Compass CEO Robert Reffkin isn’t hopeful that New York brokerages can mount an effective defense against StreetEasy, which is poised to make bank on its mounting influence with buyers.
“They’re much better than our industry,” he said Wednesday, speaking at an event hosted by the Real Estate Academy. “We as an industry can’t act that fast, because we’re not one person. We’re a collection of brokerage firms who aren’t able, because of lack of trust…… to move quickly. What takes us four months takes them a day.”
“I don’t see how the brokerage firms are going to be able to respond quickly,” he said.
Reffkin was referring to Zillow Group’s rollout of its controversial pay-to-play premier agent feature on StreetEasy Wednesday. The feature directs consumers looking at a listing to brokers who advertise on the site, rather than to the exclusive listing broker for the property. It’s been Zillow’s greatest source of revenue by far, bringing in over $600 million last year.
While Compass isn’t dictating how its agents should respond to the rollout, Reffkin said the industry needs to be cognizant of the increasing power that aggregators yield over the brokerage community.
“As an agent, you have to make a decision,” he said. “By having a [StreetEasy] pro account and taking their links and sending them to your clients, those are two ways you’re paying them. If you’re really concerned about this, you shouldn’t do those things. You should use an alternative.”
[vision_pullquote style=”3″ align=”right”] “It’s like sugar. They’re going to give it to you and it’s going to feel good but then you’re going to realize you’re addicted to it.” [/vision_pullquote]He urged agents to lobby their firms to create an official multiple listings service. It’s shocking, he said, that New York City, the nation’s most valuable real estate market, does not have a centralized system. He attributed the lack of an MLS to the presence of two or three brokerage powerhouses that hold a bulk of the listings.
“The brokerage firms have too much power,” he said, not naming names. “When you have a few companies that have 50 percent market share, that’s too much power. They can effectively say no to anything that’s not going to help them.”
The largest firms in New York, by total dollar volume of listings, are Douglas Elliman, the Corcoran Group, Brown Harris Stevens and Halstead Property. Compass is in fifth place, according to The Real Deal‘s May 2016 ranking.
In lieu of a unified MLS, the city has a fractured system with separate platforms run by private companies that disseminate information from REBNY. Those platforms include services like On-Line Residential and RealPlus, which firms can sign up for. Firms like Elliman and Corcoran also have their own proprietary systems, dubbed Limo and Taxi, respectively.
There were some unsuccessful attempts to start an MLS. When, in 2000, Elliman and Corcoran announced plans for one, a a group of smaller brokerage firms expressed concern that the two firms would own too much of the system and an agreement was never reached.
Reffkin cautioned that if aggregators become too large, they can begin to charge more extreme prices for advertising or even charge to post listings on their sites.
“The aggregators are going to try to make and more of your money every year,” he said. “It’s like sugar. They’re going to give it to you and it’s going to feel good but then you’re going to realize you’re addicted to it. It’s the only way they can make money, other than charging agents for taking their clients and selling it back to them.”