REBNY vs. REBNY vs. REBNY / portal potties still percolating

REBNY portal wars get curiouser and curiouser (nastier and nastier?)
The much-discussed announcement by the Real Estate Board of New York to create an open web portal for members of the public to review all REBNY listings continues to generate criticism, commentary and controversy.
The December Real Deal REBNY’s portal plan stirs revolt by Jen Benepe gets into impressive detail, with many interesting quotes from a variety of sources. Some of the quotes throw more heat than light about what the fight is all about, but I’ve been trying to read between the lines.
The plain vanilla explanation for doing this is offered by REBNY president Steven Spinola (“SPIN”ola sometimes seems very appropriate):
"We wanted to provide an additional option to our brokers to get their listings to the public," he said, adding that opening up member firms’ listings was a "great value of information to the consumer." The database would cover Manhattan properties and parts of Brooklyn, and would expand to other boroughs.

Proponents of the publicly accessible database said the now-private information it contains is a huge asset waiting to be exploited, and called it the next logical step into the future, in much the same way Google or Yahoo have capitalized on the breadth of data available on the Internet.

Forgive me for not having noticed any other efforts by REBNY to create structures or rules of"great value … to the consumer."
small vs. big, or a free-for-all?
Clearly, there is tremendous anger coming from the smaller firms (the so-called “independents”) about the process for this huge change in REBNY’s approach. They feel they got railroaded.
"A lot of smaller firms think they will go out of business and that’s what this is about," remarked Klara Madlin, who owns her own firm, which bears her name. "The other reason people were so angry is that nobody was consulted, and nobody knows exactly what this portal is going to be," she added.

Carol Levy, president of Carol E. Levy Real Estate, said that up to now she had been very happy with how the RLS had helped her business. But after attending a REBNY meeting where the plan was unveiled, she found her reaction was similar to many other representatives of the 150 or so firms who attended: "It was a meeting full of anger and anxiety in the way we were treated in such a dictatorial way," she said.

The article says that reaction to the portal plan is “split sharply” between REBNY firms based on size, but I am not so sure that is true.
My earlier post included the Dottie Herman quote from the NY Sun (“Nobody has really agreed 100% to anything yet," Ms. Herman said. "There are some roadblocks that people haven’t agreed to at this point."). The major firms have spent major bucks creating (what they view as) major web portals of their own. Corcoran, especially, brands all over town (and all over the media).
even ridiculous stuff deserves consideration
Not sure how statesman-like SPINola sounds here:
Spinola said the costs of the system and how they would be assigned was under reconsideration, and he noted that all objections, "from the reasonable to the ridiculous," would be addressed.
(Actually, I am sure: not very statesman-like.)
Levy & Madlin get worried
I get it that smaller firms are upset about a fee structure that charges them $3,500 to participate and larger firms only $7,000, as I said before. I don’t get Carol Levy’s fear (also expressed by Klara Madlin in the article), expressed here:
Levy projected that her clients in buyer-broker deals would default to the listing broker "to shave off a percentage of the fee."

Levy, who specializes in $8-to $10-million properties, said she makes about 60 deals a year, 50 percent of which are buyer-broker deals, using the exclusive property listings available on RLS. She predicted that it would cause the demise of small brokers in much the same way many travel agents went out of business when American Airlines took over airline reservation systems.

I don’t know why she is worried that her buyers will cut her out of a transaction because they think they can get a better price by going directly to the listing agent. Apparently she is concerned that a listing agent may make a deal with a seller that the fee will be x% if split with a co-brokering firm but 1% less if no other firm is involved.
In that case, however, there is no benefit to the buyer from going direct, unless the seller wants to share that “savings” with the buyer. Second, if Levy feels that buyers won’t perceive that she adds value to the transaction she should not worry as much about her fee as about why buyers won’t feel she is “worth it”. Third, if she is concerned that internet-savvy consumers will find out enough information on the web to render her irrelevant to a transaction, she (a) needs to wake up and smell the coffee and (b) needs to re-think her business model.
She says she is afraid that this portal will put her out of business! But if she is worried that only the big firms will have the resources to exploit the dominating positions the web provides, she should welcome a REBNY portal that puts all member listings on the same (web) page, and treats all member listings the same. The scenario most likely to result in her being buried on the web is that no one can find her listings on the web, or has to know to go to her firm’s website.
The depth of enmity within REBNY is seen in the reaction to Spinola’s attempt to reach out to the smaller firms by including three designees to be more involved.
Spinola recently asked that the medium-sized and smaller firms elect three representatives to the technology task force that is working on the portal plans and reviewing requests for proposals that have been sent to six database designers.

According to Spinola, the representatives are Reba Miller, owner of RPMiller & Associates, Inc.; John N. Wollberg, executive vice president of ATCO Residential Group; and Michele Peters, chief executive officer of Weichert Realtors — Peters Associates.

But soon after their appointment, the task force members were already being privately derided by broker critics, one of whom described them as "lambs" being "used" to push the organization’s point of view.

Here is a (presently) far-fetched (potential) consequence of this war: REBNY never gets this idea off the ground because of (a) too much bad blood and (b) they find out their present technology platform can’t do (easily, cheaply) what they say they want, which leads the Big Girls and Boys who dominate the residential brokerage part of REBNY to cede much more power to the smaller firms. I don’t see REBNY’s residential division blowing up over this (though it may have earned that reward), but maybe MANAR recruits a ton of new members.
circling the wagons against the government?
Benepe suggests I was not being paranoid in suggesting an early link between the (premature?) announcement and government investigations:
The suddenness of REBNY’s announcement, made without widespread debate, led some members to speculate that the listings service may go public because of government scrutiny.

The New York Attorney General’s Office has investigated REBNY’s listing practices, and the group also faces scrutiny over alleged commission price-fixing.

REBNY not especially residential-friendly
The Residential Division of REBNY has long been the tail that does not walk the dog. Here is the description of REBNY’s members from its own website:
REBNY’s membership consists of the major office and residential property owners and builders, brokers and managers; banks, financial service companies, utilities, attorneys, architects, contractors and other individuals and institutions professionally interested in Manhattan real estate.

Senior industry executives from these ranks lead REBNY committees dealing with such crucial matters as Tax Policy, City Planning and Zoning, District Rental Conditions, Land Use, Buildings Codes and Legislation. The committees’ findings and recommendations shape Real Estate Board positions on major policy issues affecting REBNY members’ businesses.
I count one residential member among the 17 officers (Elizabeth Stribling from the eponymous firm), three residential members from the 24 “member at large” of the Governors (Pam Liebman from Corcoran, Fred Peters from Warburg, and Diane Ramirez from Halstead), and two other residential members on the list of Governors (Dottie Herman from PruDE and Hall Willkie from Brown Harris)
This fight is along way from being over. It could even get uglier.
© Sandy Mattingly 2006
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