As the August deadline drew to a close for members of the National Association of Realtors to submit their ideas to the NAR's Internet Marketing Workgroup, many brokers, third-party service providers, and others wonder what the workgroup will do now.

In May, the workgroup released its preliminary MLS Electronic Data Display Policy for comment by associations, MLS organizations, and members, and it plans to consider comments that came in throughout the summer so that it would have sufficient time to gel the policy for proposal at the NAR convention in New Orleans in November.

One of the reasons why the NAR is taking on the responsibility of establishing a new electronic data display policy is because members of some MLSs are using the data, quite legally as the NAR policy stands now, for commercial lead capture and referral purposes that were not perhaps the original intent of MLS data-sharing policies.

The issue most revolves around VOWs (virtual office Website) which are being used by some MLS members in exclusive advertising arrangements with real estate portals.

The unique and exclusive advertising aspect of these arrangements raises questions of whether or not these members are in violation of local statutes against advertising others' listings without permission, an issue that is also being considered by state regulators.

The NAR has already stated publicly that VOWs are the equivalent of MLS books that are shared with clients by their agents, and that electronic data can't be restricted in ways that other information access isn't subject to. Yet, did anyone foresee that the Internet would allow some brokers to engage in exclusive advertising relationships that would put them in a more favorable position to either capture the customers, or to refer them? This gives certain VOW brokers an unprecedented marketing advantage on the Internet that they never could have gotten with MLS books.

Affected MLSs which have these brokers as members could be locking the barn door after the horse has already escaped. At least one of these brokerage firms has proven itself willing to go to court to protect its VOW business model. Other MLSs may find themselves in the unpleasant role of watchdog, a distraction from the primary job of providing information aggregation services.

Now that the horse is out of the barn, what can be done? Can MLSs control the data and make access and use fair to all? Perhaps the horse got away the minute some MLSs tried to make VOW and IDX listings all about broker profitability instead of member accessibility.

Among those watching what the NAR workgroup will do is a broker who has started his own VOW company, selling subscriptions to brokers and agents who want to allow their clients to view the freshest MLS listings straight from the association, without implementing costly VOW solutions of their own.

David Faudman, broker and Realtor is the CEO and founder of CleanOffer LLC. CleanOffer is a service for agents to subscribe to that allows them to register clients to view MLS listings. Only clients who have agreed to the user regulations and have committed to an agent get to view listings, the same as any VOW site. While VOW agreements don’t stand up as legal contracts, they are effective in getting the clients to behave as clients, says Faudman, a benefit to the agents.

Faudman hopes that the NAR will come up with a policy that is friendly to all members, not just brokers.

”Residential real estate is a local business driven by the local real estate agent,” Faudman wrote to the workgroup recently. “ As independent contractors, the huge majority of agents see themselves as a “one person business”. Whether working for a large firm, a “mom-and-pop” or alone, it is the individual agent who earns each and every commission and pays most of their expenses including advertising, MLS fees, etc. Clearly the large brokerages serve an important role. However, it is most essential that we consider how policies affect the individual agent. Any MLS policy must keep the playing field level for all agents whether they work for a Coldwell Banker, a Ziprealty or a “Bob’s Realty”.

Why the impassioned plea for salespersons?

”This business model reflects the way real estate agents really work,” explains Faudman.

Faudman’s idea is so simple, one wonders why MLSs haven’t adopted their own agent-sponsored client access.

”They (MLSs) look at somebody to be their information service provider,” supposes Faudman, “and the information service providers aren’t very sophisticated. Why haven’t they said, ‘We will provide this to your members as an additional revenue source for you,’ but they didn’t. They were very focused instead on the competitive nature of being bigger.”

Is Faudman afraid that every MLS might take his idea? “I never could figure out why MLSs aren't doing this,” he says, “but we do have a patent filed on various parts of process. If somebody were to copy it, they couldn’t do it the way we are doing it.

So far, the new company only has one client, BAREIS MLS, an approximately 6000-member MLS in the Bay Area, but it has over 500 agent and broker subscribers and about 2,200 registered clients of the MLS members.

But business could be growing even bigger shortly.

“San Francisco is looking at doing this with us on their home page, where the consumers go into a separate subservice of the MLS managed by us,” he says.

Published: September 4, 2002

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