The Real Estate Board of New York this week accused StreetEasy of using “brazen tactics” to steer consumers to agents who advertise on its site — despite a proposed rule that would ban the practice.
In a letter to state regulators, attorneys for REBNY said Premier Agent, the portal’s controversial agent advertising program, “falls woefully short” of pending standards that require third-party websites to make a “clear and conspicuous” reference to the listing agent, and to include the term “advertisement” to denote paid ads.
StreetEasy has failed on both counts, REBNY alleged in a Dec. 15 letter. “Consumers need to know that Premier Agent is nothing more than a paid-for status and not an indication of the level of service, experience or the personal qualifications of the broker,” the letter said.
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The trade group appears to be trying to establish that if the rule were adopted, Premier Agent would be in violation of it. The letter, which was shared with REBNY members Tuesday, was sent during the public comment period for the proposed regulation. Zillow Group, which owns StreetEasy, has endorsed the new policy.
The rules are the culmination of a two-year probe by state regulators in response to backlash from agents after StreetEasy introduced Premier Agent in 2017. At the time, REBNY said the ad program had caused a “maelstrom” of consumer confusion by making it seem like the advertiser was the home’s listing agent.
State regulators then took an expansive look at not only Premier Agent but all real estate advertising in New York, issuing guidance for who is allowed to advertise properties for sale and how.
In May, stakeholders on both sides of the issue said they considered the regulation’s final language a win. The rule was published in October in the State Register, but has not taken effect.
In its letter this week, however, REBNY said StreetEasy has failed to update its online forms to include the word advertisement to denote paid ads on its site. Listing agents’ names are buried “below the fold,” REBNY said, using an old newspaper term to say that consumers need to scroll down to find a live link.
In its own public comment letter, Zillow said “as a whole” it supports the proposed regulations “as they align with the spirit of transparency that has always guided our own business.”
“Ultimately, we believe these changes will better serve consumers in New York if they’re approved,” Zillow said in a statement.
Privately, New York City agents have complained that the state has taken too long to act on StreetEasy and Premier Agent.
In its letter, REBNY declared that for some of its members, “the wait has critically harmed state regulators’ credibility.”
“It must be noted that some licensees believe that with the new regulations going into effect in 2020,” the letter said, “we have simply solved 2017’s problem in 2020.”
In the meantime, REBNY said, industry players have launched products that “attempt to skirt the regulations,” including one from StreetEasy called Experts, a pay-to-play program that displays agent contact info on all listings at a building where they’d done a deal. (Agents pay a “success fee” if they close a deal with a lead generated through the program; agents can only participate if their firm enters an agreement with StreetEasy.)
Along with REBNY, the New York Residential Agent Continuum has advocated for tougher advertising standards. “We do not feel the current laws meet today’s reality in addressing the practices of these aggregators/third-party websites,” the brokers group said in a statement.
Since launching Premier Agent, StreetEasy has modified the contact forms for agents. In January the company also launched Agent Spotlight, a program that lets agents avoid Premier Agent by paying $333 a month.
Premier Agent has long been a cash cow for Zillow. In 2018, it generated revenues of $898.3 million, more than 67 percent of the listing giant’s $1.3 billion total income. Zillow has now jumped headfirst into instant home-buying, betting the leverage it has with Premier Agent will help it grow rapidly.
Earlier this month, Trulia — which was acquired by Zillow Group in 2015 — was hit with a federal lawsuit accusing Premier Agent of being “unfair” and “deceptive.” The $5 million suit, which seeks class-action status, alleges Trulia connects buyers with agents with “no actual connection” to the listing.