We're almost to the end of this line, I think. I took a break for a couple weeks to think more about this and to talk to some thought leaders (and also to do a little of the work for which I get paid ;-). In this post, I'll spend a little time on the history of IDX and what I think most brokers think its purpose is. I'll argue that IDX index fishing, though not illegal or immoral, 'breaks' the expectations of most listing brokers regarding IDX, but that we probably should find a way to permit it. In the next post, I'll talk about a couple technical and legal details. And in my final planned post (number VIII!) I'll discuss the specific proposals of which I'm aware and wrap it up.
A little history
I sometimes get described as "the father of IDX." I think that's an unfair characterization. Of course, anyone who's known me long knows that I am head-over-heels-in-love with the idea that I believe underlies IDX: "The best source for listing information on the web should be the web site of a broker participating in MLS." IDX facilitates this by ensuring that a broker with an IDX site can display nearly all the active listings in the MLS to visiting consumers. In almost all MLS markets (with some quirky and distressing exceptions), that means the broker's site can be unsurpassed as a source for listing information.
Back in 1999, when I managed the RMLS in Minneapolis/St. Paul, we looked at the model adopted at the broker-owned MLS in Seattle, Northwest MLS. They called their program "Broker Control." RMLS considered whether it should adopt the same approach. While I was on a three-month sabbatical, two key members of my staff, Rachel Wiest and Rebecca Younger, worked tirelessly with a small group of RMLS's leaders, most notably Phil Olson (a Coldwell Banker broker who sadly died just a couple years later at a tragically young age) and Henry Brandis (a leader at Edina Realty). Late that year, after I returned from sabbatical, we tweaked the rules to address the concerns of a big listing broker in our market.
As soon as RMLS launched IDX (we called it "Broker Reciprocity"), I started crowing about it on listservs (like those maintained by Internet Crusade) and via other means. I spent the balance of 2000 and 2001 traveling all over the country explaining IDX to large groups of brokers and MLS execs. In 2001, on behalf of RMLS, I wrote the IDX Implementation Guide for NAR, which NAR published in August of that year, just a few months before the implementation deadline of January 1, 2002. I also moderated a listserv at for the Internet Crusade on IDX or broker reciprocity issues. Over the years, I may have talked with more brokers and MLSs about the 'why' and 'how' of IDX than anyone else – I've heard a lot about their expectations.
The purpose of IDX
There is no definitive statement of the purpose of IDX. NAR did not adopt one with the IDX policy in 2000. The NAR IDX Implementation Guide did not articulate one in 2001. Even RMLS did not adopt an explanation for why it had done IDX. But the message of the leaders at Northwest MLS and at RMLS was very consistent:
The purpose of IDX is to ensure that brokers are unsurpassed as a source for real estate listing information on the web.
I looked back at my communications and presentations from the 2000-2001 era. Back then, we focused on IDX as a tool for brokers to make their sites 'sticky,' to keep the consumers on their sites once they arrived. We expected brokers would get the consumers to their sites using traditional marketing; brokers were already spending heftily on it, and adding a web address to display advertising would not increase their costs. That angle also helped to persuade large brokers, who held most of the listings, that it was cool sharing their listings in IDX with smaller competitors. Yes, the large broker and small broker sites would have all the listings, but the large broker's greater marketing budget assured more traffic per capita (with the capitae here being those of agents). (It turns out we were wrong about that, too. Some small and medium brokers get much more traffic per agent to their sites than even very successful large-broker sites.)
Until a consultant showed me IDX index fishing a couple years ago, I had never considered the question of listings serving as 'bait' to get consumers to broker sites from search engines. Of course, they were always bait for the big listing aggregators in principle; I just had blinders on regarding their utility for SEO on broker sites.
Expectations thwarted, but maybe they need to change
I'm spending this time on history and the way things were to make a point: I expect many brokers in IDX share my antiquated views about how IDX ought to work, and that those expectations shaped the brokers' strategies to participate in IDX. Now that brokers have built web strategies around IDX, they cannot respond to expectation-breaking uses of the IDX data just by pulling out of IDX, as some have suggested. Preventing other brokers using your listings in IDX means giving up your own IDX. I can't imagine a broker doing that.
Thus, while I don't think IDX index fishing is illegal or immoral, I do think it departs from the expectations of brokers contributing their listings to IDX, particularly in that a consumer using a web search engine to search for the address or listing agent name of one broker's listing may get a search result showing another broker's site at the top. Listing brokers are right to be distressed about this. Brokers who get inquiries on their web sites about other brokers' listing are terrible at replying, resulting in a disservice to seller, buyer, and listing broker. (WAVGroup published research to this effect in "The Consumer Online Real Estate Search Experience" in March; Victor, I could not find a link....)
Practically, though, it may not be reasonable to ask brokers to hamstring their web-sites when it comes to competing with the likes of Realtor.com and other aggregators, many of whom are engaged in index fishing themselves. Thus, I think we need to find a way to make it possible for brokers' IDX sites to be indexed by legitimate web search engines. That also means educating all brokers in IDX about what their new expectations should be.
We'll talk specifics in post VIII on this topic, but we have a few little items to address in post VII first.
-Brian
8 comments:
Here is the link to our research about broker responsiveness
http://waves.wavgroup.com/what-happens-to-online-inquiries-this-study-may-offer-clues
I appreciate your effort to look backwards before you look forwards.
Here is a thought for you to consider. In the travel industry there were agents who had amassed groups of consumers who trusted them to book flights. Online websites took those companies out - that entire industry was wiped away.
In time, a discount airline arrived, called Southwest. Their online mission was to directly manage the relationship with their traveling customers. They provide the greatest amount of value to their customers at every touch point - including booking. Today, you can only purchase Southwest flights at Southwest.com. Today, Southwest.com is ranked number one in website traffic in their industry.
I think big real estate companies are getting a little fed up with sharing their listings with other brokers who use them as bait, and offer limited services to consumers. Like you, we focus our broker consulting services only to brokers in the top 500 - these are large companies with hundreds of listings and agents that typically occupy 35 percent or more of their regional marketplace. None of them have taken the radical position of pulling out of IDX, but a few are getting close, and this issue may push them over the edge.
With their marketing power combined with listing syndication, they can easily become the Southwest Airlines of their market. Consumers will soon know that the only place to see their hundreds of listings is on their website. They can also offer a virtual office website to enable the consumer to view all listings.
If there are any brokers reading this who would like to pursue this plan, WAV Group will support your efforts at no charge in exchange for the opportunity to measure and report on the impact.
Victor Lund
Partner
WAV Group
Http://waves.wavgroup.com
Brian, there is a second set of expectations that need to be considered:
What were the expectations of brokers that heavily invested in SEO friendly IDX sites?
For seven years now, I've made major investments each year in making my brokerage's IDX site more easily indexed by search engines. I've also spent tons of money on other SEO related activities.
I made these investments based on the IDX rules that have been in place the entire time with only a few minor changes.
Some of the brokerages I compete with chose to make similar investments and currently do well in the search engines, while others chose to ignore search engine marketing and focus on other marketing channels.
As you've noted, the large brokers have substancially larger marketing budgets than smaller brokers. They just have been unwise in spending those marketing budgets, IMO.
You have covered the expectations of brokers in providing listings to IDX (as I do for dozens of listings too), I believe you should also cover the expectations of brokers that have built websites based on the existing IDX policy?
Should we have expected the IDX rules to change overnight? If I thought this could actually happen, I would have probably invested differently.
Finally, how do you believe the DOJ and FTC would view the actions of MLS boards controlled by large brokers in shutting down the search engine marketing of their often smaller competitors?
Victor, it's insulting, wrong and irrelevant to claim my brokerage offers "limited services to consumers" just because I do well in the search engines.
I own a small full-service brokerage that provides far better service from far more experienced agents than any of the large brokerages in my area.
Like many other small brokerages, our number of transactions per agent beats the pants off the big body shop brokerages and their newbie agents.
And, sorry, I'm not afraid of any of the big brokers pulling out of IDX. Actually, I wish they would as it would be a great selling point against them in a listing presentation. Just how would they justify to a seller their home would not show up on hundreds of local real estate websites?
I'd then simply build a VOW so our website users could see all the listings, including those of the broker that pulled out of IDX.
@Little Broker: First of all, this is hardly a little broker vs. big broker issue. For example, one of the must successful users of IDX index fishing in markets I've looked at is Weichert (hardly a small firm). Other examples of large firms successfully using "RESTful" development to improve search engine placement abound. A great many tech-savvy brokers (large and small), have not used this technique at all, as far as I can tell.
That fact that you have made effective use of a technique for a period of time, and in fact invested heavily in it, does not by itself insulate you from the possibility that the policy could change to prohibit it. If the practice is deemed to be an abuse (and I've not called it that, you'll notice), MLSs should be able to prohibit it. That fact that they did not prohibit it earlier is irrelevant - the MLS cannot adopt one set of rules for IDX and expect them to endure unchanged while the internet changes around them.
As for DOJ and FTC, folks opposed to almost any proposal of MLS policy employ the rhetorical flourish that it somehow disadvantages "new model," "discount," or "small" brokers. As far as I can tell, the issue we are discussing here cuts across large and small, new-model and traditional.
A group of brokers agreeing to share their listings for advertising with each other is entitled to establish reasonable rules. Each of these is a "restraint of trade" - for example, the requirement that the listing broker be named on listings in IDX (which most MLSs require) is a restraint of trade, but it is a reasonable compromise between interests of listing broker and displaying broker.
In short, if the MLS has a reasonable business justification for its rules, I'm not worried about the FTC and DOJ.
@Little Broker: BTW, welcome and thanks very much for your comments. I wish you'd been here earlier to help liven things up a bit.
Thanks Brian, I wish I had found your blog sooner. It's a fantastic resource. Thank you!
I respectfully disagree that MLS's should not be concerned about FTC and DOJ. Other attorneys I've discussed this with see the issue very differently than you do, as I believe the FTC and DOJ will.
I agree with your point this is not a big vs. little broker issue. Instead, it's really an innovative vs. non-innovative broker issue.
I believe the non-innovative brokers will be viewed by the FTC and DOJ as a cartel using their industry influence to limit competition and retain trade.
I also agree with you that if an MLS has a reasonable business justification for rules it can and should change them.
I just don't believe there is a single reasonable business justification that supports the extraordinary restraint of trade these rules embody.
What do you believe is the reasonable business justification that calls for significantly restraining trade and suppressing competition as proposed?
Who has been harmed by the existing rules other than those that have chosen not to compete online?
Here's a little snippet about how U.S. law prohibits exactly this type of competition suppressing rules proposed by the non-innovative brokerages:
...as the respected jurist Learned Hand noted, "[t]he successful competitor, having been urged to compete, must not be turned on when he wins." U.S. antitrust law thus does not attack monopoly power obtained through "superior skill, foresight and industry."
While the prohibition against multi-firm anticompetitive goes against agreements "in restraint of trade", it is not enough to show that an agreement in some technical way restrains trade. Under U.S. law, at least, the scope of the prohibition is limited to those agreements where the restraint of trade is unreasonable:
Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.
From: http://en.wikipedia.org/wiki/United_States_antitrust_law
Hi All,
I have the unusual perspective of one moving from a dinosaur company where I was encouraged for 11 years to "go back to the basics", where change was feared and brokers use index cards and make their clients come by the office to pick up hard copies of listings; to the most hip and state of the art Real Estate co on the planet (at least in the US).
I am dazzled by the opportunities and have an intuitive point. I remember when the internet search became an option and 90% of the agents were afraid they would no longer be needed. I think ultimately they are right. The services they provided in the past are less valuable now that clients are more empowered.
However, my sense is that if I keep focusing on being in service and stay open to change and learning new things, my consultation will remain highly valuable.
What do you think?
@Charles: I really believe in a value proposition for real estate brokers that goes something like this:
1. A good broker provides professional judgment (i.e., applies knowledge and experience in a way that a layperson is unlikely to be able to do) in advising buyers and sellers about the values of properties and the means of getting the best deals.
2. A good broker manages and facilitates the closing process to ensure a timely, satisfactory closing.
(Note, these skillsets may not be embodied in the same person on the broker's staff.)
The Internet does nothing to change this value proposition. But there are two problems:
1. Many brokers cannot articulate this, or any, value proposition. AND
2. Most consumers do not have the means of telling a good broker from a bad one.
-brian
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