When Kate Foster went condo shopping online, she was surprised she had to hunt through eight brokerage Web sites to find what was available.
Some sites would e-mail her about one new listing when she knew that 10 new properties had just been posted elsewhere. Others delivered announcements of “new” listings she had gotten a week earlier from other sites.
“When you’re buying a property in Chicago, a week is everything,” said Foster, a 23-year-old commercial property manager.
Foster’s condo search ended happily. But she still wonders why she had to work so hard.
Real estate listings used to be closely guarded by agents, who had a near-monopoly in the business of uniting buyer and seller.
The Internet promised to make house hunting easier and faster. To a large degree, that has occurred. Search engines at Web sites allow consumers to look for properties by neighborhoods and ZIP codes, by number of bedrooms and price range.
There are also photographic “virtual tours” that provide a peek inside some properties.
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But the power of the Internet also has helped fuel a war among brokers over control of real estate listings, including the timing of postings and their exclusivity.
Although 71 percent of all home buyers use the Internet at some point in their search, according to the National Association of Realtors, the thousands of publicly accessible real estate listing sites have become a Wild West of inconsistency and confusion.
Some brokers ensure that their properties are listed far and wide while others guard them like maps to treasure.
Perusing the listings earlier this week for Chicago’s ZIP code 60622, which covers West Town neighborhoods such as Bucktown and Ukrainian Village, illustrates the situation.
On realtor.com, a listings site operated by the National Association of Realtors, a search for a three-bedroom condo priced between $200,000 and $300,000 yields 17 results.
At Coldwell Banker’s Web site, the same search turns up only two properties.
Re/Max’s Internet site, which says it searches the same 2 million properties listed on realtor.com, returns only one result–a property represented by Re/Max.
There are reasons for such disparities.
Smaller brokers may decide not to list their properties on their own Web sites. An agent may decide that he risks losing part of the commission on a property if he allows it to be listed on another broker’s Web site.
And even when the system works perfectly, it’s far from perfect. A broker has 72 hours to send a new property listing to Multiple Listing Service of Northern Illinois, the Chicago-area clearinghouse for real estate listings. It can be another 72 hours before data are transferred to other real estate Web sites and made available to property hunters.
Late appearance
That means that properties listed on one broker’s site may not appear elsewhere for up to six days.
And then there are situations like those encountered by Kevin Barnicle, 31, an account manager with SBC Communications Inc., who used two Internet sites when he looked for a Wicker Park condo last year.
The condo he ended up buying was listed nowhere. He found it by chance, driving from one property showing to another.
“I saw a sign for an open house,” said Barnicle. “It was luck of the draw.”
Despite the practical factors involved, there is one overarching explanation for the halting flow of information.
“When you have the best properties on your Web site and nobody else does, you’re going to sell a lot of property,” said Steve Cook, spokesman for the National Association of Realtors.
The situation has been further fragmented by developments at MLSNI, the nation’s largest multiple listing service.
Last spring, brokerages Coldwell Banker, Koenig & Strey GMAC and Baird & Warner yanked their North Shore listings from the multiple listings service and placed them exclusively with MAP MLS, a much smaller rival based in Palatine.
The brokerages said MAP’s policies give brokers control over the outside use of the data.
The move further scattered the collection of real estate listings data, exposing some homes to a smaller group of potential buyers. At the same time, it shielded some brokers from competition for the commissions that come from selling those homes.
“If sellers knew they weren’t getting maximum exposure, I think they would be upset,” said Ed Watts, a Prairie Shore Properties agent in Evanston.
For buyers, the shift can create problems. One of Watts’ clients was in the market for a two- or three-flat in Rogers Park, and found one on the Internet.
Watts had not shown the property because he had looked for buildings in the MLSNI system, which traditionally serves Rogers Park. The property was represented by an agent who had just switched listing systems. The client had found the yellow brick three-flat using a Web site that searched MAP listings.
“Now I have two sources I have to go to,” Watts said. “It’s extremely cumbersome. We used to have one site we could go to and look up everything and be sure it’s accurate. This has destroyed our system.”
And there is more controversy afoot.
In 2003, the National Association of Realtors attempted to impose some order on its members’ online listings. Traditional brokers were riled up about new, Internet-based brokerages that were taking their listings, placing them online and collecting a discounted commission.
Premier among them is Zip Realty, a California-based company started in 1999. Zip promises to cut commissions up to 25 percent by relying on an efficient Internet-based approach to the real estate business.
The firm employs more than 600 agents, and took in $33.8 million in revenue last year, primarily from sale commissions. Zip operates in 12 metropolitan areas, including Chicago.
“Obviously, the established industry wasn’t and isn’t enamored of those new firms, and that’s putting it politely,” said Steve Murray, an industry consultant in Littleton, Colo.
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Opt-out rule
The traditional brokers wanted, and got, a policy change allowing them to prevent particular competitor Web sites from using their listings. They reasoned that their inventory should not be used to subsidize the lower-overhead operations of online firms and of smaller firms in general.
The online and discount operations have said an opt-out rule would force them out of business–that they cannot compete without full listings access.
Murray agrees.
Within five years, he said, “You could have three to six brokers in a given market that would have most of the listings, and they would simply cut everyone else out.”
That situation is not a promising one for consumers, said David Hanna, chief executive of Prudential Preferred Properties in Hinsdale.
“When [big brokerages] become the keepers of the gate, how is it possible that the consumer is going to know that they are getting the information they are supposed to get or that it is current or unbiased? They can’t,” he said.
The policy is on hold for now, as the U.S. Justice Department investigates whether the practices violate fair-trade laws.
But in some markets, brokerages have found other ways of cutting competitors out.
Des Moines heavyweight Iowa Realty recently began offering deals on warranty and financing fees to clients who agreed to keep their homes off the local MLS.
That allowed the realty company, whose corporate parent is Warren Buffett’s Berkshire Hathaway Inc., to find a buyer and keep the entire sale commission. At the same time, such sales can bar discount, Web-based brokers from the market.
Competitor Coldwell Banker sued, calling the program an illegal monopoly. The case is pending.
As the brokers wrestle over listings, Cook said it is important to realize how far the industry has come in recent years.
“It wasn’t so long ago that the entire real estate industry was scared to death of having this information out there,” he said. “As time has passed, we’re seeing more data each day than we were seeing yesterday.”