A House Divided : Launch of Rival Listing Service Sparks Bitter Real Estate Feud
In the posh confines of Westside real estate offices, where beachfront homes and Beverly Hills mansions are a stock in trade, a bitter feud is being waged over the control of a mundane but valuable commodity: real estate listings.
The battle has enraged brokers, confused countless agents and divided industry leaders. Millions of dollars are at stake, as well as the viability of a venerable industry institution, the local boards of realtors, whose once firm grip on real estate sales information is facing a serious challenge on the Westside of Los Angeles by a powerful group of brokers.
The tug-of-war over the listings could mean that location, location, location--the brokers’ traditional mantra--may no longer be as important as information, information, information.
“It’s a matter of control,” said Rick Campbell, an agent for Remax Estate Properties in Beverly Hills. “Are we going to let control of an incredible resource fall into a few hands?”
The Westside war of realtors was triggered last month when the area’s largest brokers--Fred Sands and newly merged Prudential Jon Douglas--helped launch the California Listing Service with a $2-million investment.
CLS--which is organized as a cooperative whose profits are shared by participating brokers--is one of the many multiple listing services nationwide that provides agents with essential sales information on availability, price, commissions and ownership. Agents use the systems to find homes for buyers, market their properties and determine prices.
The launch of CLS put it on a collision course with CLAW--the Combined Los Angeles Westside multiple listing service owned jointly by the realtor boards and associations in Los Angeles, Beverly Hills, Malibu and Southwest Los Angeles. Long established on the Westside, CLAW boasts 14,000 sale listings and until recently was used by 6,000 agents.
*
The brokers behind CLS said they started up their rival service because the Westside boards had failed to modernize their system, which even supporters criticize as outdated. They also wanted to create a single system that could give brokers and agents access to listings across the state instead of the current patchwork of multiple listing services, each with its own fee and unique set of forms and computer commands.
More important, the brokers fear that sophisticated outsiders--ranging from the phone company to Microsoft Corp.--would one day collect listing information directly from home sellers and distribute it to buyers, thus diminishing the need for realtors. By owning the listings and operating their own systems, the brokers say, they would be able to compete more effectively against the potential newcomers and protect their businesses.
“The formation of the California Listing Service is an outgrowth of the desire by the major real estate companies to control [home sale] information,” said Prudential Jon Douglas President Rick Merrill.
But many others consider CLS a power play by the brokers to further fatten their profits at the expense of agents and their board of realtors.
“The real estate community is totally upset. It’s craziness and we don’t like it,” said Marie-France Salaun, an agent for Asher Dann in Beverly Hills.
For more than a century, the agents who control the boards of realtors nationwide have acted as guardians of the listings. Before that information was available on computers, it was exchanged in person at weekly meetings and later compiled into three-ring binders, with copies distributed to members.
*
As their power and influence has waned, the boards of realtors--which once regulated and issued licenses before the state adopted that role--have come to rely heavily on their multiple listing services as a way to attract and retain members and generate profits. With approximately 6,000 agents paying $33 in monthly fees, the Combined Los Angeles Westside multiple listing service alone generates more than $2 million a year in revenue.
The Beverly Hills Board of Realtors, for example, has relied on the listing service for nearly a quarter of its revenue, said President-elect Art Spaeth. “We make a very good profit,” he said. “But all the money is spent on member services.”
Earlier this month, CLAW and its owners suffered a serious blow when Sands and Prudential California moved their 1,600 Westside agents out of CLAW and into their California Listing Service.
Since Prudential California and Sands generate about half the area’s listings, many other brokers have also signed up with CLS. (Many of those brokers and agents, however, still participate in the board-controlled listing service.)
While CLS has been given a big boost by the major brokerage firms, the first month and a half of service on the Westside has been marred by glitches and confusion. Many agents who have used the board’s system for nearly 15 years have been frustrated trying to learn an entirely new service.
“It’s absolutely horrible,” said one Prudential Jon Douglas agent in Los Angeles. “It’s a lot harder to get used to this than the last system. Our time [on the computer] has quadrupled.”
Such confusion is typical in launching a new system, CLS says. But the firm and its supporters concede that they underestimated the need for agent training, and have hired 50 computer experts to work with agents in major offices and will refund the first two months’ worth of membership fees. Despite its problems, CLS is here to stay, said broker Fred Sands.
*
“It’s permanent,” Sands said. “It’s not going to go away.”
Neither is CLAW, said Spaeth at the Beverly Hills board. But many real estate observers say Spaeth faces an uphill fight. In the San Francisco Bay Area, a group of large brokers is forming its own listing service and similar efforts have been launched in other parts of the country, real estate analysts said.
In response to such efforts, Ed Albers, president of the California Assn. of Realtors, said he has suggested that the boards take a look at their listing operations to see how they can improve their service and charge less than profit-making organizations.
“If they are not providing a service in a fair and economical way, they are going to have competitors,” he said.
The Los Angeles Board of Realtors, which has broken ranks with the Beverly Hills board, has pretty much conceded defeat. It has laid off four staff members and cut other spending to make up for the loss of revenue from CLAW.
*
The California Listing Service “will probably end up putting CLAW out of business,” said Executive Vice President Ray Rosenberg, whose group will focus its efforts on political advocacy and agent education.
But the Los Angeles board’s defeat does not mean the brokers have won the war over the listings, Rosenberg said. Instead, he said the rapid expansion of real estate listings on the Internet and other computer on-line services will allow home buyers to bypass the brokers, despite their efforts to control the information.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
The Multiple Listing Service: A Primer
What is MLS? A computerized directory of property available for sale in a particular community or region. Each listing typically includes the asking price, previous sale prices and transactions, a description and information on property taxes.
Who uses MLS? Only licensed real estate brokers and their agents can get access to the MLS, in return for a fee. The systems are not open to the public.
Who owns the systems? Primarily associations and boards of real estate agents and brokers. The groups contract with computer service firms to operate the systems.
How many are there? About 30 in Southern California and several hundred nationwide.
Why are they important? They provide critical sales information and serve as the trading floor of local real estate markets, helping match sellers and buyers.
