Zillow exec: ‘I don't see the benefit of hiding inventory, ever’ 

Should the National Association of Realtors decide to repeal its Clear Cooperation Policy, which requires agents to add a listing to the MLS within 24 hours of publicly marketing it, what would that mean for buyers, sellers and agents? And if big brokerages push to keep more listings in their private networks, would that prompt home search sites like Zillow to jump into the brokerage business, as some leaders have suggested?

Errol Samuelson, Zillow Group's chief industry development officer, recently spoke with Real Estate News about these themes and more. Meanwhile, the industry awaits NAR's decision on the CCP, which is expected "in the coming weeks," according to the organization. 

This interview has been edited for length and clarity. 

Zillow's CEO has been vocal in his support of Clear Cooperation. What else do you want the industry and consumers to know?

We think the focus needs to be on the end goal, which is transparency around listings, because right now, consumers and agents are being misled. They're being harmed. We've got data on a very broad survey of almost 3 million listings done by credentialed economists that shows that sellers typically leave money on the table if they sell their home off market. 

We think that sellers need to think very carefully before their agent or their brokerage convinces them to hold their listing off MLS. It's bad for buyers, because we have a housing inventory and affordability crisis right now, and so anytime you hide inventory in a private network that's only available to certain agents and their customers, that reduces inventory and drives the prices up and affordability down.

We think that an open, transparent marketplace where any buyer can see any listing, they can work with any agent of their choice, they aren't forced to work with the agent who just happens to have the secret, private inventory — we think that's a good market. CCP is a way to get there. 

Some leaders say they support the CCP but want more than one day before having to list on the MLS. Is that a reasonable compromise?

I don't see the benefit of hiding inventory, ever, from the broader market. I think if you allow windowing a longer period — let's say seven to 14 days — you run into the identical problems that you're running into with office exclusives today. 

Consider a seller and their agent agree upon a certain list price, they keep it off the MLS, they hide it from the broader market for 14 days if that's how the rule were modified, and they get an offer at list price and say, fantastic, I'll take the offer. What that seller doesn't know is whether or not they could have got a lot more if that home was up for competition among buyers.

If the rule is repealed, what happens to Zillow and other home search portals?

We think we're well positioned in that we have, over many years, built a very well-known, beloved and trusted consumer brand. It's certainly where sellers want their listings. It's where buyers go because they feel that they can trust that we're showing them everything that's available on the market: mostly MLS listings, but also non-MLS listings, for sale by owner, new construction and auction. 

We have the technology that we can source listings from multiple sources. We prefer the MLS feeds. They're more current, they're more accurate. But even today, we still accept feeds from franchisors and brokers as well as the MLS feeds, although the MLS feeds are our preference. So, whatever happens, we will adjust. 

Could 'adjusting' include pivoting to a brokerage model? 

We really like our current model where we get to work with the best agents at any and every brand. We do believe that agents are a critical part of the service that we provide to buyers and sellers. We call them our partners because they are. They help us partner to deliver an amazing consumer experience. 

But we don't want to have a bunch of agents working for us in any capacity, either as independent contractors or employees like the Redfin model. It's just not part of our plan.

If the big brokerages rush to build up their private listing networks, what does that mean for consumers and the competitive landscape?

There's the specter of having five or six or seven private databases in a marketplace. And that's not only a nightmare for buyers who now aren't just seeing the listings in one private network, but it's really bad for agents. 

And so the dynamic is very dangerous when you get one or two big brokers who feel that this is giving them a competitive advantage. That advantage, to the extent it exists, is short term, because all the other brokerages will respond in kind. You see a breakdown of this really transparent, liquid market that we have.

It certainly would lead to brokerage consolidation. This is exactly the way it played out in commercial real estate. You see a high concentration of big commercial brokerage companies, each with their own private network and I think that's what you would see happening. It's bad for competition, which, in turn, is bad for consumers. 

Some leaders say sellers are asking for private networks, but Zillow data suggests most consumers don't even know what the MLS is. What's your take?

Consumers don't necessarily understand the difference between selling in a private network versus selling in a multiple listing service. 

So for the people who say consumers are asking for this, I would say, that's great, show me the study. Show me the consumer data which would suggest this is what consumers are asking for, because any research we've done shows that the consumers, for the most part, don't really understand and they're relying upon their agent who has a legal and ethical responsibility to act in their best interests.