Tue 31 Jul 2018

7/31/18: FTC/DOJ DEADLINE for public comments on barriers to innovation, anti-competitive practices in real estate

Bill Wendel Public Seen by 254

Today is the deadline to submit public comments for the FTC/DOJ's inquiry into anti-competitive practices and barriers to innovation in residential real estate. We reviewed about 2/3rds of the nearly 50 individual comments submitted thus far. You can scan the entire list using this link:


Recommend reading comments already submitted by @tomwemett , Sissy Lappin, and Mark Holt. Steve Brobeck of http://ConsumerFed.org and Doug Miller of http://CAARE.org submitted extensive documents which exceed the 4,000 character limit on the form below:


INVITE FEEDBACK BEFORE SUBMITTING (or betterr yet, read my thoughts and submit your own?)

A revolution has been unfolding over the past 10 years, but not one real estate consumer advocates envisioned.


Instead of expanding homeownership, the US is struggling to recover from record low homeownership rates.

Instead of delivering more informed decisions, nearly 70% of Millennials experience buyers remorse, nearly double the rate of baby boomers.

Instead of saving $30B annually by conducting transactions online as predicted 20 years ago by McKinsey & Co, real estate startups have abandoned their original money-saving value propositions. What they save on one side of the transaction, they try to capture on the other side by double dipping (as Sissy Lappin asserts.)

Instead of enabling peer-to-peer transactions, the internet has become the greatest tool ever of in-house sales. While some assume the MLS is an open competitive marketplace, in-house dashboard are commonplace particularly in overheated markets with fierce competition for listings.

Instead of delivering transparency, BLIND bidding wars have normalized bidding over asking price. 25 years ago, housing markets were considered overheated if 6-10% of homes sold over asking price, in recent years, 60%+ have sold over asking price in some areas.


Instead of leveraging new efficiencies to lower transaction costs, 56% of Inman survey respondents admit that many agents discriminate against money-saving brokerages, see http://bit.ly/AGrevival.

Instead of fiduciary services on both sides of the transaction, conflicts of interest have been normalized. Teams nest conflicts of interest within conflicts of interest while the few remaining exclusive buyers agents struggle to survive.

Instead of limiting distribution of MLS listings, brokerages limit access to inventory preMLS. Homebuyers are required to sign dual or designated agency agreements, that turn pocket listings into double paydays.


Instead of empowering ordinary homebuyers, new apps turn any listing presentation into an inside deal for a network of investors - so called iBuyers.

Instead of leveling the playing field for independent real estate agents, a “real estate arms race” pits VC-funded consolidation vs megabrokers building BILLION dollar siloed data companies (even their own agents — independent contractors — fear “their data” is being misused).

Instead of focusing on active inventory in the MLS, competition is now to predict who’s most likely to buy or sell by tracking leads online or scanning private email.
Surveillance capitalism, one vendor described as Stalker 2.0, threatens privacy during both the transaction & homeownership cycles

Instead of providing affordable housing for the next generation, prices have risen to unsustainable levels. If blockchain & cryptocurrencies mainstream factionalized ownership, housing prices will further disconnect from underlying fundamentals.


Regulators need to anticipate challenges in the coming decade particularly as megabrokers cannibalize competition & housing prices correct. At a minimum, those include:

  1. Fee transparency as Sissy Lappin recommended.

  2. Unbundled fees as Tom Wemett & Doug Miller argue.

  3. Extend the need for privacy protections that Mark Holt flagged to a Real Estate Consumer Bill of Digital Rights. To prevent the misuse of personal data by megabrokers & 3rd parties, GDPR-like disclosures & protections need to be built into AI & business processes to ensure agents acts as “information fiduciaries” throughout the homeownership cycle

  4. As innovators cocreate a money-saving real estate ecosystem capable of delivering $30B annually in consumer savings, use some savings to fund an alliance of consumer groups, including CAARE, to counterbalance Realtors on regulatory boards & standards groups like RESO.

  5. Encourage development of a funding mechanism to offset investments by NAR subsidiaries & others that focus on sustaining innovation rather than money-saving innovations.


Bill Wendel Tue 31 Jul 2018

Attorney Doug Miller of http://CAARE.og authorized me to share the 10 page public comment he submitted yesterday to FTC/DOJ. It hasn't appeared yet on the government site, but may contain points you want to amplify if you plan to add your thoughts before tonight's deadline.

Steve Brobeck of Consumer Federation of America, who participated in one of the panels at the FTC/DOJ workshop in Washington, also submitted this testimony:



Jim Battan Wed 1 Aug 2018

Here are the comments I submitted to the FTC/DOJ today:

July 31, 2018

This is public comment for the Federal Trade Commission and Department of Justice joint public workshop held in Washington, DC on June 5, 2018.

I am Jim Battan, Founder and CEO of Builts Corp, a real estate technology startup focused on the residential real estate marketplace. I started the company because of eye-opening insights gained during the buying and selling of my own homes both via agents and FSBO (two FSBO sales, one agent sale, one FSBO buy, and two agent buys). What is usually referred to as a "complex" real estate transaction is primitive compared to many "hard tech" industries (airplane mfg, autonomous driving, and space exploration, e.g.). Granted I have a Mensa-level IQ, but it was very easy for me to FSBO, despite many impediments by the real estate ecosystem and confusion because of the varying laws, procedures, etc. My further extensive research over the past 18 months has shown that the real estate industry in the US is clearly anti-competitive and very unfair to the American consumer, and commission costs are so exorbitant as to prevent mobility of those wanting to move to more desirable locations. Despite my findings of numerous obstacles to a well-functioning marketplace, I will focus my concerns on the Workshop's four questions.

There has been a huge amount of competition entering the marketplace over the past ten years. New agents continue to flood an already oversaturated profession, brokerage models have changed to increase competition between traditional full-service agents, pocket listings have increased, reduced commission companies are gaining traction, and the Internet is making the availability of information about neighborhoods and homes much more accessible to the average consumer. In today's hot market, it's almost trivial to sell a home by any method. It has become clear that many people can do most of the work of finding suitable properties for sale without the assistance of an agent, and people who complete their own taxes using software that hides the 3.9 million words in the US tax code could certainly do FSBO if they had a platform that walks them through the process. The percentage fees that brokers charge has largely remained static, and with increasing home prices, the commission amounts are eye watering. But the work an agent does is largely the same regardless of the price of a home, so in high-value markets, consumers have to pay so much in commission that they could instead have sent their child through community college or bought a new car. Consumers are generally happy with the services an agent provides, but feel taken by the extremely high commissions. Ironically, due to the huge overhead of being an agent, with association and MLS fees, brokerage cuts, marketing costs, etc, most agents don't make a lot of money. There has been an industry-internal vocal push to "raise the bar", for it is astonishingly easy to become an agent, and there are numerous incompetent ones that give the industry a bad rap.

Internet technologies have greatly improved the process of finding, buying, and selling a home. Data ownership and access are the two current main flash points in the industry. The traditional brokerages are losing "their" data to portals such as Zillow and are increasingly calling to "take it back" to maintain their anti-competitive behavior. However, the MLS applications and data structure underlying those listings are ancient and archaic, extremely limited, largely closed to public access, and vastly fractured among 700+ organizations. Despite being the "envy of the world", the MLS is a mess compared to any modern data storage paradigm. It has obviously served its purpose for dozens of years, but it's time for a radical transformation. The only solution I've identified is a "clean slate" system that I am developing called the Open Real Estate Data System (OREDS) that puts the ownership of a property's extensive qualitative and quantitative attribute data into the hands of the property owner, who can then decide whether to keep all or some of it private, allow an agent to augment and market it for a sale, sell the property using FSBO, or use flat-fee professional assistance that is the norm in the legal, financial, and medical professions but not in real estate. OREDS will be published using CC-SA copyright protection (similar to Wikipedia) so that the industry can continue to enhance it for public benefit. Infighting and momentum will likely delay any meaningful consolidation of MLSs in my lifetime. The current consolidation standard, RESO, is merely a common data dictionary for the existing primitive MLSs.

"Competition" is nuanced. There is certainly vigorous competition in the sheer number of brokerages and agents, so agents spend much of their time prospecting for potential clients. There are numerous barriers to comprehensive competition, with disparate sources. In my experience, buyer agents won't touch FSBO listings unless the seller offers a full 3% BAC. (Numerous brokers would call me and verify that I was offering less than 3%, and would never present a potential buyer. As soon as I increased my BAC to 3%, I immediately had an order-of-magnitude more showings.) Each state defines its own real estate laws, leading to a need for specialization in a given geography, and each state's regulatory boards are largely made up of industry insiders, so many states have rules against rebates, fee-for-service, and/or pricing disclosures that would result in greater transparency and reduced costs for the consumer. Commissions are largely kept quiet, under the cloak of anti-trust laws. Associations are largely self-governing for Code of Ethics violations, and the number of dishonest schemes grows daily. Dual agency, exacerbated by pocket listings, can put consumers at a disadvantage since most don't understand any disclosure of the implications of keeping both sides of the transaction. Fear, uncertainty, and doubt plague the average consumer due to the numerous disparate laws and large transaction value, and agents can play into that and prevent competent owners from attempting FSBO and saving tens of thousands of dollars.

After $4B of VC investment and all the talk of "disruption", there's been very little. Most "competition" in the industry has taken the form of reduced commission brokerages, agent productivity tools, lead generation, and online closings. Does the industry need to be watched for anti-trust and anti-competitive behavior? I certainly don't trust today's real estate industry, so do recommend you keep an eye on it. I'd recommend you focus on making all state associations fairly represented, push for common laws across the states, and set the stage for flat-fee-for-service transactions. Capitalists such as myself will take it from there.

Jim Battan
Founder and CEO
Builts Corp.


[deactivated account] Wed 1 Aug 2018

Well its too late now to put up my comment.


Bill Wendel Wed 1 Aug 2018

Jim Battan, so glad you’re expanding the frame of reference for industry critiques. How can we help you introduce Builts to the Boston market place and collaborate with more intention in the future?

A number of us, including Doug Miller of http://CAARE.org, are setting some goals, post FTC/DOJ public comment period. Our experience is that neither regulators nor NAR have the resolve, vision or motivation to change the #RECartel. As the head of ARELLO wrote:

ARELLO believes that the regulation of real estate licensees properly exits at the State level and is not a deterrent to real estate competition. Jurisdictions continue to see an increase in individuals and brokerages entering the marketplace, echoing what was heard at the workshop, competition is alive and well.

Full comment: http://bit.ly/CommentARELLO

Dazza, are Legal Hackers at http://Law.MIT.edu still going to do a follow-up event with Doc Searls and the #VRM/#CustomerTech community? I’d love to make progress on (at least) three items:

  1. Updating a Real Estate Consumer Bill of Rights based on #GDPR;

  2. Building an #IntentCasting prototype that enables buyers & sellers to interact directly;

  3. Collaborating with credit unions to build #HousingID functionality into their MyCUID vision.

There are three months before NAR arrives in Boston for their annual convention, which means we’ve got 10-12 opportunities to meet weekly to make progress on shared goals.

Last Friday, some of us met outside on the deck beside the Boston Tea Party for their sunset happy hour (5:30-9pm). Should we do it again this Friday to build momentum with local real estate reformers / innovators from outside the traditional industry?

Nomination’s for this week’s agenda? Instead of waiting for the FTC/DOJ report, we can drive reform and in action by... (fill in the blank)



Bill Wendel Wed 1 Aug 2018

LOL typo... that was meant to read, Drive INNOVATION, as ARELLO and others are already driving in action ;-)

Maureen, sent you a private message via a Basecamp about submitting your comment to the FTC/DOJ. Can you reply there?


[deactivated account] Wed 1 Aug 2018

I asked you a while back if you would put my comment up proper form for this thing. Too bad we didn't do it. If you still have time to do it then great do it. No time to learn how to how to acquire this particular technical skill today have a great day