Redfin CEO Glenn Kelman lambasted the practice of letting buyers’ agents advertise on other brokers’ listings as a “fundamental misdirection” on Tuesday.
During a workshop on competition in real estate convened by the Federal Trade Commission and Department of Justice, Kelman said the practice is a cash cow for listings portals but is confusing to consumers.
“There’s now a multibillion[-dollar] industry based on misdirection,” Kelman said. “Redfin makes money from this, Zillow makes money from this, almost every website makes money from this.”
The comments come amid fierce debate, in New York and across the country, about the ethical and legal implications of such agent advertising, particularly by Zillow Group and StreetEasy.
According to Kelman, agents in markets like Boston and San Francisco have been known to withhold listings from the local MLS because they’re convinced the listings will be distributed to third-party websites that don’t feature their names prominently.
“This is not picking on one website or another, it’s our website, too,” he said. “We want [multiple listing services] to modernize the attribution system so the listing agent has an incentive to post listings immediately to every website. I don’t know that FTC or DOJ has a role in this.”
Kathleen Philips, Zillow’s chief legal officer, spoke before Kelman’s remarks. But she said it would be impossible to eliminate consumer confusion.
“The way organized real estate works is confusing,” Philips said, noting that consumers are confused by commissions in particular. Zillow has empowered consumers by providing access to data about the market that lets them make more informed choices. “Was it more straightforward when [consumers] saw a yard sign? Yes. But would you trade the opportunity for a consumer to do all their research on their own and seek out this information to go back to that day? I wouldn’t.”
She said consumers on both sides of a real estate transaction want to be represented by agents. “That being said, consumers are doing a lot more of the work themselves up front,” Philips said. “There’s heavy competition in the marketplace to represent those consumers.”
“Could I envision a model in which we let agents bid for seller listings?” she said. “Maybe.”
While there may be more sites displaying listings, compared to 10 years ago, large companies are the beneficiaries of the most consumer eyeballs, said Luke Glass, executive vice president of industry platforms at Realtor.com.
Kelman said he views advertising on listing portals as a “tax” that has to be paid. “Every dollar we have to pay the portal, is a dollar we have to charge the consumer.”
In his opening remarks, FTC Chairman Joseph Simons said even if changes in the brokerage industry are driven by consumer demand, it’s imperative to understand the marketplace dynamics. “If necessary, we may need to recalibrate our expectations about what’s important to consumers,” he said, “and, in turn, allow that to shape both our consumer protection, and competition efforts.”