Victory for virtual agents in US could lead to threat to traditional agents in Australia

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The settlement of a lawsuit this week threatens to have a major impact on the way agents work in the future–to the possible detriment of large numbers of people in the industry today.

The lawsuit is between the US Department of Justice and the National Association of Realtors (NAR).

The low down is that traditional real estate agents in the US can no longer withhold their property listings from virtual agents. This gives a big opening to businesses like Redfin, which calls itself “the industry’s first online brokerage for residential real estate.”

The fact that all this is happening in the US means there won’t be an immediate impact on Australian agents. But, if a powerful new web-based agent business model emerges in the US as a result, it could be just a matter of time before Aussie agents start to see a threat from such businesses.

Glenn Roberts of Inman News wrote an excellent piece on this. (subscription required)

Read the settlement (PDF) (thanks to

Read the official line from the National Association of Realtors

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  • Glenn Batten
    Posted May 30, 2008 at 3:09 pm 0Likes


    For those that don’t fully understand the real estate model in the US as it applies to Agents, Brokers and MLS’s could you provide a brief explanation to everyone. You seem best equipped with your personal knowledge.

    I believe that the fundamental differences in the real estate industry between our two countries will effectivley stop this sort of issue in Australia. We have a similar model to the UK and I can’t see an online broker like Redfin being able to legally insist on receiving every agents listing details in either country and then claim a side in the transaction.

    Has REA done due diligence on this or received a legal opinion on this being possible in Australia that you wish to share?

    In fact if it was indeed legally possible in Australia and REA did not position itself to such a model, wouldn’t REA have as much to lose as the agents on this?

    In fact, if it was possible, REA would be in the box seat to change to such a model wouldn’t it?. You have 95% of the agents in Australia sending you listings already. You have the majority share of the internet traffic relating to real estate in Australia.

    Still, IMHO I don’t think it could be done here but it does makes interesting reading.

    Another topic that effects Agents in the US but is not relevant here…. A company REAL is suing a range of businesses including agents, property portals, builders for displaying property for sale on a map. It seems there was a patent registered and they want to be paid for everyone that has infringed their patent and thats a lot of people… millions of people.

    They have been hanging around like a bad smell for years but they have had some investors inject money to forward the case and who will undoubtedly pocket a large percentage of the damages if they win. It will cost Real Estate industry a bucket of money if they win. I think I read somewhere that they were asking for $4k or $5k per agent and substantially more from larger and bigger companies caught up in it. .

    Those caught up in the action include National agency groups like REMAX, National Association of Realtors and its 1.3 million members, the National Association of Home Builders and its members and other websites, companies and associations.

    The company retained to fight the matter is Proskauer Rose which apparently has 750 lawyers on its side and is most famous for winning IP cases against Youtube and Google plus other large successful ip cases. This is a serious heavy hitter. see –

  • Greg Vincent
    Posted May 30, 2008 at 6:37 pm 0Likes

    Dave, the virtual office could happen in Australia or NZ a lot faster than most agents would believe. The main thing that has stopped it happening in the US is that the MLS system is so strong & people would be crazy to list with any agent outside of the MLS system.

    The last figures I saw, the MLS had over a million agents who all have full access to sell each others listings across the country. It’s EAC multilist on steriods.:)

    Whilst over here both the sellers & the agents now appreciate the importance of having their property on REA & Domain. These portals have become such a powerful tool & is central to most marketing campaigns because of the level of enquiry generated & the online market exposure.

    Simply being a licensed real estate agent with a Corporation Licence makes an agent eligible to a subscription on your site doesn’t it? Or is it even less than that?

    I suppose you just have to ask the question. Can you see any real estate marketing other than a window display that a virtual agent can’t offer their client? Considering how little window enquiry happens nowadays would this be detrimental to the sale?

    The example you mentioned about & another company I saw look like the beginnings of this change to the industry.

    It’s actually quite scary to think how quickly & cheaply an innovative thinking agent could set up a virtual agency in Australia or New Zealand compared to the US.

  • SSSR
    Posted May 30, 2008 at 9:28 pm 0Likes

    One trend that I have noticed is Australia is new real estate agencies opening up that look like a nice trendy cafe. I can go in, have a latte and shoot the breeze with an agent about recent sales and various other local tid bits. Other agencies are setting up a very corporate environment that is more professional and inviting.

    Agencies are starting to evolve to capture a changing market. A professional shop front, busy sales people and a nice car here or there, goes a long way in establishing that “perception” that this is the place I want to have my listing, they must do a great job if they have a set up like this.

    Customer service is still important to people. A real person in a real office, whose sole function is to sell property makes my time poor week, very convenient.

    The point I am trying to make with models like Redfin and OneAgency is that these are lone agents working their area from home. They dont get the benefit of working in an office with other sales people, sharing/collaborating market intelligence, bouncing ideas/opportunities off each other. There is big underlying value in people coming together to network and mutually grow their knowledge base.

    JetAgent seems to just be like a zero agent, a private listing portal that also does the contracts as a small added extra.

  • Glenn Batten
    Posted May 30, 2008 at 9:29 pm 0Likes


    Online only agents are a reality in all countries already. No secret there at all. What this lawsuit means is that one agent whether they be an online agent or not can insist on having access to all agents listings so they can sell them.

    Online agents in Australia still represent the seller however in the example given, from what I can work out Redfin would be representing the buyer in the transaction and introducing them to the property.

    That is something entirely different and with that sort of legal right anybody with good exposure to the masses of potential buyers could leverage that exposure to earn commission on a lot of transactions.

    Instead of acting as a media source like a newspaper presenting homes to buyers on behalf of the agents (ie. REA or Domain) they are now able to present them on their own behalf, and should they introduce them to the property they get to keep some part of the commission.

    There are buyers agents in Australia but they are still quite rare. There is no nationwide MLS system for these sort of agents to take advantage of and Australians are only use to paying commission on one side of the transaction and I cant see a court forcing agents to give access to their listings to a third party and share their commission..

    Do you believe that an Australian court would even consider ordering you to share your commission?

    In the US they always share with the MLS systems so the sharing part is not new. In fact the public know that there will be commission paid on both sides of the transaction. The court case just seems to say that if you share, you have to share with everyone that is qualified.

    They are strange lot over there 🙂

  • Greg Vincent
    Posted May 31, 2008 at 9:18 am 0Likes

    Glenn, In this context do you consider an online agency & a virtual agency to be something different ?

  • Glenn Batten
    Posted May 31, 2008 at 10:25 am 0Likes

    I consider an online ONLY agency to be a virtual agency however the example of Redfin from Dave’s post does not fit into the Australian definition.

    Whilst Redfin does sell houses like agents do in Australia, their primary business is when “Customers search for homes on our website, arrange home tours with Redfin and, when they’ve found a home they like, get started on an offer via our website.”

    These properties on their website belong to agents around the US because they get the MLS listings and now this settlement ensures that they can not be excluded by agents who must provide them their listings.

    Nobody is doing that in Australia. The reason why is that they are not fed all the listings from other agents nor do they have any way of getting this information (other than scraping REA). Our laws are totally different in that to offer a home for sale in our windows, on the internet etc etc you must have an authority to sell.

    Just so its clears, brokers are what we call agents and agents are what we call salespeople.

    I believe that in the context of this story, a virtual agent (or a virtual broker in US speak) is one who leverages access to other agents listings (which is now entrenched in law) with internet marketing to present property to potential buyers and then represent them in the negotiations.

    It is this context that I cant see happening without major changes to our industry and laws, and honestly I just cant see that happening at all.

  • Robert Simeon
    Posted June 2, 2008 at 11:19 am 0Likes

    Ah – the crash test dummy theory. May work with low price range property however real estate is much more about the relationship which continues to resonate throughout our industry.

    Look at the examples that came out of America over the last ten years that have been a complete disaster “the bums on seats theory”. Look big – think small.

    Look at how difficult the Remax model is fledging under the local market conditions. The leading real estate agencies are running a finely tuned customer based relationships model as against the ones that struggle still opting for the “crash test dummy theory”.

    One only has to look at market share and whether or not it continues to increase or decrease to ascertain which is the preferred model. I agree that the internet is vital however some today share a different *outlook* on which are the most viable options.

  • PaulD
    Posted June 2, 2008 at 1:51 pm 0Likes

    I think you are right as far as the difference between the agency practice in the US v here. There would need to be such a fundamental change in such a short time, that I don’t think it could possibly happen in the next 5 years at least. I have had a look at many “virtual” agencies based here, and the major problems that they seem to have are:
    1. Not enough listings in any one location. They try to accommodate the whole market and don’t do it well at all.
    2. Quality of information. The photos and property information are of newspaper standard. In other words brief and non descript. Generally the photos are really dreadful, and many don’t even have photos. This is particularly the case with fsbo’s because the vendors send low quality images and think it should be good enough – and it’s not !

    Many times you just stumble onto these sites, they have no real market presence, and people don’t go back to a site that has little or no information on areas they are searching, so they struggle to maintain any credible traffic. There’s not a lot you can do about those problems unless you throw a heap of money at it, and the people who want to be on those sites, don’t want to throw the money.

  • anonymous
    Posted June 2, 2008 at 5:04 pm 0Likes

    Has anyone heard the rumor that Domain sacked their GM? Does anyone have more info?

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