A NEW KIND OF BUSINESS
By Ali Ebrahimi
The NYC brokerage community has been up in arms and completely frantic these past two weeks (even more so than over politics if you can believe it!). I’m referring to people’s reaction to the recent launch of StreetEasy.com’s new ‘Premier Agent’ advertising program.
The ‘Premier Agent’ program essentially connects buyers searching for properties on StreetEasy to agents who have purchased advertising on the website, and not directly to the exclusive listing broker for the property. This has understandably created confusion among buyers and upset many listing brokers, but is being hailed a ‘win’ for buyers by StreetEasy execs and others, who encourage buyers to have representation and work with buyers’ brokers to protect their best interests with deals.
What’s All The Fuss About?
Though this poses a great opportunity for new agents, agents with little or no listings, and smaller brokerage firms, it has been concerning for agents WITH listings, who’ve reported a significant drop in inquiries coming directly from buyers since the program’s March 1, 2017 launch. There has also been much confusion for buyers, who think they are making an appointment with a listing broker, only to show up at the property and unexpectedly be greeted by a ‘Premier Agent.’
FACT: New development listings and listings over $10 million will be exempt from the program.
StreetEasy has been an integral part of NYC real estate; the site has singlehandedly become our MLS and created much-needed transparency by publishing every type of data imaginable about a building or an apartment, including detailed sales and ownership history. Buyers, sellers and brokers alike have become hugely dependent on it, and therein lies the issue: how do you control a giant conglomerate that we created and now rely on?
This is the result of having no MLS in the largest real estate market in the world. That’s right, there is NO MLS in New York. Prior attempts have been made to create an MLS, but rivalry and a lack of partnership among NYC firms, have made it next to impossible to establish.
So Where Does This Leave Us, And How Will This Impact The Market?
In New York, 90% of deals are co-brokered (where one agent represents the buyer and another the seller); but you can expect that number to rise. This will not only cost listing agents commissions, forcing them to split with agents who advertise on StreetEasy; it will cost sellers too, as sellers typically pay a reduced commission if no agent represents the buyer.
StreetEasy says this is advantageous for buyers, in the sense that it’s crucial to have a buyers’ agent representing them to help analyze information and advocate for their interests during the often-complicated purchase process in NYC.
FACT: Zillow paid $50 million to buy StreetEasy in 2013. In February 2016, StreetEasy said its revenues had more than doubled since the Zillow takeover.
Unlike Zillow, which is generally used by foreigners and individuals who don’t live in New York, StreetEasy is primarily searched by local New Yorkers who are in the know and expect facts/transparency, and so I anticipate this to create upset among this core group of users.
FACT: The ‘Premier Agent’ program has been running on Zillow for some time and is the publicly-traded company’s largest revenue source, generating over $600 million last year.
With respect to possible violations of state laws, don’t hold your breath. StreetEasy takes its compliance with local and state laws seriously, and is most likely in full compliance. The ‘Premier Agent’ program is not going anywhere.
As far as StreetEasy is concerned, the company has been a beacon of light and one we have all grown to love, trust, and repeatedly turn to. I feel strongly that as a community, once all is said and done and the dust settles (i.e. StreetEasy irons out the flaws with the initial interface and rollout, which they have indicated they will do), we will continue to see them as such.