous 12/02/09
Malcolm Carter, Service You Can Trust
When I moved my real estate business from Washington, D.C. to Manhattan three years ago, I wasn't surprised by the lack of an MLS such as the one that helped my D.C., Virginia and Maryland clients. But I was stunned to see how much of the brokerage process--whether the lack of lock boxes and of keys at concierge desks or of enforcement of ethical behavior--ill serves my customers and clients here. Based, I think, on avarice (e.g. "direct" deals), much of the system is embarrassingly antiquated, causing inefficiency and reducing much of a broker's efforts to opening doors, rather than taxing to a broker's brain as happens in D.C. and elsewhere through the negotiation within hours of both offer and and signed contract without a lawyer's assistance. As for comparing the cost of apartments in D.C. and Manhattan. The commenter could make his point even stronger by contrasting rents in Manhattan and, say, Detroit. Silly!
Comment #4 Posted By: Malcolm Carter, Service You Can Trust 12/02/09
Anonymous
New models of doing business spring up all the time ;it will ultimately be the consumer who decides which models will succeed.
Comment #5 Posted By: Anonymous 12/03/09
Anonymous
Rumor has it that Redfin from Seattle is looking to come into New York and also recently I heard that Anthony Longo who owns CondoDomain.com (a nationwide firm based in Boston) and discount VOW broker has moved to New York which obviously makes me think that they are going to open here as well. Here we go, this should be exciting. Agree that new business models will continue to spring up and it will be the consumers who ultimately choose to see what sticks and what doesn't.
Comment #6 Posted By: Anonymous 12/06/09
Anonymous
Here comes Redfin...
Comment #7 Posted By: Anonymous 12/07/09
Anonymous
Seattle and Boston? Manhattan is a completely different animal! They can try, but will not be successful!
Comment #8 Posted By: Anonymous 12/09/09
mhg
I think that the Law of Unintended Consequences might come to apply here. The last thing that real estate companies want to do is to level the playing field between large and small firms. Large firms spend a great deal of money (a) training their new agents (b) advertising and (c) leads. What these types of rulings will precipitate is a national MLS from the large firms that only include their own listings. The market margins are getting smaller and smaller and some smart guy in Parsippany will come up with the idea of creating their own proprietary MLS that has their own listings, to be shared by their own agents, for their own clients. The large companies have the majority of the inventory. If they were to “take their basketball and go home” the game is over. That will be the end of small firms. And of NAR. The number one reason licensees join NAR is for the MLS. They have been waiting for the investment to be worthwhile and the process to be effective. All the pieces are in place now. Just wait.
Comment #9 Posted By: mhg 12/10/09
Anonymous
Three words set us apart from the rest of the country and will continue to do so ..."co-op board packages" None of the people quoted in this article have a track record with board packages. When the clients of the "vows' starting failing boards en-masse or are in contract default because of missed deadlines, the will soon be out of business. Further, buyers in manhattan fall into two categories (1) those that do no have time to do it themselves and use a broker that a friend or fmaily memeber had a good experience with ; or (2) those that have the time to do it themselevs and do so via streeteasy, property shark or nytimes.com. the people in category (2) will not use some un-tested newbie, not happening, no way they are too samrt for that. Further, very few people do direct deals any more nor have thay done so for about 10 years or longer, so that is a non-issue, everything is a co-broker these days. these "vows" are just another "get rich quick' scheme because after all making tons of money in real estate is simple, right ?
Comment #10 Posted By: Anonymous 12/16/09
Anonymous
What's even better about the vows is that it will foster direct deals. These vows will send the info to their clients, their clients will think they will get a better deal if they go direct, will go to the listing company's web site and contact the broker directly without mentioning the vow. Thank you Mr. or Ms.Vow.
Comment #11 Posted By: Anonymous 12/16/09
Anonymous
It is absolutely amazing to read some of the comments- really demonstrates how truly behind in real estate nyc is compared to the rest of the US. The subject of the article (vow's) is TEN YEARS OLD EVERYWHERE ELSE!
Comment #12 Posted By: Anonymous 12/22/09
Anonymous
To Comment #11: If you lose a customer to another firm they were never your customer to begin with. VOW's and IDX's exist in every other state. Get over it!
Comment #13 Posted By: Anonymous 12/23/09
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Comment #14 Posted By: bad credit loans 12/30/09
Anonymous
Why don't people sign their names?
Comment #15 Posted By: Anonymous 02/22/10
Marilyn Harra Kaye
VOW is the name of the lawsuit that The justice department sued NAR for to have more transarancy with listings on IDX the first Virtual ON LINE WEB listing service which has been on Realtor.com for almost Ten years with the National Association of Realtors, the largest Realtor membership in the world with over one million members worldwide. Realtor.com is the largest web site in the world. Manhattan has NAR membership with BMAR and MANAR is also in Manhattan. We at MLBKaye International Realty have three memberships, BMAR with NAR, Luxuryrealestate and REBNY...in Manhattan we feel, as brokers, and to service our sellers and buyers, these 3 memberships are important to cover global, luxury and local markets. IDX was the first VOW and what everyone thinks in Manhattan VOW is the first is wrong. Manhattan is very provincial and it takes time for change here. An example is co-ops: which were the first form of group ownership with shares in two buildings on East End Avenue and a small building in the sixties in Manhattan. It took almost forty years later for the first condo in the village to come to pass. While Manhattan is more traditional and it takes more time o make changes.if you want to list with a MLS, currently only BMAR and MANAR can currently do that for you in Manhattan but a great advantage it will go worldwide with Realtor.com, the largest website in the world. Marilyn Harra Kaye, President. MLBKaye International Realty P.S. You can have IDX immediatel as well.
Comment #16 Posted By: Marilyn Harra Kaye 02/22/10
Anonymous
Manhattan real estate brokers and agents can take advantage of a wide range of programs, services including IDX and VOW available to members of the National Association of Realtors.
Comment #17 Posted By: Anonymous 02/22/10
Anonymous
Yes but two points 1. A vow is only good if someone gets to your website 2. In order to see the listings a person has to register with their email and name and for some vendors a ton of personal information. Do you think clients will go for this?
Comment #18 Posted By: Anonymous 03/25/10
Anonymous
Vows or MLS however you want to put it is in the best interest of the consumer. My website gives my customers the opportunity to make a decision as to what apartment they want to see and they can go through all of the listings to make the choice. The large companies are not liking this kind of free choice. They dont really want to co-broke their listings and they dont really want to rent or sell anyone elses listings outside of their company listings. THEY ARE PIGS AND HAVE KEPT THE CONSUMER AND THE WHOLE NYC REAL ESTATE IN THE DARK for years. Its finally the small company's turn to show off lots of inventory. GOOD FOR YOU NEW YORK STATE. Its not all about PROFIT for everyone but if you are a big PIG company that has millions of square footage to pay off every month then its about profit. This is why the big companies dont like sharing their listings and are actually told try not to sell anyone elses listings. Steer the customer away from the other listings.
Comment #19 Posted By: Anonymous 07/03/10
Anonymous
By the way, almost 90% of all listings sold are through Co-broking. So big companies, wake up and smell the recession. This is the nature of what the VOWS does. It lets the consumer decide who to buy from. If your customer wants to see other listings, then why not show them.
Comment #20 Posted By: Anonymous 07/03/10