It's interesting when major news services write about real estate, especially insider issues like VOWs (virtual office Websites.) You have to wonder where they are getting their information, because it's more than clear that some reporters are only getting one side of the story.

Take the Wall Street Journal's story "Web May Soon Work Magic In Real Estate," by David Wessel, published on October 31, 2002. It's the latest in a series of similar stories, including some in USA Today (Sept.22, 2002) and ComputerWorld (Oct.2, 2002) that have suddenly appeared across the country. These stories attempt to explain to consumers about the VOW debate among brokers. How MLSs will be guided to regulate the MLS listing information to be published on VOWs will be determined at this week's NAR convention in New Orleans.

Brokers, commissions, consumer interests - this is juicy stuff, but the newspapers are trying the case in the wrong court.

VOWs aren't a consumer issue. It's an industry practices issue that revolves around the unique agreement among competing brokers to share listing inventory and how that inventory can be fairly used by members. Advertising other brokers' listings without their permission is prohibited by state regulations, so allowing the industry to determine what is and isn't advertising, is an important step.

Look at it this way - if you had listings and they were part of a repository that you shared with other brokers, would you mind if that broker put the repository of listings on his/her Web site?

Now, let's ask that question again, only this time - what if the broker used the repository to engage in an exclusive advertising arrangement with a major Internet portal? One that makes him the gateway to consumers - not you. That would be OK if you had the same opportunity to advertise on this portal, but you don't. The agreement is to make your competitor the gateway to listings on the portal. That's a little different, isn't it? Still feel the same way about how great it is to all share listings?

Now you may be asking a question - hey, is that advertising, or isn't it?

That's the other side of the story that the consumer journalists aren't telling. That the brokers are having the above debate, and that as the suppliers of the listings, they have every right to have such a debate.

To read the consumer side of it, the NAR is portrayed as trying to put discount e-brokers eRealty and zipRealty out of business by creating rules that will prevent them from using other brokers' listings to capture leads online. (To see with your own eyes, click eRealty's picks.)

If the issue were only that simple.

In the story, journalist Wessel reports that last spring the NAR proposed rules that "would have crippled a couple of upstarts that are using the Internet to undercut the 6 percent or 7 percent commission that agents traditionally collect on each home sale." The upstarts, eRealty and zipRealty, are both discount e-brokerages, who use the collected listings in local MLSs to engage in exclusive advertising relationships with portals such as Yahoo!. Wessel writes that this caused an "uproar," and that a NAR committee asserted "that no broker participating in the MLS should be forced to 'allow his competitors to display his listings on their public Web sites,' and by proposing rules to permit agents to keep MLS listings off eRealty and zipRealty." He writes that this proposal is "now dead," and that a new proposal is more friendly to online brokers, though they "complain about a few thorns." "The e-brokers have to get street addresses and phone numbers, not just e-mail addresses, upfront, and an individual seller - not a broker - can opt to have his house listed on the MLS, but not on the Web. On tap to provide the closing comment is zipRealty's marketing VP, Patrick Lashinksy, who says, "We still think they are putting some large hurdles in front of consumers." Wessel's parting shot is that the 6 percent and 7 percent commission is already "being eroded by quiet competition. As long as the trade association is unable to erect barriers to progress, noisy competition from the Internet will speed that erosion."

The NAR is depicted as a controlling body that is protecting its members' high commissions, but the writer fails to ask what they are in an uproar about. The writer scarcely contains his contempt for the NAR, which operates "like a medieval guild to protect its members,' he writes. The story includes no interviews with opposing brokers, and the only other source is an unnamed official from the NAR who is quoted as saying that the MLS "was a wonderful monopoly for Realtors. In order to get access, you had to be a Realtor."

Journalists can be all too willing to follow a red herring instead of getting the real story. In this case, the red herring is the size of the commissions. eRealty and zipRealty has the journalists focused on the consumer aspect - that they charge less commissions and are being persecuted for that reason. Of course, the gallant journalists are going to leap to their aid with swords flying, and fully believing they are doing the heroic thing.

There are no dragons to slay if the real issue were better understood - that brokers are agreeing to share listings and then finding out that clever members are doing something with the listings that they hadn't thought could be done. The discussions are about establishing a new policy that they think (and hope) will cover any ideas that the lightning quick Internet companies will think of next.

Published: November 4, 2002

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.