Connect with us

Real Estate Corporate

Judge grants Move/NAR motion for contempt, prompts investigation into “Samuelson Memo”

Errol Samuelson became a Zillow exec the same day he left Move, leading to a drawn out legal battle between the companies, with a contempt of court charge now at the forefront.

Published

on

nar settlement

King County Superior Court’s Judge John H. Chun has granted a motion for contempt filed by Move, Inc. and the National Association of Realtors (NAR) against Zillow, Inc. and Errol Samuelson. This marks the latest in the drawn out drama after Samuelson left Move, Inc. abruptly without notice last year to become competitor, Zillow’s Chief Industry Development Officer.

The contentious departure spurred an ongoing lawsuit, and last summer, Washington State Superior Court Judge Barbara Linde granted a preliminary injunction in the case of Move, Inc. and the National Association of REALTORS® et al. vs. Zillow, Inc. and Errol Samuelson et al.

What the injunction prohibits

At the time, Judge Linde found Samuelson to have misappropriated trade secrets by acquiring it using improper means, and by copying it without authorization. It also enjoined Samuelson, a former Move employee, from using and sharing any trade secret and confidential information gained while employed at Move, Inc., and from specific activities relating to his new position.

The injunction prohibits activities relating to obtaining direct data feeds of listing data, prohibits activities relating to developing contact relationship management (CRM) tools, and prohibits activities which would circumvent ListHub.

Judge Chun orders an investigation

Judge Chun has granted Move and NAR’s motion for contempt of court, ruling that further investigation into a memo written by Samuelson is warranted. Within the month, Zillow is required to produce for deposition all employees related to the creation, distribution, and implementation of what court documents refer to as the “Samuelson Memo.”

Court documents do not include the memo, and we have reached out to Zillow and Errol directly to obtain a copy, but with this case ongoing, it is unlikely that a lawyer will allow it, whether information is redacted or not.

When contacted for comment or information on the Samuelson Memo, Move declined to comment, as is their policy for ongoing legal matters.

What now?

Because there is so much that the original injunction prohibited Samuelson from doing, it is difficult to speculate as to what the Samuelson Memo contains. On March 30th, Move/NAR will go before the judge for their opening brief, Zillow follows on April 6th, and Move/NAR will enter their reply on April 10th. Then, on April 24th, Zillow is ordered to show cause as to why they should not be held in contempt for violating the preliminary injunction.

Court records refer to redacted and unredacted versions of the memo, which is not part of the public record, but the judge will likely issue a ruling late April or early May, which will indicate which rule Samuelson broke, if any at all.

Final analysis: If these allegations are true, it is shocking that any moves would be made to make any waves, given how heated Zillow’s talent grab has been for the industry.

#SamuelsonMemo

Full court document available here.

UPDATE: Zillow tells us, “To be clear, what the court granted was Move’s request for further investigation and a hearing. For context, Errol has been on leave since July 1.
Beyond that, we cannot comment on this litigation.”

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Real Estate Corporate

Zillow stops their home buying, but you shouldn’t get excited about it

(CORPORATE) Zillow has put the kibosh on their home buying program, and real estate practitioners are buzzing, but no one should get excited…

Published

on

zillow

Zillow has halted purchases of homes for their iBuyer home buying program, and many real estate practitioners are buzzing on social networks to gloat and analysts are saying the company is on the rocks, but that sentiment is missing the forest for the trees.

In Q2 of last year, they only bought 86 homes to flip. Their purchase rates then rose to 808 in Q3, then 1789 in Q4, and 1856 in the first quarter of this year. Fast forward to Q2 of 2021 and they invested in 3805 properties.

That’s one serious surge in inventory they’ve invested in, which means a major upswing in their backlog to get through.

The reason for the purchasing pace change is unclear, but no one is currently immune to the supply chain crisis which is making raw materials expensive or impossible to obtain, while labor shortages in the industry are creating a scenario where hiring to finish this many flips is extremely difficult.

Current market conditions are such that housing starts and permits have slipped a bit as the nation faces the same challenges as Zillow must now endure.

Further, with their average purchase price in the second quarter hitting $322,432, average renovations, holding, and selling costs reaching $26,334, their average return is $19,636. That’s a decent return on a flip, but professional flippers can reap larger returns than $20k – but not at the scale Zillow is accomplishing.

Spencer Rascoff, Zillow co-founder and former CEO told CNBC he suspects buying will resume early next year. That seems like a reasonable supposition.

On the note of what they’re accomplishing, Nevada Realtor, Sean Gotcher, posted a wildly viral video last month on social media about Zillow manipulating the housing market and consumers finally realized the possibilities of what a power like Zillow could accomplish. Whether they do the evil thing or not is yet to be seen.

Real estate practitioners have spent the last 24 hours proclaiming the death of Zillow, which is wildly off. The company simply has a backlog and is struggling with labor and materials like everyone else in America.

And even if their iBuyer program shuts down and they stopped getting every listings feed on the planet, they’ve created a scenario where they’ve basically applied for (and yuck, been granted by the federal government) every conceivable generic patent on real estate online.

Instead of reading a headline and gloating on Facebook, practitioners need to start paying attention to the possibility of Zillow patent trolling the world – the rest is all just chump change. They really are evil geniuses, and they’re definitely going to survive this small iBuyer blip.

Continue Reading

Real Estate Corporate

REX Homes has second round of layoffs, closes NY and CHI markets, plans to join MLSs

(CORPORATE) REX Homes has just concluded a second round of layoffs and has indicated they will be joining MLSs as part of their restructure.

Published

on

REX Homes

REX Homes yesterday initiated a second round of layoffs in the past two months, has now shut down operations in Chicago and all of New York as part of a company restructuring, and intends on testing out joining local MLSs.

Layoffs are a common part of startup life, and REX Co-Founder, President, and COO, Lynley Sides assured remaining employees in a company-wide call that they are “done with downsizing efforts,” which they say they did their best to do “respectfully,” and the new goal is to move forward, focusing on the customer experience, on profitable markets, and on “winning” now that the company has “the right plan.”

The first round of layoffs was in late August and eliminated roughly 60 positions (a number which has not yet been verified by REX). No severance was paid, but the company offered resume coaching and allowed impacted staff to retain all company technology as a “creative” move, Sides said on the call.

The company has earned several rounds of private equity funding and is not publicly traded. They had not closed their Series D round of funding in August, but did shortly thereafter.

The second round of layoffs was Thursday, October 7th and impacted 34 employees who did receive severance and were also allowed to keep company technology.

Because of the timing of the Series D closing, Sides told staff on the call that they would be revisiting severance with employees cut in the first round.

She also noted that they would have preferred one round of layoffs and had hoped that would suffice, but instead took measures to cut “all costs,” including reducing marketing spends “notably,” addressing overhead, negotiating with vendors, and even subleasing some of their space to “reduce the impact of the second wave.”

It is unclear what markets they continue to serve as their website still allows users to select New York, but not Chicago, and several past and current staff say the number of areas they service have been drastically reduced in this calendar year but none agree on the actual number. Sides noted a shift toward focusing exclusively on the most profitable markets.

Sides also said on the call that REX would be “trying to join a few MLSs which is the right thing to do for our business and our customers” as they focus on the “customer experience.”

The pilot test is notable given the company’s lawsuit against NAR and Zillow, alleging a cartel surrounding MLSs and commission structures. Although a recent court ruling urged the company to not use the term ‘cartel,” the lawsuit stands.

Also fascinating is that the real estate tech startup was able to avoid all news coverage of the layoffs, market closings, or a shift toward joining any MLS.

Regardless, Sides concluded her portion of the call by assuring her teams that she remains “incredibly optimistic about REX’s future,” a sentiment others on the call echoed.

We have reached out to REX Homes for comment, as we don’t know the precise number of employees dismissed in August, the size or date of their Series D round of funding, or what markets they still serve.

Continue Reading

Real Estate Corporate

Viva – the startup that gives renters equity as they rent

(TECHNOLOGY) Viva launched as a pretty brilliant model – give renters back equity as they rent, foster future buyers, and build a property portfolio.

Published

on

viva equity fund

Renting often feels like a necessary evil, one which is compounded by the fact that renters are unable to build equity – through no fault of their own. A company called Viva thinks they have a solution for this systemic issue: third-party equity.

Viva is a startup with the main goal of allowing renters to earn a certain amount of equity per month.

The process itself is fairly straightforward: Renters in Viva-managed properties have the opportunity to earn up to eight percent of their rent back in equity per month. This equity is stored in the form of a rebate that can be reclaimed once the renter’s lease is up.

I say “up to” eight percent because, according to Viva, certain tasks–mild, “unskilled” maintenance and general upkeep of the property–are assumed to be the renter’s responsibility (unless otherwise dictated elsewhere); failure to maintain a presentable property can result in a lower percentage of rent going to your equity.

While that sounds like it opens the door for picky landlords to dock renters for arbitrary issues, Viva assures them that they “expect the vast majority of all tenants to earn the full 8% every month.”

That equity can be tracked via Viva’s online portal and payment receipts from each month of rent.

Once a renter’s lease expires, they can request their equity in the form of a rebate; it can also come in the form of a housing credit should the renter want to put it toward their next property.

On the landlord side, Viva charges a relatively high 16 percent for management: eight percent for renter equity, and eight percent for general management fees.

While this sum is higher than the average 10 percent cited on Viva’s FAQ, they point out that their eight percent covers more things (maintenance and “community engagement”) than a usual maintenance fee.

Viva also posits that people who live in properties they manage will be more dedicated to maintaining those properties, thus cutting down on long-term costs.

Viva’s goal of creating a third viable option that nestles between renting and buying couldn’t come at a better time in terms of the housing market. Both renters and landlords will want to keep an eye on this venture as they develop.

Continue Reading
Advertisement

Our Partners

Get The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox!

Still Trending

Get The American Genius
in your inbox

subscribe and get news and exclusive content to your email inbox