Can you fight City Hall? Can you wrestle with an acknowledged power that has overtaken consumers? How significant are individual voices of censure?
Last week I cancelled my PRO account at StreetEasy and posted on social media my hope that all self-respecting agents with integrity do the same. I wrote, “We should not support misleading advertising which only confuses consumers.” The post attracted 60 likes, 15 comments and 1 share. Not a storm of response but a sentiment supported publically by the heads of Compass, Corcoran, CitiHabitats and Town Residential who each announced to their agents that they would not reimburse participants in StreetEasy’s newest Premier Agent advertising program which was introduced to New Yorkers on March 1st.
Real estate agents have had a love/hate relationship with StreetEasy since its launch in 2006. The company is a web aggregator that compiles searchable real estate listings from agents and generates revenue by selling advertising back to agents. The database counts the number of days on the market, stores closing information, and provides alerts for new listings and price reductions. Over the years, the website has added a variety of features. In 2009 it recognized Buyers’ Agents and encouraged brokers to claim buy-side deals, ensuring that both sides of a transaction gained recognition. About the same time, the PRO feature debuted and for $75 monthly, agents were identified as a PRO and given easy access to closing stats. Agents could also pay to “feature” listings which brought properties to the top of a search page to increase visibility.
In July 2013, Seattle based Zillow purchased StreetEasy for $50M in cash. At the time of the acquisition, Zillow was a recognized brand outside of New York with 61.3M users but had been unable to secure any significant market share in Manhattan. In February 2015 Zillow acquired Trulia for $2.5B in stock. Both StreetEasy and Trulia operate today alongside Zillow as separate brands and each sells advertising to agents. In a 2014 interview in the NY Times, Zillow’s CEO Spencer Rascoff acknowledged the importance of the New York audience: “It is the largest real estate market in the country. Therefore, it’s critical for Zillow to win in New York, and we acquired StreetEasy with that goal in mind.”
Under Zillow’s watch in spring 2015, StreetEasy introduced 2 separate paid “Expert” initiatives, one for Buildings and another for Neighborhoods, replacing an earlier “Top Agents” feature which had been based on merit. I recall a subsequent heated exchange during the Q&A at an industry event when a leading agent sparred with StreetEasy’s General Manager Susan Daimler about the integrity of these paid programs. The agent said that for $805 a month he could be one of three “Building Experts” in a condo where he himself resided and where he had transacted a few hundred deals; he declined the advertising offer asserting it was false and misleading.
The controversial Premier Agent program
If we thought StreetEasy’s Building and Neighborhood Experts programs were controversial, you ain’t seen nothing yet. Fast forward 2 years, and StreetEasy has again launched a new advertising product offering agents an opportunity to be listed as the contact or Premier Agent for the exclusives of other brokers—not including rentals, new developments or properties over $10M.
Nationwide the Premier Agent feature generated more than $604M in revenue for Zillow last year according to a report in The Real Deal. Across the country, agents are spending as much as $5000 monthly boosting Zillow’s revenues by 35% from the prior year; revenues from Premier Agent are expected to jump in 2017 another 25% to $755M.
On Premier Agent’s Frequently Asked Questions page, StreetEasy maintains that agents can “purchase leads on New York City for-sale listings within a selection of  ZIP codes.” Susan Daimler justifies the program saying: “It is crucial for home shoppers to have a buyer’s agent on their side, helping them analyze information and protecting their interests during the shopping and purchasing process.” I wholeheartedly agree that buyers benefit from agency representation. However, for me, the problem is less about the consumer bypassing me as a property’s Seller’s Agent, and more about the buyer being directed to an unvetted third party of undetermined experience who may have little or no knowledge of the property or neighborhood. It’s not readily apparent to the consumer that the Premier Agent has paid for the label.
StreetEasy’s new advertising platform is alarming because it is revenue driven by a media company and does not put first the best interests of the consumer and is creating confusion. REBNY asked NY state regulators to consider whether the program violates state advertising laws. Because Manhattan lacks a Multiple Listing Service, it was all too easy for StreetEasy to enter the market and gain dominance as the go-to online marketplace for NYC real estate shoppers. If agents want to advertise for buyers on websites, they have every right to do so, but their paid sponsored advertising should be evident and transparent. Similarly media companies have every right to provide advertising products for paying customers to increase company revenues. The market is wide and there’s opportunity for all players, but consumer interests, fairness and integrity, should not be compromised.