And so I believe sellers should have the right to choose when, where, and how they market their homes. It's their home. It's not our home. I believe if I am a real estate agent, you're my seller. My fiduciary and statutory duty is to you, not to someone else's buyer. It's to you, not to Zillow. It's to you. And there are some conflicts, right? Days on market and price drop history is the killer of value. And if a seller doesn't want that on their listing, they should be able to not have their listing.
My guests today are two of the most influential and interesting voices in real estate. Robert Reffkin is the chairman and CEO of Compass International Holdings and Thad Wong is the co-CEO of At Properties and Christie's International Real Estate. Two weeks ago, Robert visited us here in Chicago, the city that suddenly has the attention of our entire industry. If you haven't seen the headlines, MRED, our local MLS, cut its listing fee to Zillow.com after Zillow continued to block certain active listings from its websites. Days later, the feed was reestablished, but a federal judge denied Zillow's request to continue banning listings, including those marketed through MRED's private listing network. As we wait to see how it'll all unfold, I'm really excited to have Robert and Thad here to help us understand what's at stake and what it really means for agents and their clients. Stick around for rapid fire where we get to know Robert better from first impressions of At Properties to marathon mishaps and making time for family. So, let's dive in.
Robert Reffkin and Thad Wong. Thank you so much for being a part of Core Values today. I am excited for this conversation. Hopefully won't go too far off the rails because we only have about 45 minutes. But welcome guys.
I'm glad to be here. I didn't think I realized how you're playing on the word core values. I love that. That's great.
Yes. Yes. My husband said, "Where do I get any credit or benefit from it since it's his last name?" and I told him, "You're lucky I'm staying married to you." So, that's how we've got it. All right, let's jump in because we've got a lot to talk about right now. So, Robert, let's start with you. You came to Chicago two weeks ago and brought agents from four different brands together in an inspirational moment that reminded us real estate is one of the only professions where success depends on collaboration as much as it does competition. And in your presentation, you started with a line that I will tell you stuck for a lot of agents and that was, "I don't want to destroy the MLS. I want to restore the MLS." What do you mean by that? Help us understand why that in my mind is such a powerful statement.
So, I support mandatory submission for data purposes so that the MLS is a source of truth for comps. I support mandatory cooperation, so that if there's a publicly marketed listing, it must be in the MLS for all agents across brokerage firms to be able to see for their buyers. What I don't support is being forced to give our data and our clients' data to third-party portals and AI companies. I just don't support that. The original MLS between 1950 through 2008 never forced us to give our data to these third-party companies. And so I want to restore the MLS to what it was. The original MLS was a place where I as an agent with a listing could put a listing in the MLS and agents that have buyers would then be able to search it and then the agent can share with the buyers. That was it. Agent to agents and that is the model that the MLS should be able to provide us that would help our company the best and our agents and our sellers. It's not saying that they don't give us the option to syndicate to third-party portals, but give us an option to share our listings with agents.
So, Robert, that's a great point. You know, and having the MLSs has been an opportunity for agents to share information related to home listings and inventory. This is also really a conversation about data though, right? And this is the fact that we as agents have data, but more importantly, clients have information about their houses that are data. That is data. And it's really talking about who controls that and when it's distributed. Would you agree?
I agree. I think agents are being put in a situation too often where they're the cheapest content creators in the world. In fact, they have to pay someone to take their content from them. And you know what happened in Chicago, a lot of the broker owners, I don't think they realized when they gave their data directly to Zillow, Zillow now owns that data. They own all the historical data. They own the photos. They have the ability to license and sublicense and sell it in perpetuity. When you give it through the MLS, the MLS protects your data.
And so let's talk a little bit deeper about people out there that maybe don't really understand what the PLN is, which was created by MRED, which is our Midwest Real Estate Data MLS. And it's been a pretty intense and amazing opportunity and it's actually been most utilized by agents. Over 60% of them use the PLN as a way to search and find properties and list properties for their agents. Thad, can you tell us or for those that don't understand what the PLN is, can you articulate what it is and how you see it being an incredible benefit?
Yes. And if you've been selling as long as I have or half as long as I have, I would say if you want to conceptualize in your mind, the easiest way to think about it is the PLN is the MLS pre-portal. That's all it is. And going back to the previous statement, I think a lot of brokerages forget that the MLS is in support of agents and works on behalf of agents. So the PLN, you nailed it, Amy. 60 plus percent, I mean, how many of our agents really use a specific tool over 60%. If you get 35% 40%, you feel like you have very strong adoption from an obligation tool. And so the PLN getting 65 is telling you that consumers and agents are using a resource provided by our MLS to compete in the market and it is one of the best resources I have seen. The only thing I change on it is that the only reason they had to call it private is that we have portals now and so now there is public on portals. Originally, the MLS created this network for a public person to work with an agent to showcase listings that agents had with sellers. And that was the community. And that's what Robert's referencing is that bringing back agent-to-agent servicing of listings. And I think all of this could be solved, by the way, if NAR stepped in potentially and said all listings according to our rules and regs, if you read them, it's actually in there. It needs to be defined a little bit because portals got through the loophole. But it says that all listings need to display the brokerage, the agent, and the agent's contact information. That is who the seller hired to represent them. And I would argue that all websites, including ours, and portals need to prominently display the brokerage, the agent name, and their phone number.
Yeah. Well, I think the interesting thing here is it's almost two things. There's client choice which I think is really critical and Robert I want you to talk about that but I think that it's also about client confusion because I don't think that clients are very clear on what is happening and sort of what's at stake for their home with some of the negative impacts that are on these portals. So Robert talk to us about client choice because I know that that's a little bit of an argument that goes both ways. Zillow is fighting for their positioning on that, but we are really strong in what client choice looks like for us and our agents who are working as fiduciaries for their clients.
And so I believe sellers should have the right to choose when, where, and how they market their homes. It's their home, it's not our home. I believe if I am a real estate agent, you're my seller. My fiduciary and statutory duty is to you, not to someone else's buyer. It's to you, not to Zillow, it's to you. And there are some conflicts, right? Days on market and price drop history is the killer of value. And if a seller doesn't want that on their listing, they should be able to not have their listing. And so, yeah, I believe in choice and seller control. Ultimately, much of this is about seller choice versus platform control. Should sellers have the right to choose how they market their homes with their agent in the construct of the law, state law, or should third-party platforms the seller did not hire have the right to ban agents for not using them?
Yeah. You know, and I think as a second part of that, and that I want you to respond is, you know, there's client confusion. I think being in the industry, we are really clear as to what's happening. We're all watching the headlines. We're all reading the headlines particularly here in Chicago but across the country and I think as agents, our agents are starting to wake up right now and realize what's happening and then what is their responsibility for, especially as we're coaching our agents for clarity to the consumer because I think it's an opportunity here for us to have them better understand what's happening to their properties.
You know it's so funny because I think this is a classic case where political strategy has moved into corporate strategy. And we know in politics, whatever party you're with, each party blames the other party for doing what they're actually doing. And we're watching and we're confused. Well, think about this a second. When Zillow uses the word transparency, there is no bigger culprit of transparency than Zillow. 97.8% and that's the lowest percentage when surveys have been taken of consumers are confused when they hit the contact agent button and schedule a tour now button. That's almost 10 out of 10. Meaning you have to find one person to actually know what they're doing and it's probably an agent. So testing out the technology. So they are the least transparent brokerage which they call themselves in our industry because they are confusing the seller to profit from the agent. And so what they've said is that in that same survey almost 80% of consumers would understand if they put a big toggle on there that said this is not the listing agent. All they would have to do is actually be transparent and say who you're clicking on is actually not who you think you're clicking on. If they actually were transparent, they would be out of business. So their entire revenue future business plan and strategy, if I were to define their entire business strategy in one word, it would be three words, lack of transparency. How can I capitalize and build a business without being transparent to the consumer? So what agents are actually doing is the exact opposite. By the way, when agents are using the PLN or using a network to provide value for the market, the end consumer, if the end consumer says, you know what, we've got to move. I don't want my child to know we're moving. It's a sensitive time. We've had a death in the family. We who have sold homes have been in a number of situations that require not an amplification of a listing at all. And also I would argue that the PLN statistically achieves a higher sales price in a shorter market time. If I were selling a home, the last place I would start listing my home is on a portal. Portals are kind of place that listings go and they last forever. But when you actually have a market that's generated by professionals, agents that are on the ground, you're creating the most efficient opportunity for consumer to invest into with their agent to promote their property to achieve an outcome. And the PLN gives an opportunity to test an aspirational price. It gives an opportunity to create urgency around their listing. And there is not a customer out there that I've never received an email from a seller that says I was cheated by the PLN. Not in any case at all. It's one of and I would argue that the MLS and originally and the service it provided by a cooperative platform like the PLN is one thing that it's very hard to find an error in it going back 75 years when we got the books the biggest things when it went online and we were all able to see it and it brought efficiency but the MLS and our network of cooperation has probably created the biggest consumer benefit through all of us competing with one another. Robert and I were heavy and I would say to this day we're competing against each other still to provide better value to our agents. I don't know if I know how not to compete against Robert. Anytime I look at him I want to compete against him. So I can tell you at least here in Chicago, we're still benefiting our agents and our customers by our relationship. We might be friends but we still like to beat one another, you know.
Yeah. Frenemies. Frenemies. Yes.
It's a thing. Yes. Friends should always figure out a way to make each other better and you should be able to inspire all friends.
It's true. So going back to this, the PLN, everything that happened in Chicago with MRED pulling the feed from Zillow, our brands, many many many brands or many companies also were off of Zillow for a period of time. But we do know that there were a couple of companies that decided to directly feed to Zillow even though MRED was really taking in our opinion collectively I think a strong stance on what we felt was best for agents and for consumers. Why do you think that some of these brokerages decided to direct feed? Robert, I'll start with you.
Well, look, the top five companies didn't do direct feeds. There's over 8,000 brokerages that are members of MRED and only a few hundred gave direct feeds. And so the vast majority did not. And so look, I think the real question is why did people not? And I think the reason people didn't is Zillow operates under the illusion that they are essential to the home selling process, but Zillow doesn't sell homes, they sell leads. If Zillow did not exist, the exact same amount of homes would sell in Chicago. And the only reason Zillow still exists is because of our listings.
And so I think people recognize these different things for the most part. I mean, the evidence is in how many people did not give them the listings. People that did, I think one, they didn't realize that they were giving up their data forever. And now Zillow, which is an AI company, AI learns off data, that data, those companies' data is Zillow's. Just go look at their terms of use. It is now Zillow's.
Um, yeah. No, no, I'm just saying that's huge. I don't think they knew that and I don't think their agents knew it. But more importantly, do you think Zillow didn't tell them that?
I don't think Zillow told them obviously, but I don't think the agents would have told their customers. And I think that's the importance of the MLS. The MLS works for agents and customers. And so the protections the MLS did with their feed protected our sellers. And so when Zillow so friendly comes by and hey, we can accommodate your feed, they're not protecting the consumer at the end of the day and I think those brokerages if they had the chance to change that decision they would but I would also argue that those agents and brokerages should have the right to do that and that's what creates a competitive environment and that's what defines value proposition so if you look at the brokerages that chose to do it their model is less service meaning a cap model where the agents are relied upon to invest more in marketing and customer procurement and branding and that's a good model it succeeds in a lot of different markets and it should be there. But for them, when you say, "Okay, what is your greatest cost that the agents use to attract a customer," they would say, well, this one doesn't cost me any money. The agents can actually use this to differentiate themselves from companies that are aligned with the MLS. Let's give them a point of differentiation that costs us nothing. I think that was the mentality. Keller Williams obviously has an agreement with Zillow, so you knew they were going to be aligned. eXp doesn't, but I think that was more of their mentality. Is that, hey, you know what? This costs us nothing and our agents, let our agents do the battle. I think that if we were all looking what's in the best interest of the consumer, at the end of the day, I don't think anyone can say besides 2% of the market, 2% of the leads here come from Zillow. Okay? And a fraction of that, not even 1% of that, actually buy the home that they requested the agent on. Okay? And so Zillow trains those agents to take that lead and showcase them a number of different properties. So there is no seller benefit to Zillow. The consumer benefit are a lot of things that actually work against the seller. The listing that's given to the agent that MLS puts onto Zillow is actually used against that consumer. That seller, 50% of the buyers, 50% of the market are sellers. That seller does not want an amplification of the days on market. If you're selling a product, you don't have a sign next to it that rotates every day. It's been unsold. That seller also does not want a suggestion that the price is less than what they're asking. How are we doing our fiduciary duty if we're putting them on a site where that site's suggesting their home is worth less than what we think it is? That site is not doing us justice when it's using an algorithm to tell you if it's a nice neighborhood to live in and walkable. If it's walkable to things, well, a lot of times that has to do with one person's perception. If it's a train or a store or where they want to live. So, so many things. Bottom line, long-winded short, Zillow was built for buyers to give buyers information and ammunition to provide lower prices on homes at the end of the day with the inventory given to them by the seller. So, going to two things that are very important to me, fiduciary and transparency. We have a fiduciary responsibility to our sellers when we take that listing to achieve the highest price in the shortest amount of time under the conditions that are in the best interest of that seller. That's what seller choice is. Zillow works exactly against that to achieve profitability. And I will say, shame on me, shame on all brokerages and agents that over the course of the time were fallen for Zillow's idea that give us your data, we'll give you your lead. And slowly but surely, they won't even let us. By the way, here's how funky it is. Now, Zillow will not let me give them money to put my agents' name, face, and our brokerage on their listing. They won't allow us to do it, and we still give them the data through many MLSs. This is a wakeup call for agents across the country about our fiduciary responsibility to our sellers and putting them in the best interest, in the best likelihood of success.
Yeah, I think I know over the last two weeks in so many conversations that I've had with agents, you know, this gave them an opportunity to take a step back and realize their value in all of this, right? Because I think a lot sometimes it was just on autopilot as far as, you know, you had a certain process that you initiated in order to launch a listing. Many started in a private environment and then moved it mainstream to the MLS if they didn't get an offer. But I think agents really took a pause and said, "I need to be mindful of my role here and that Zillow and some of these portals are only a very small portion of the whole value of what we're offering here." And so this I think was a great opportunity for them. So Robert, I know you see tons of challenges as opportunities. You know, in your opinion, what's the outcome of this challenge? You know, as we've seen in Chicago, but it's still sprinkling across the US right now for our companies and our agents. You know, what are going to be some of these real opportunities that they're going to see?
I think the opportunity that is coming from the challenge is that in Zillow's effort to control how sellers sell homes and ban any seller and their agent if they market outside of Zillow, the Zillow ban. In that effort to do that, I think they are advertising to agents and to sellers that something's wrong. If you have to ban me to scare me to use you, like because if you get banned as an agent, you're too scared to ever give a seller choice again to market outside of Zillow. If you have to ban me to use you, there's something wrong. Think about if Google banned anyone that advertised outside of Google or if Amazon banned anyone that had a private garage sale. That's what Zillow's doing. And so I think the opportunity is the harder that Zillow is trying to control us, the more that agents and brokers are going to wake up and say something's wrong. And you know, I want to find a way to be able to sell homes where Zillow isn't taking a 40% cut, hiding the listing agent's name, putting days on market, price drop history, listing goes in contract and out of contract. My seller looks harmed, Zestimate less than the value of the house. The walk score, bike score, what is the walk? These aren't real scores. They just made these things up. Zestimate is inaccurate. And so I've never seen as many agents finally see that these AI companies and Zillow are going to create more problems, not less for them. And Zillow is just the first step. AI is taking our data, our clients' data, and they're finding ways to monetize it. A few weeks ago, all of our data for the first time went to Google. So, and I was like, how did our data end up on Google? I don't remember my seller giving that permission. Like Google, the company now has the listing data. And we called an MLS and MLS said that they sold the data to them and they literally making money by selling our clients' data to Google. And so, something's wrong. Majority of MLSs are working perfectly well and increasingly so. But we need to find a way to be able to sell homes to other through other agents just directly. Like the simple question is should an agent be allowed to take a listing and give it to another agent in an MLS and or all the agents in the MLS without sending it to AI companies and to the public internet? I think they should be.
Yeah. And I think it's going to be, Thad you alluded to this earlier but NAR, you know I really do hope that this is an opportunity for us to align with our association that you know is here to help support and protect us and align with, you know, this world is evolving. AI is here, technology is here, it is not going away and we don't want to step backwards as a result of this, but we want to be in a space where we can also make sure that we are doing right by the consumer, doing right by our agent base. So, I'm really interested in seeing what the future looks like with NAR involved in it. You know, I don't know your either of you your takes on that, but I think it's a real opportunity right now.
Yeah, I think NAR fuels all opportunity for consumers delivered by agents and how the consumer experience is improved is through competition and if all of us look at each other that we compete with on a daily basis. It's that competition that improves the consumer experience and that's what NAR is behind. I know Robert is an incredible competitor and I know the two of us competing against one another improves what we deliver to the agent and inevitably improves the customer experience and I can tell you as a Chicagoan, somebody that's been a member of MRED since the day my first license in '96 maybe, is that the MLS here is exceptional at what they do, exceptional. The board, Rebecca Jensen, they are only interested in providing a platform for us to compete naturally to improve the consumer experience. Sorry to be redundant, but to also bring us opportunities so we can do that better. And that was the PLN, which was effectively I know you guys love the MLS and everything it did before portals. Let's give it back to you 10 years ago when a lot of us were voicing heavily. I was very much voicing that Zillow was not in the best interest of the consumer. And they solved that problem. But Zillow very strategically incorporated Compass so they could find a villain that brokerage knows and so that you could have people out there, individual brokerages and companies fight against one another when in all reality all we have to do as brokerages. If we all say that in every single listing we will promote the brokerage, the agent and the agent's phone number on atproperties.com, compass.com, Zillow.com, sothebys.com, whatever the brand is, betterhomesgardens.com, we all do it. That is true transparency to the consumer. And the other thing that is so important is that there will always be multiple-owned brokerages, independents, corporate, franchise, etc. And there is something that the consumer relies on that I would say is provided by our MLSs and that's cooperation. None of us does deals without each other. And we might compete fiercely which benefits the consumer but we are still friends and we are still working in the best interest of the consumer but we have to cooperate in order to get that done. Zillow is taking out cooperation and taking out transparency and trying to point the finger at Compass. I think it's really, really important for agents to pay attention, to read, and not fall for it. To really believe that Zillow is doing something for you. Zillow's never done anything for you for free. Never. If Zillow might give you a lead, it's going to cost you 40% of your commission. That's not possible. It's not possible to build a business on that. A small business maybe, but nobody can really build on that. And if you can close your eyes and imagine if Zillow achieved its goal, which is to be the national MLS, if you close your eyes and you work at Zillow and your whole goal is to generate a return to your shareholders, what's the first thing you do? You require every listing to be on Zillow active for 5 days and not allow the seller to sign a contract to make sure everybody in the world can have the opportunity to buy that house under the guise of transparency. Give me a break. I think it's foolish for them to think that we're so undereducated.
I'm glad you brought that up because Zillow does want to be the MLS. In New York, they became the MLS. In New York, the MLS was called REBNY RLS. They told Zillow, you cannot be involved in deceptive marketing practices. Every state has that. They said you must put the agent's name top and center. Not hidden below, but prominently. Put the agent's name and phone number. And when you say contact agent, you have to say contact a buyer agent, not the listing agent. So that was what was sent to Zillow and Zillow said, "You know what? I'm not going to take your data feed anymore. I'm going to go directly to agents." And the agents gave all the listings directly to Zillow. It's a company called StreetEasy. They own here in New York. And what happened the next year? Zillow started charging for lease rental listings, a dollar a day. The year after that, $2 a day. The year after that, three. The year after that, four. The year after that five. Year after six, year after seven. Now it's $8. Just keep pushing, pushing, pushing. $8 a day for lease rental listing. Now, what they're trying to do is create MLS power and apply the Zillow revenue model to it.
That's the best way for them to extract revenue from the transaction is to become the regulator. And it's very dangerous for a for-profit company to be the regulator of real estate brokerage. Very dangerous. I would argue it's the end of the consumer experience and the benefits the consumer get. I don't know how it would even work. But it would if you close your eyes and think, okay, Zillow's my MLS and I'm speaking to Keller Williams. I'm speaking to eXp. I'm speaking to those agents that don't really understand that they are feeding the dog that's going to eat your lunch. And I fed that dog for a period of time. I'll fall on the sword. I made mistakes in the way that I provided my data to Zillow. But once I was educated and I understood and I realized, whoa, whoa, whoa. They're not on the side of transparency. They're not on the side of competition. They're on the side of replacing the MLS to effectively extract revenue from every aspect of the transaction to generate the greatest profit to their shareholders.
What they did is they got the listings for free. Remember, they didn't compete for them. Compete means they're going to offer you more. There's zero competition for the listings. If they had to compete, we seller agents would say, "I want the name back on. You're going to compete for it." So, there's no competition. They got it. And then they said, "How am I going to attract buyers?" They put a bunch of negative insights. It's almost like, think about a periodical that has a bunch of negative headlines to attract people to it. Put negative days on market, price drop history, price status changes, again walk score, bike score, crime score, weather score, climate score. And they put these insights on that hurt the sellers and the seller, 45% of the homes last year had a price drop. They all look like damaged goods. That means that there are and that came from the portals. It didn't come from brokerages. It didn't come from the MLS. It came from portals who started putting the negative insights to attract the buyers. That means that last year there are countless countless people who sold, people that are in their 80s, early 90s that sold their last home, their retirement savings and it is less because of the system that these portals created.
Yeah. I mean I think this is a wakeup opportunity for our industry. I've got to be honest and it is in our hands.
It might be the last call. It's a wakeup opportunity, but honestly, it might be our last shot for MLSs to work with agents to enhance the consumer experience and make educated decisions. It's not our responsibility to grow Zillow's revenue. That's not my responsibility when I take a listing. My responsibility, we all know it and anybody watching knows it. We can say it so easily because it's what we do on a daily basis as a fiduciary.
Yeah. I mean, I think we've, this has been and I was worried we were going to have nothing to talk about, gentlemen. I think this was, you know, part one. I hope I'm gonna have you back again of a very lively conversation. However, before we leave, Thad, you know, my part of Core Values, I've already done your rapid fire, but since I've got Robert here, I have to take the opportunity. Robert, in this part of my podcast, I do a little rapid fire with my guest star just to learn a little bit more about you. May be outside of your days at CIH, which are probably 9:00 a.m. to 10:00 p.m. All right. Let me ask you this. This is a fun one.
I was talking to Pat last night after 10, like 11:30, so definitely later.
Probably both smoking a cigar if I got it right.
