Zillow and MLS Data: Expanding On My Podcast Musings

In case you missed it, Greg Robertson and I recorded an episode of Industry Relations on Zillow’s announcements last Thursday; it was just posted. In it, I started musing about how IDX is less of a deal than VOW, and Greg and I started to talk about what Zillow might be able to do for all brokerages.

I’ve been thinking about that some, and doing a bit of research to confirm some things, and thought I’d share them with you. A big part of it is to solidify my own thinking on the subject, of course, but it might be useful to some of you.

Let’s see if there are any takeaways or conclusions to be drawn from these mental exercises.

IDX v. VOW

Most of you who are from the industry probably know that there is such a thing as VOW. But we don’t really think about VOW much because so few companies actually use VOW for anything.

Nonetheless, it’s worth understanding the difference as well as the principle/theory behind the difference.

First, the names are meaningful: Internet Data eXchange vs. Virtual Office Website. The first is specifically meant as a way to allow brokers and agents to advertise the listings of competitors over the internet, while the latter is specifically meant as a way to allow brokers and agents to conduct brokerage services virtually.

Second, this is NAR’s VOW Policy as of today. It’s long and legalesy, which is a bit odd since it’s meant to be read by brokers and agents and MLS operators, but whatever. We Americans love our rules and policies to look and sound like lawyer-speak; take a look at NFL rules sometime.

Third, this is from ARMLS, one of the largest MLSs in the country, and is one of the more important MLSs for the new Zillow Homes brokerage since ARMLS covers Phoenix:

Far easier to understand than a bunch of clauses and paragraphs. The key difference is “All non-confidential property data information” as well as “All Pending and Sold listings.”

On its face, this isn’t a big difference, and since IDX has grown over the years and getting consumers to register for your website is a hassle… VOW really doesn’t get used much at all in the industry.

However, the key understanding behind VOW, as was established in the NAR-DOJ lawsuit, is that a brokerage should be able to share over its VOW anything that it can share in person. Because the idea that the DOJ had was that novel web-based brokerages should be able to conduct actual brokerage work over the web, which would result in cost savings to consumers.

None of that happened, obviously, for a whole lot of reasons. So VOW was kind of forgotten, and IDX became supreme.

Zillow’s announcement really only talked about using IDX to power Zillow.com, which makes sense since Zillow.com is a public website open to any and all visitors.

What I started musing about on the podcast was whether Zillow would flip to a VOW website once a user has registered on Zillow.

The Minimal Requirement of VOW

In theory, the NAR VOW rules require that the brokerage establish a “consumer-broker” relationship:

A participant may provide brokerage services via a VOW that include making MLS active listing data available, but only to consumers with whom the participant has first established a lawful consumer-broker relationship, including completion of all actions required by state law in connection with providing real estate brokerage services to clients and customers (hereinafter “Registrants”). Such actions shall include, but are not limited to, satisfying all applicable agency, non-agency, and other disclosure obligations, and execution of any required agreement(s).

In practice, this has come to mean “get the user to register on the website with a valid email address.”

Here’s a post from 2009 from the WAV Group that spells things out:

The settlement between the DOJ and NAR recognized that access to this level of real estate information should only be permitted when there is an expressed working relationship between a consumer and a REALTOR®. To access a VOW, the consumer is required to register, agree to the terms of use, and agree they are entering in a lawful broker-consumer relationship (broker-consumer relationship as defined by state law). To satisfy the registration requirements, the consumer must provide their name and a valid email address. The password must also expire on a specified date, and the broker must keep the registration information of that consumer for 180 days after expiration.

To satisfy the lawful broker-consumer relationship, the consumer must click to agree to the terms of use, and verify that they will not use the data for any commercial use, and confirm that they have a bona fide interest in the purchase, sale or lease of real estate of the type being offered through the VOW. Nobody – broker, consumer, or the website provider may redistribute any of the information to any third party.

The irony of that post lo these many years later is that WAV Group was promoting it as a way for brokers to compete against non-REALTOR websites, like Zillow:

Brokers who are members of a MLS can now provide more comprehensive information to their customers than any non-REALTOR® website can feature. They can now offer a data feed of all MLS listing information to their clients via a Virtual Office Website (VOW).

And now, Zillow, Redfin, and Opendoor may be the only websites who can truly take advantage of VOW.

I’ve used all three websites… and while they can be used without registering, I inevitably end up registering to take advantage of all of the various tools and features, like saving properties to a favorites list, or to be notified when a property comes on the market, etc. All three websites make it super simple to register as a user, because they’re tech companies who know how to do that.

Finally, unlike registering with a normal broker or agent website, I have little fear that these large national companies are going to call me day and night with sales pitches or spam my inbox unreasonably. Whereas I definitely have that concern when it’s some individual agent or broker’s website that is asking me to register. I suspect that most Americans today feel the same way, since we all have registered on hundreds of various websites, but we’re also leery of giving some unknown fly-by-night website our real email and phone number.

I don’t have any stats, but I’d venture to guess that a huge percentage of the 218 million monthly uniques that Zillow gets are from registered users.

Implications

The first implication is that while brokerages who hate Zillow might find a way around IDX (because that is a voluntary in-or-out decision), there are only two ways to get out of VOW:

1. Get the seller to agree not to advertise his home on the internet; or
2. Leave the MLS entirely.

If the listing is in the MLS, then it is in the VOW, and no further permission is required… or even allowed.

Furthermore, even if somehow, the broker gets the seller to agree not to advertise his home on the internet, Zillow may share that information to users via email, its mobile app, text message, etc. From the NAR VOW Policy:

Notwithstanding the foregoing, a participant who operates a VOW may provide to consumers via other delivery mechanisms, such as e-mail, fax, or otherwise, the listing or property address of a seller who has determined not to have the listing or address for its property displayed on the Internet.

Second, while a lot of MLS executives and attorneys are looking hard at their IDX rules, and talking about how Zillow will now have to abide by IDX rules (including complicated commingling rules and such), a registered user on Zillow may be presented with a VOW display which have far fewer rules. (Plus, see below re: regulations.)

And third, and this part might be important, under NAR’s VOW Policy the MLS is required to provide downloading of all MLS data:

An MLS shall, if requested by a participant, provide basic downloading of all MLS non-confidential listing data, including, without limitation, address fields, listing types, photographs, and links to virtual tours. Confidential data includes only that which participants are prohibited from providing to customers orally and by all other delivery mechanisms. They include fields containing the information described in Section IV.1. of this policy, provided that sold data (i.e., listing information relating to properties that have sold) shall be deemed confidential and withheld from a download only if the actual sales prices of completed transactions are not accessible from public records. For purposes of this policy, downloading means electronic transmission of data from MLS servers to a participant’s or AVP’s server on a persistent basis. An MLS may also offer a transient download. In such case, it shall also, if requested, provide a persistent download, provided that it may impose on users of such download the approximate additional costs incurred by it to do so. [Emphasis added]

Seems to me that RESO Web API might be a wonderful thing to have, but Zillow is entitled as of right to a persistent download of all of the MLS’s listing information, including sold data (at least in states which are not non-disclosure states), to keep in its Living Database. Period, end of story.

And many of Zillow’s syndication agreements I have seen (can’t share them obviously) contain language about prohibiting or limiting derivative products. In contrast, the VOW Policy forbids the MLS from interfering with Zillow in creating and using derivative products:

Except as provided in this policy, an MLS may not prohibit participants from enhancing their VOWs by providing information obtained from sources other than the MLS, additional technological services (such as mapping functionality), or information derived from non-confidential MLS data (such as an estimated monthly payment derived from the listed price), or regulate the use or display of such information or technological services on any VOW. [Emphasis added]

The “except as provided” is interesting, but I can’t find anything in the VOW Policy that speaks to derivative products so….

I imagine that the Zestimate and the actual offers from Zillow Homes will now be more accurate than ever. I further imagine that Zillow can start creating whatever derivative product it wants using MLS data without giving a damn what the MLS thinks about it. Doesn’t mean they will; just means they can.

Speaking of Derivative Products….

In the podcast, Greg and I wondered out loud whether Zillow could end up being a major vendor to other brokerages for things like the “Broker Back Office Feed” or the Zillow Listing Detail Page. Based on the VOW Policy language, I can’t see how anyone could prevent that from happening… even if he wanted to.

The Zillow Listing Detail Page is a good example of this dynamic.

If you have recently been a homebuyer, and you worked with an agent as you most likely did, then you’re familiar with one of these:

The agent would hand me one of these as we were walking into the house, except it was black and white. Yes, the image above (which I found on Google) says Copyright, 2014. I was handed many that looked exactly like this one. In 2020.

Makes your eyes hurt, doesn’t it? It’s almost like the designer actively tried to make a printout that is unusable. Or maybe the designer is really misanthropic and hates human beings.

Once Zillow has all of the MLS data via the VOW feed, what stops Zillow from creating a Zillow Listing Printout product for use by its Premier Agents? Nothing, as far as I can tell.

And did you know that Zillow already has a set of Listing Flyer Templates that its Premier Agents can use for free? Here’s an example:

Could Zillow make a listing printout that agents would want to hand over to their clients? One that actual human clients could get useful information from without wanting to beat the designer? I think so. Would they? I don’t know, but it sure would be of value to their Premier Agents, don’t you think?

And there isn’t a single thing I can think of that the MLS can do to stop this. All of its rules/policies have to do with protecting the MLS’s data from unauthorized users. The Premier Agent who belongs to that MLS is the very definition of an authorized user. By what rationale could the MLS prohibit a brokerage from creating better products and tools to make life easier for authorized users?

The Ultimate Derivative Product….

I realize this is going to freak out many of my MLS readers but… I have to let my thoughts go there.

Once Zillow is a Participant in every MLS, and has downloaded all of the data as of right, what stops me as an average agent from registering on Zillow, and using the Zillow VOW to search for properties for sale in my local market instead of the fugly asinine search interface the MLS offers?

And don’t think agents aren’t using Zillow and Redfin today for exactly this purpose, except that most serious agents don’t use Zillow because it doesn’t have all of the data that they need to work with their clients. After this pivot? Zillow will have all the data, including confidential fields (which it can’t display… but it has them). Why would I as a working REALTOR living in the 21st century want to use this instead:

Some folks are masochistic, I know, but dayum.

I realize the first instinct of many people will be, “HOLY CRAP! WE CAN’T LET ZILLOW INTO OUR MLS!!!!”

Given the likely outcome of going that route (Dept. of Justice, state Attorneys General, and Zillow’s rather large and sophisticated legal team), might I suggest you pivot to, “How can we improve our system so that our agents don’t want to use Zillow as their primary MLS interface?”

Also, you know all that angst over “overlapping MLS disorder” and such? How MLSs have been arguing for years and years about data sharing? How we see literal news releases from two MLSs in adjoining markets when they decide to data share so brokers and agents can see the listings in the next county over without having to join that MLS?

Is it me or does the Zillow VOW kind of make that whole discussion moot?

About the Regulations…

Finally, this is highly speculative of course (as the entirely of this post is), but there is yet another angle to consider for MLS and Association leaders.

Of course the VOW Policy can be modified, and there are plenty of rules in it today that impede certain things that Zillow may or may not want to do. In theory, NAR can promulgate new VOW policies to prevent any of the above from happening.

Thing is… in case you missed it, there was a recently resolution in a major antitrust case north of the border in Commissioner of Competition v. TREB. Seeing as how I wrote a longass Red Dot report on the topic, I’ll skip covering it. But I did talk about it some in this post:

It really does feel like the DOJ (and possibly the FTC, its comrade in arms when it comes to regulating the real estate industry) is going to bring some kind of an enforcement action against a variety of MLSs, possibly against NAR (as the entity that creates national rules and regulations for MLSs), alleging that most of the “private information” on the MLS is anti-competitive. Why would the DOJ invoke the Sherman Anti-Trust Act otherwise?

At the same time, either the DOJ or the FTC or someone else with jurisdiction is likely to promulgate regulation requiring disclosure of previously private information. If Commissioner v. TREB is any indication, that is going to involve:

• Sold and pending homes
• Withdrawn, expired, suspended or terminated listings
• Offers of cooperating commission

See, in the Canadian case the “Disputed Data” that the Competition Bureau went after TREB over was those three categories.

Just like in the U.S., all of those were kept behind the walls of the TREB MLS. Subscribers had access to that information, but the information was not to be made public. The VOW feed from TREB did not contain this information, and obviously, the IDX feed did not either. And that’s what the Canadian authorities went after.

Based on what I read of the actual ruling from Canada, any move against Zillow in the future using the VOW rules and regulations are likely to get the DOJ very interested indeed. That’s because one of the biggest reasons the Canadian authorities went after TREB is that its rules were prohibiting its own broker Participants from offering more innovation and more data to consumers. The court made quite a big deal of that, because now the MLS is inhibiting competition amongst brokerages.

If the MLS and brokerages are going after Zillow, a third-party portal, that’s one thing. If Zillow is a fellow Participant brokerage, that’s a whole different kettle of fish. Now that case looks almost identical to Commissioner v. TREB. Yes, it’s a Canadian case, so no binding precedent on American judges, but if you think they won’t at least look at that case, I got news for you.

This doesn’t mean that you don’t poke the bear; poke away, if you’d like. But like I said in my previous post, don’t force Zillow into a corner, because you’re not going to like the results. Furthermore, I would urge an abundance of caution and plenty of legal advice going after a “competing brokerage,” especially one with the size and quality of Zillow’s legal team.

In fact, if Zillow should decide that some of the VOW Policies — for example, the prohibition on showing the compensation offered — are terrible, and NAR disagrees, now the DOJ gets to look at how those rules and policies affect a “competing brokerage” rather than a third-party portal.

Contain Your Paranoia

None of the above means that Zillow will or might or wants to do any of these things. They have never once said they want to create MLS derivative products, nor has any Zillow employee anywhere ever said they want to eliminate the need for MLS data sharing. Zillow’s announcement was clear that it’s going to use IDX, and adhere to IDX rules and policies. As far as I know, Zillow loves them some MLSs and has gone out of its way to protect and cater to them. I seriously doubt that Zillow would do anything to intentionally hurt the MLS.

I am merely pointing out that there is far more here that is possible. Especially if you try to force Zillow into a corner.

The corollary takeaway, I suppose, is that if you are in the broker/agent tools and apps business, you had best step up and soon. If you are in the MLS technology business, you’re going to want to step up, and soon. Not because Zillow is coming after you, but because they might do something that benefits consumers (which has always been their North Star), and that benefit to consumers can be used just as easily by professionals to solve some of their problems.

In his post about the Zillow pivot, Phillip Cantrell wrote:

Up to this point, the MLS has been the one remaining bastion of informational power to the real estate brokerage industry. Yet we need to be completely honest – and with this statement, I am certain to ruffle feathers – Zillow exists because WE (the industry, self-included) FAILED to be responsive to consumer demands. The consumer was demanding information, and we failed to deliver that information. We had the chance with Realtor dot com, but we blew it, opting instead to abdicate on the challenge and sell it to the highest bidder.

He was talking about consumers, but I think the sentiment applies to sectors of the industry. Your consumers (brokers and agents and MLSs) are demanding things, and if you fail to deliver those things… well, hard to blame either them or the guy who delivers what they want when you either can’t or won’t.

So contain your paranoia. Zillow is not after you. At the same time, at least be aware of what the new possibilities are and what the new landscape looks like. You can’t tell them nothing, if they’re giving that to the people and spreading it across the country.

-rsh