Buyers beware….There’s a storm brewing in the New York City real estate market and it’s a big one.
On March 1st, StreetEasy adopted the practices of its parent company, Zillow and debuted its ‘Premier Agent’ program. The initiative, which generated $600 million for Zillow last year, is effectively a ‘pay to play’ platform. The program allows unvetted brokers to buy advertising on the pages of another broker’s exclusive sales listing . The industry backlash has been making news and there’s no end in sight.
Previously, StreetEasy prominently featured the name of the exclusive agent, their brokerage and a link to their website next to every listing. By clicking ‘contact agent’ buyers were able to send a message directly to this agent. With just a subtle change to this format, StreetEasy has obscured this information and actively rerouted interested buyers to a ‘Premier Agent’, who has paid a significant fee for leads in the zip code.
While there is still a link for ‘seller’s agent info’ this is overshadowed by the seemingly more informative ‘learn more’ button. Once you’ve entered your contact details and clicked this link you’ll be directed to a Premier Agent. Worryingly, this agent may have little or no knowledge about the listing or the neighborhood. They may even be working in a different state.
Calling the telephone number in the contact box will not connect you with the listing agent either, but again a Premier Agent who will likely have no more information than you already have from reading the listing’s page on the site.
This audacious move by StreetEasy has provoked the Real Estate Board of New York’s (REBNY) lawyers to write to the Department of State. REBNY rightly claim that StreetEasy’s actions not only lead to ‘consumer confusion’ but also violate a state regulation that prohibits the advertising by an agent of of another agent’s exclusive listing.
As REBNY lawyers stated in their March 3rd letter to the Department of State:
“The Premier Agent Program is identical to a real estate agent purchasing a billboard, advertising another firm’s listing on the billboard without identifying that firm, and including just a telephone number or generic email (without the advertising agent’s name or picture) for the consumer to use to contact someone for more information”
The brokerage community on the whole is deeply concerned by StreetEasy’s new business practices. Anecdotally, brokers in our office have encountered disgruntled buyers at open houses, angry and frustrated that ‘Premier Agents’ have misinformed them about the listing, misrepresented the property or incorrectly stated that the property is already in contract or unavailable.
Now don’t get me wrong – working with a buyer’s agent is a very wise move in any property transaction, particularly as it comes at no cost to the buyer (fees are paid by the seller and split between the seller’s and buyer’s agents). However, finding a buyer’s agent should be based on some due diligence – asking for recommendations and basing a decision based on the broker’s reputation, ability and personality – not just on the click of a button.
“…the listing broker ultimately has a fiduciary responsibility to get the best price for the seller, which often means buyers won’t have much luck negotiating down a price unless they have their own broker…”
If you do get redirected to an agent, remember your priorities are to get accurate listing information and then to seek your own representation. Always ask the agent to disclose whether they’re the listing agent or a buyer’s agent (agents have a fiduciary duty to disclose this). If you’re considering the agent to work on your behalf, be sure to take time to research them – easy to do online or in person – and decide whether their experience and knowledge will benefit you.
Another option is to bypass the ‘learn more’ link altogether and instead click on ‘Seller’s Agent Info’. You’ll be directed to the name of the listing agent and with one further click you’ll have their contact info. If you then want to see the property you can do so with a buyer’s agent of your choice, or one you’re already working with, to represent you. Alternatively, if you’d rather use another aggregated site, the New York Times real estate section is a great option.
StreetEasy have responded to the REBNY Department of State letter claiming that they have full compliance with advertising laws:
“We believe the arguments made in REBNY’s letter are without merit and are confident that the Premier Agent advertising program does not violate New York law…..We take compliance with laws very seriously and will fight any allegations to the contrary.”
We’ll see who plays their next hand first. Stay tuned….
The postings on this site are my own and don’t necessarily represent Brown Harris Stevens’ positions, strategies or opinions.