(Update 11/19: Some of the links to the policy did not go to the particular provision but only to the beginning of Part I, Part II, etc. Corrected today.)
Sound far-fetched? In fact, I think it may be conservative.
Whenever I read an article on Inman about the VOW settlement, someone invariably posts a comment to the effect: “This does not matter because the guys who build these things will be out of business thanks to this market.” I spoke with a high-ranking NAR staffer at the NAR convention in Orlando earlier this month; that person’s view is that VOWs are going to become less common in the coming months and years.
On the contrary: I think that broker and agent web sites with VOW capabilities will proliferate for a variety of reasons.
Building on IDX. First, note that such sites do not have to stop being IDX sites. The VOW policy provides that VOWs can offer many different functions including IDX; nothing prevents an existing IDX site from being augmented with VOW capabilities. In some markets, IDX is so crocked that VOWs will inevitably be attractive. Some MLSs still only provide 30 fields for use on IDX sites; others impose silly rules or interpret the NAR model rules in very quirky ways. I’m told some MLSs still make IDX an opt-in system (despite the fact that violates NAR policy). I’m also told that some MLSs allow IDX sites only if they are built by the broker in-house or by the single IDX-site-building vendor the MLS has endorsed. Many MLSs do not permit agents to have their own IDX sites. There is a lot of stuff IDX sites generally cannot do: for example, displaying off-market listings (though some now permit solds to be displayed) and listing price history.
Arbitrary limitations like these will be difficult, if not impossible, under the VOW policy. If your MLS does not comply with the policy, you can report it to NAR. If it still does not comply, NAR has to turn it in to the Department of Justice. It’s likely many of the couple hundred thousand IDX sites out there will take on VOW characteristics. They’ll show consumers as much as they can using IDX data and then tease them with promises of richer data if they register. (Young folks are less shy about registering on sites now, too; think how useful Facebook and MySpace are if you don’t log in.)
Many sites per broker and per agent. Second, the VOW policy expressly permits brokers to have multiple VOWs working with multiple ‘affiliated VOW partners’ or AVPs. (More on AVPs in a moment.) The policy also says that salespeople/agents have nearly all the same rights as brokers, including the right to have multiple VOWs, subject only to the broker’s oversight and consent. If MLS says ‘no,’ brokers/agents can report it to NAR and DOJ. Some brokers will say ‘no’ to their agents who ask to operate VOWs. I expect many more will just say ‘yes’ because they don’t want trouble with their agents.
CRM. Third, VOW data makes possible a great many sophisticated customer relationship management capabilities on the web sites of brokers, something traditional brokers will not overlook. Traditional brokers were some of the first to operate VOWs, and they will likely continue to try to capitalize on the capabilities VOWs offer. (I know at least one large brokerage firm that has managed in 2008 to dramatically grow its revenues from referral fees it charges its own agents for leads from the firm’s IDX site. I bet that firm will look hard at enhanced CRM capabilities possible with a VOW.)
Who wants to be an AVP? Fourth, the way that AVPs are defined in the policy, almost anyone can be one. The policy smoothes the way for companies to build ‘roll-up’ VOWs. I use the term ‘roll-up’ or ‘drill-down’ to refer to sites like REMAX.com, Roost.com, and Realseekr.com, which host and ‘co-brand’ IDX sites for local brokers. When you go to the home page of a roll-up site, you select a geography to search, the site drills down to a locale, subtly rebrands itself as the IDX site of a local broker, and shows you pretty much all the listings in the market. Roll-ups face challenges from the whacky variety of IDX rules and enforcement attitudes that exist out there. But MLSs can do little to restrict co-branding under the VOW policy. They cannot prohibit AVPs from building sites for brokers in return for referral fees; in fact MLSs cannot concern themselves with the means of compensation between broker and AVP at all. Under the VOW policy, roll-up sites can expect more consistency and thus more efficiency.
With lower barriers to being a roll-up, think of the players who might want to have them. Any national media entity frustrated with dealing with the myriad of rules and restrictions MLSs impose on data licenses could just find a broker or agent in each MLS market and build a roll-up VOW site: a national television network, a consortium of newspapers, a mortgage bank (assuming any of them still have money). I’d be disappointed in the management of Move, Inc., if they did not find a way to offer a VOW to every agent and broker in the country by the end of 2010.
Stranger stuff yet to come. Those are just the obvious possibilities. What about the more creative ones? My favorite so far is an MLS, frustrated by the unwillingness of its neighbor MLSs to discuss collaboration to deliver efficiencies to their broker participants; the MLS figures it will become an AVP for its brokers, acquire data from the neighboring MLSs, and help its brokers have complete VOWs with all the regional listing information on them. (I’m not sure there aren’t some problems with that plan, but I was taken aback by its boldness.)
So, I promise not to take this post down until after January 1, 2011. At that time, we’ll see if my prediction was correct.