Watching the (virtual office Website) VOW debate has been as satisfying as a Godzilla movie. The beast keeps coming back to scorch Tokyo, and he gets stronger with every sequel. Most moviegoers love the misunderstood, heroic Godzilla, the way many Realtors love VOWs.

Like the Japanese have tried to contatin Godzilla, the National Association of Realtors has valiantly tried to control the monstrous partnerships and revenue diversions associated with VOWs, but I'm afraid they are going to watch VOWs slink off into the ocean, only to return another day with new unexpected powers.

VOWs have been a huge headache for the NAR, but they were an issue that should never have gotten out of hand in the first place. VOWs, and their littermates IDX, should have been defanged when they were babies.

Jealous over Realtor.com's ability to monetize aggregated listings by charging Realtors for exposure opportunities while consumers got free rides, brokers complained that they wanted to be able to display listings to generate leads, too. A policy for Internet data exchange (IDX) was born, and so were the infant seeds of revenue appropriation away from listing brokers.

IDX was put in place so that brokers could agree to share their listings for advertising/publication purposes. When the policy was created, there was no referral fee advertising portal looming yet. It all seemed so fair - if brokers opted their listings out, they wouldn't be able to advertise other brokers' listings. But, by the same token, brokers who agreed to allow their listings to be advertised were now subject to paying referral fees to fellow brokers and media companies who acquired brokerage licenses in order to participate in the commission.

Then VOWs started getting attention. Not content to post other brokers listings with their permission, some brokers claimed that they had a right to download the entire MLS database into a VOW environment and share it with any consumer willing to leave an e-mail address, valid or not. Moreover, they argued the right to engage in exclusive advertising arrangements in which they receive traffic in exchange for selling their fellow brokers out for referral fees - a small cost for have-nots who don't have their own listings to attract consumers. One lawsuit later, the whole industry cowed, screaming in terror.

Godzilla was all grown up and breathing fire on Tokyo.

NAR defangs VOWs

At last, somebody figured out a way to drive Godzilla back into the ocean.

With the release of an alternate virtual office Website (VOW) policy proposal known as the VOW Report 2, the National Association of Realtors' Work Group is making new recommendations to the board of directors who will vote to adopt the proposed VOW policy on May 17th in Washington at the NAR mid-year governance conference.

The new proposal addresses concerns by many brokers who felt that they lost control of their listing data to MLS bureaucracy and the tyranny of have-not, lawsuit-threatening competitors. They got some of that control back with the VOW Report 1 which recommended that VOW-displayed MLS databases not be allowed to be used in third-party advertising/referral fee schemes to boost any economic advantage for one broker over others using MLS database listings.

But some brokers didn't feel that was enough to tame the beast. They wanted a broker opt-out solution. The NAR gave it to them with freedom of choice between blanket opt-out and selective opt-out. (VOWs are subject to state regulations.)

Unless prohibited by state law or regulation, such permission (to have listings displayed by another broker's VOW) is presumed unless a listing broker "opts out" by directing that his or her listings not be available for search or display on the VOWs of other participants. A listing broker may independently elect to opt out of (i) the VOWs of all other participants in the MLS ("Blanket opt out"), or (ii) the VOWs of selected other participants determined independently by the listing broker ("Selective opt out.")

Godzilla: the sequel

The NAR's VOW recommendation leaves IDX, in a strange position because brokers don't have selective opt-out with IDX.

IDX was supposed to be a solution for advertising greater numbers of listings. With selective broker opt-out available for VOWs, IDX is now an anachronism.

Selective broker opt-out means that brokers can say which advertising sites they want their listings to appear. If IDX is the advertising solution, why don't brokers have the same ability to selectively opt-out with IDX where it makes the most sense? A selective broker opt out means a broker can say, "It's okay with me that you use my listings on your Website, but I don't want the listings on PayMeAReferralFee.com."

Already, third-party referral companies have seen the handwriting on the wall with VOWs, and they are wooing IDX solutions from brokers who are signing up to give consumers a free peek at listings in hopes of capturing a sale.

Godzilla is coming back out of the ocean.

Time to slay the beast once and for all

Both IDX and VOWs are manufactured monsters as surely as radiation created Godzilla, and they could easily be killed without killing the lead generation they were meant to create for individual brokers.

How? Let brokers have their VOWs as customer service vehicles. Let them advertise each other's listings on IDX sites, but keep in reserve the most valuable asset of the real estate industry - the aggregate - the aggregated listings of the MLS.

Then charge consumers access to the aggregate.

What? Charge the consumer? An outrageous concept! Or is it?

Let's keep in mind that brokers want leads which was the motivation behind the creation of VOWs and IDX. What brokers didn't look ahead to see was the creation of a monster - the rogue broker who uses other brokers' listings for personal gain through third-party advertising and referral companies.

Instead of IDX and VOW brokers empowering third-parties, why not let the brokers follow NAR's VOW and IDX rules, but at the same time create their own advertising giant - one that not only doesn't charge referral fees but pays them dividends in the form of admission?

Create a central consumer-access VOW, which is governed, controlled, monetized, and operated by the MLS on behalf of member brokers.

There is a good reason to pass the cost of aggregation to consumers.

There is something wrong with brokers paying top dollar to give the information away that consumers so clearly crave. Why should brokers pay 1/3 of their commissions for advertising? Make the consumer come to the broker by tightly controlling access to the aggregate.

Consumers want to see all the listings. So show them - but make them pay for the peep show.

What if consumers get mad? Well, so what if they do? Consumers don't appreciate what they are getting for free. Putting listings on the Internet didn't do anything to endear consumers to Realtors. In fact, pressure on commissions has done nothing but increase. Does any consumer understand or appreciate the enormous investments in technology, personnel and education it takes for Realtors to make listings available online? Of course not.

But charging for the aggregate could garner some new respect for the industry. Consumers would be given access to the listings they are clamoring to see, which would shut the consumer advocates up. The MLSs would have a new revenue stream and the revenues would be shared with the brokers. Everybody's happy.

Currently, consumers don't have to register to see IDX listings. They do have to register to see VOW listings. But either way, they are getting the information for free while brokers are paying dearly to get the information in front of them.

That's just plain stupid. "Free" clearly doesn't work for anyone but the consumer, and it puts additional economic pressure on brokers and agents. So why not change it?

Charging for the aggregate would accomplish a variety of goals. It would restore Realtors to the center of the transaction by disintermediating third-party advertising/referral fee companies instead of the other way around. Second, it would provide a revenue stream for the aggregate. The aggregate is the only thing of true value that can be effectively monetized by the real estate industry on a massive scale. Third, consumers could be encouraged to choose an agent online, by getting their peep show admission refunded by any agent or broker. This would considerably lower advertising costs to agents, and profitability would rise.

Will consumers object? Of course they will. But they will adjust, just as they've adjusted to Web sites that are no longer free, air miles that are no longer free, and hundreds of other examples. They'll pay because there is no other way to see the aggregate.

It's time Realtors use listings to empower themselves, not third-party referral companies, banks, title companies and others.

It's time to put Godzilla to sleep for good.

Published: April 28, 2003

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