Tweetstorming the Industry Relations Podcast with Jack Ryan of REX

[Note: These are the personal opinions of Sam DeBord and do not represent the position of RESO, the National Association of REALTORS, or any other organization associated with the writer.]

R.O.B and Greg Robertson recently interviewed Jack Ryan of REX on their Industry Relations podcast. The story of REX isn’t a new one. It’s a brokerage that wants to shrink commission costs by reducing or cutting out buyers’ agents’ compensation. It doesn’t want to participate in the MLS.

REX also wants to enjoy the benefits of the organized processes and technology that MLSs have built for showing efficiency, but the company doesn’t want to shoulder the costs of participating in the MLS. It sees that requirement as unfair.

During the podcast, the hosts interjected to question some assertions Jack made. But it felt like the snowball he was rolling downhill was growing faster than the fact-checking could keep up with. And whoever was at the receiving end of this snow job would likely be confused or misled by what they’d heard.

To be clear, this post will not argue against the recent DOJ-NAR agreement, though the topics are related. This is simply accountability for unsound arguments that Jack continues to make which, left to grow in a void, become unquestioned conclusions.

Rob and I agreed that reproducing the Tweetstorm I published subsequent to the interview here on the blog would help frame the discussion. The quotes are my summarizations of what was said on the podcast and I believe they are accurate. Apologies for the informality, but it’s Twitter. Brevity and a little bit of humor help:

OK, let’s dig in. This is going to be a long thread.

Jack Ryan seems like a smart guy with his heart in the right place. That’s not enough. Important people are listening to him and facts matter. https://t.co/6Vgkbp4Wxg

— SAM DEBORD (@samdebord) December 4, 2020

1. Choices are good, whether on price, service, or product. In Seattle, we’ve had every compensation model under the sun for decades (MLS4Owners, Redfin, Faira, MySecretAgent, FSBO markets). You’re all welcome to the competition.
2. We have to document the misrepresentation of facts. Because a mountain of half-truths becomes a monument to false premises. And people with friends in high places make decisions based on those premises.
3. There is an interminable parade of people with big ideas coming to real estate that lack the experience in the industry to “know what they don’t know.” I was one of them, even 10 yrs into the business. So let’s chalk these misrepresentations up to simply, “Didn’t get it yet.”
4. Begin rough quoting of the podcast:
   “At Goldman Sachs, trading prices were going down, why not for transactions in real estate?”
   This is a well-worn opening storyline. Insert another industry and ignore the flimsy false equivalence. We’ll return to this.
5. “We’re a full-service brokerage firm, we find homes for buyers and sellers, do real-time bidding, make predictions, better algorithmic trading.”
   Great–bring us better intelligence and tech.
6. “You can’t change the outcome, cost structure, and service level if you use the exact same process (MLS)–you have to use a totally different process.”
   Binary questions oversimplifying concepts will repeat.
7. “One of the MLSs on the West Coast wanted to do Coming Soon and they (NAR) said no you can’t.”
   This is simply not true. NAR policies allow for Coming Soon if any market wants to adopt it. The monument is beginning to be built…
8. Access to the lockbox is where things start getting fast and loose:
   “Why are we not allowed access to/why are we not allowed to show the home? You can’t get access, even though you’re a registered agent in California.”
   Greg called this out. And what is a registered agent?
9. In the vast majority of cases, the listing agent will:
   -Have an open house
   -Ask the seller to open the door for a keyless agent
   -Schedule a time to open the door for the keyless agent who can’t afford the $100/mo to make the showing process reasonable for their clients.
10. This is a huge point. The boogeyman evil listing agent who doesn’t want the home to sell and wants to restrict showings is the scarecrow that many other conclusions rest upon. It’s simply false in most cases.
11. “The industry is out of touch with the internet age. As these commissions come down, and they will, and it’s not us it’s the internet…if you’re a middleman, the internet is putting your job in some pressure. It’s not just us it’s the internet and AI is doing it.”
12. The agent-as-middleman concept continues to be a weak analysis. Consumers can see all of the inventory and access it directly if they want to. Yet they hire agents for additional professional services: consultation, process management, contract negotiation, etc.
13. “As you bring the price of the transactions down, the transactions go up (stock vs home). Fees go way down, transactions go way up. The value of the underlying asset goes up.”
    Greg couldn’t let this one slide again.
14. Some sales could increase. But there’s no reasonable person who believes we all want to move significantly more often. The physical and emotional human friction of a home sale and move negates all comparisons to stock, cars, travel, etc. Even if we love a home, we HATE moving.
15. The flimsiness really set in here:
    “Our people are W2 employees so they can use technology to make better decisions. Those independent contractors only use human intuition to remind themselves, ‘I’m just going to call Rob today’.”
16. It’s insulting when independent contractor agents are broadly painted as feckless and unsophisticated. The best agents I know are high tech, doggedly responsive, supremely organized, automated and almost all are ICs.
17. Yes, there are a lot of low producers, but the high producers are involved in the vast majority of sales. Of course, though, binary is easier, so IC=bad, employee=good.
18. Get ready:
    “Our agent might get a push notification and say to a client: ‘Maybe we should increase the price of your home because our AI says other homes nearby have sold for more. Maybe we underpriced it.”
19. 
20. My client, whose home I haven’t been able to get sold yet, should RAISE their price. Boom. AI. Don’t @ me.
21. “Why does a seller, when hiring a listing agent, have to hire a buyer’s agent? Can a plaintiff’s attorney pay a defendant’s attorney?”

    (Yes, the emojis are coming.)

22. A seller doesn’t have to, they have the option of making the offer. Even if they do, they may not pay it if a buyer comes directly to the listing agent. Buyers and sellers are negotiating toward a mutual agreement, they are not parties in conflict like the attorney example.
23. “If they would give away the rule-making authority of course we’d join (the MLS). Let’s say we had an idea like the realtors in CA like we wanted to do coming soon and the nar and the mls shut it down.”
    
24. That didn’t happen. Also, this tells of a lack of understanding of the broker cooperative. It literally exists to provide the rules under which cooperation can proceed with certainty and efficiency.
25. “(Purchasing real estate) It’s a hard process because it’s been designed to be hard for the last 50 years.”
    All brokers, agents, and MLSs who’ve been working on the design to make the process harder, please raise your hands.
26. “Once the rules come off there’ll be no stopping the free flow of information that’ll occur.”
    The MLS has been the single biggest driver of consumer-accessible data on residential real estate. It’s already free-flowing. Ask the big portals who all access it.
27. Greg: Hug your kids.
    Me: Hug your policymakers and let them know that not everything the fast-talking man tells you is so.
28. “If you’re an efficient real estate agent, you’ll have plenty of transactions at whatever rate you’d like to charge as long as your service supports it.“
    “For someone like you, Greg, I don’t think the price of the transaction will change that much.”
    Where’d the revolution go?
29. “Shampoo has so many choices. Wait until real estate gets that. MLSs will make tons of money if they just let us do what we want to do and be a system of information.”
    New entrant tell: “The MLS should just be a database.”

What am I missing?

Also: Rob's purchase should be the next episode.

— SAM DEBORD (@samdebord) December 4, 2020

Let’s hope that the misinformation that was conveyed during the podcast was just a lot of misunderstandings that can be corrected. But this story has been told many times to many people of significant stature. And the alleged anticompetitive activities attributed to agents and MLSs–unsubstantiated and even verifiably false in many cases–paint a picture of a “cartel” which is inaccurate.

The DOJ has spoken on issues of transparency and the industry will comply. Things will be fine. Competition will reign.

So why spend energy fighting the continued promotion of storylines like Jack’s? Because accepting the precedent that the industry’s business practices should be guided by fast talkers with paper-thin arguments is a recipe for disaster. This isn’t a corporate rivalry over mobile phones or video games. It’s about the integrity of the nation’s organized marketplace for housing opportunities.

No one is totally immune to the seduction of fast-and-facile arguments like those presented by REX. So it is incumbent on real estate leaders to be intellectually disciplined, to separate the facts from the fiction, and to profess the inaccuracies loudly or accept the consequences quietly.

-swd

PS: This is one of the stranger posts I’ve written. But it’s a Notorious post: question, inform, and provide some levity. Then post music. Be well, friends.

“Scheming on a thing that’s a mirage…”✌