The Real Deal New York

Here’s how New York might change StreetEasy’s Premier Agent

DOS considering new guidance that would impact all real estate advertising online
By E.B. Solomont | June 11, 2018 07:00AM

New York regulators could be require StreetEasy to add a series of disclosures that would tell prospective buyers that they are not being connected to the listing agent.

What will StreetEasy’s lucrative Premier Agent program look like after New York State regulators issue their final guidance for agent advertising online?

An interim opinion letter dated April 2 suggests the platform could be required to add a series of disclosures that would tell prospective buyers – unequivocally – that they are not being connected to the listing agent.

In the three-page letter, reviewed by The Real Deal, the state offers an example of acceptable language: “The Department finds that an obvious hyperlink which appears in close proximity to the named licensees, in a size and font that is not likely to be overlooked and labeled as: ‘A Premier Agent Is Not The Listing Agent, Click Here For More Details.'”

As TRD previously reported, the opinion letter reflects the state’s belief that Premier Agent falls short of “mandatory legal disclosure” requirements. Specifically, a “tip tool” — or hover box that contains additional information — “was not proximate to the agent information, the size was disproportionately small in comparison to the rest of the viewable text, and the symbol did not adequately convey the intended use,” a DOS attorney wrote.

But the broad language in the letter leaves open a real possibility that the state could impose more disclosure requirements for residential agents and brokerages sharing listings online.

The state began looking into Premier Agent last year after a request from the Real Estate Board of New York, which expressed concerns that the program may violate advertising laws.

But sources familiar with the discussions confirmed that the forthcoming guidance will be broader than just lead-generation programs like Premier Agent.

“The letter to them raised broader issues about advertising over the internet,” one source said, referring to REBNY’s March 2017 communication with the state.

StreetEasy’s parent company, Seattle-based Zillow Group, is among the stakeholders who have met with state officials in recent months. Premier Agent is Zillow’s greatest cash cow by a distance, generating over 70 percent of its nearly $300 million revenue in the first quarter.

“We don’t expect the guidance to be specific in any way to Premier Agent or Zillow Group sites,” a Zillow spokesperson said. “We expect it to apply to all real estate advertising online in the state of New York.”

It’s not yet clear what disclosures will be required. One idea that’s been floated, for example, would require websites to disclose the agent’s specific license type (which many major brokerage firms already do) and possibly link back to DOS’ website, where can consumers can look up agent license information.

The interim opinion did not mention IDX, or Internet Data Exchange, the mechanism used by residential brokerage firms to display other firms’ listings on their websites. Zillow would like to see the new guidelines extend to other websites, including those with IDX. But sources said there’s a distinction between IDX and Premier Agent since IDX requires voluntary participation, while Premier Agent doesn’t offer the same opt-in for listing agents.

Regardless, the interim opinion is a political win for REBNY, which said its opposition to Premier Agent stemmed from concerns about consumer “confusion.”

“This industry hasn’t ever wanted to put Premier Agent out of business — although individual agents may have felt that way — we wanted transparent and proper disclosure,” said one Manhattan brokerage executive. “This, if enacted, would provide that and more.”

Premier Agent rattled the city’s residential brokers last year. But after some of the biggest firms came out against the agent-advertising program, some signed on to participate in “Premier Broker,” a version that lets firms generate buyer leads in bulk.

In a statement, REBNY president John Banks said implementing the interim opinion would help to eliminate consumer confusion.

“This is good for both the consumer and the real estate agent,” he said. “We look forward to evaluating any new regulations as they become available.”

DOS hasn’t said when it plans to issue formal guidance.The agency plans to hold a public hearing and meeting of its 15-person real estate board on June 11. The agenda has not been released.