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Real Estate Corporate

Move, NAR sue Zillow and Errol Samuelson

Move, Inc. and the National Association of Realtors have sued Errol Samuelson not for his leaving without notice, but questionable circumstances like wiped hard drives.

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According to court documents filed in the State of Washington, a lawsuit has been filed by the National Association of Realtors (NAR) and Move, Inc. (operator of realtor.com, Top Producer, SocialBios, ListHub, and several other companies) against Zillow, Inc. and Errol Samuelson.

The suit alleges breach of contract, breach of fiduciary duty, and misappropriation of trade secrets. In a statement, Steve Berkowitz, CEO of Move said, “we take our trade secrets and intellectual property extremely seriously as a valuable asset in our competitive position in the marketplace. We take action in cases in which we believe our trade secrets have been compromised. We have raised this matter for the courts and believe that the matter will be resolved judiciously.”

When Errol Samuelson, former president of realtor.com and Chief Strategy Officer at Move, Inc. left to become Zillow’s Chief Industry Development Officer, reactions ranged from criticism of Move, calling it a poaching of talent, to a criticism of Samuelson, calling it a betrayal to the industry as NAR members own and have an operating agreement with Move (which competes with Zillow).

Lawsuit alleges that Samuelson destroyed evidence

Court documents state that “Each quarter that he was employed by, and an officer of, Move, Mr. Samuelson certified in writing that he had read, understood, and would abide by Move’s Code of Conduct and Business Ethics,” which includes a “Conflict of Interest” clause and forbids employees from releasing proprietary and confidential information during and after his employment.

Further, the suit states that Samuelson arranged to defect to Zillow, destroyed evidence by erasing all memory from the iPhone, iPad, and laptop issued to him for business purposes by Move, and then resigning from Move without notice.

Last week, we also questioned the timing, wondering if it was designed to hurt Move, Inc. company stocks, or benefit Zillow in some capacity, which Move and NAR clearly agree with via their lawsuit.

The truth is that during his tenure at Move, Samuelson was promoted to a position that was so encompassing, that his job entailed knowing the inner workings of Move companies as well as the National Association of Realtors. The role will not be filled as it once was, rather remain broken into parts and functions will be filled by various people.

Samuelson isn’t the only one

Don’t consider this the last lawsuit to be filed, as Zillow announced today that Samuelson’s replacement, Curt Beardsley jumped ship today as well to become Zillow’s Vice President of Industry Development.

Also, this probably shouldn’t be considered the last high ranking official that will leave for Zillow in this apparent coup – their pockets are deep and they’re clearly willing to use their assets. Next quarter’s SEC filings will shed more light on just that.

This story was originally published on AGBeat on March 17, 2014.

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

Did rental companies take too much advantage of COVID evictions?

(REAL ESTATE CORPORATE) With the convulsing housing market forcing people out of their apartment, massive rental companies are partnering with AirBNB to make up lost profit, and then some.

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As national lockdowns have left Americans feeling confined, the demand for short term rentals remains strong—despite the rampant rental crisis. It’s mighty convenient for corporate landlords and rental companies dealing with a backload of vacancies from recent waves of evictions.

ABC reports that the largest apartment landlord in the country, Greystar Real Estate, is gaining infamy for subletting their vacant apartments online. They manage over 500,000 rental units in the US.

One tenant, interviewed by Eyewitness News, stated they had found their apartment complex on the site, as well as 570 other Greystar properties across the country under the same host. Their landlord hadn’t disclosed these postings to them, either.

Most standard statewide rental contracts strictly forbid tenants from subletting to others through websites like AirBNB. But they don’t necessarily keep landlords from doing the same thing.

And in the absence of rent control laws, nothing stops them from rent gouging to drive their permanent tenants out.

Short term renters who apply for an apartment through AirBNB don’t agree to the same terms as long term renters. The actual residents of these buildings are ultimately held to a stricter standard, and potentially have to put up with more grief.

For example, if the property manager doesn’t intervene when disruptive behavior occurs in an STR, permanent residents are forced to put up with whatever trouble these guests might bring, from noise violations to dangerous activities. Anyone unfortunate enough to be stuck in a lease there is effectively trapped in a would-be hotel with no oversight. Over time, it creates a living environment that drives regular tenants out (meaning more space for overpriced Airbnb units.)

The practice puts disproportionate pressure on tenants that share complexes with temporary renters. And it’s not just unfair—this creates a potential health hazard, too.

Tenants in these buildings are rightfully concerned with the potential health risks of people constantly moving in and out of their building during a pandemic. Each new person passing through could potentially expose the rest of the building to the coronavirus (which is currently raging harder than ever, pushing hospitals to capacity across the country.)

All this stinks suspiciously like a potential violation of the Fair Housing Act to us. Renting an apartment through AirBNB or other rental companies would allow someone to potentially skirt the criteria that a regular applicant would otherwise be held to, and possibly rejected for.

In fairness, there are hosts doing their best to use their resources to help people, too.

Still, taking advantage of people’s desperation in the middle of an unprecedented economic depression is shameful—and AirBNB must take accountability for their role, too.

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Real Estate Corporate

Zillow continues to build their patent collection – looking back, is anyone surprised?

(REAL ESTATE CORPORATIONS) The real estate giant Zillow continues the trend of the last decade and even adds another four patents to their ever growing patent collection.

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Overhead of farm home on Zillow, where a patent may be held.

In 2006 Zillow, the online real estate marketplace company, hit the world scene. Little did we know that this little website would explode over the last 15 years into the massive business venture it is now. Total assets in 2019 reached up to $6.1 billion. The founders, Rich Barton & Lloyd Frink, have been building this company from the ground up, pulling in new acquisitions and pursuing new avenues of revenue. Always adventuring into the next frontier of real-estate, and taking a patent or four along the way.

In a new move that surprised real-estate moguls around the country, Zillow Mobile was developed and they began creating mobile applications (listed below). However, I don’t think anyone expected what this would lead to in 2018.

  • April 29th, 2009 – iPhone Application
  • March 18th, 2010 – Android Application
  • April 2nd, 2010 – iPad Application
  • March 31st, 2011 – Blackberry Application
  • July 13th, 2012 – Windows Phone Application
  • November 27th, 2013 – Windows 8.1 Application
  • November 2015 – Apple TV Application

Once these apps were in place Zillow announced some news that would rock the real-estate world, Zillow Offers. The app provides a unique position for the company to directly purchase a seller’s home from them and do all the work to sell. Completely eliminating the go between aspect of the job. In the first year of this and leading into 2020, the company took a massive hit to their revenue because of the front end of purchasing all of this property.

Zillow 2.0 is still holding strong however. The current CEO Rich Barton is not worried about the downswing. He has been molded in the world of business over the years, having learned about the benefits of “risk that is tempered” while he founded/co-founded Expedia and Glassdoor. This business guru is a force to be reckoned with.

These highly aggressive tactics don’t just stop at the purchasing arena either. Over the last 15 years the business has acquired 21 patents. The patents in recent years are starting hedge competitors into a tight spot. Listed below are some of the more recent patents that have been cleared.

1. “Automated Control of Image Acquisition Via Use of Mobile Device User Interface” – Filing Date 8/21/2020

  • Techniques are described for using computing devices to perform automated operations to control acquisition of images in a defined area, including obtaining and using data from one or more hardware sensors on a mobile device that is acquiring the images, analyzing the sensor data (e.g., in a real-time manner) to determine the geometric orientation of the mobile device in three-dimensional (3D) space, and using that determined orientation to control the acquisition of further images by the mobile device. In some situations, the determined orientation information may be used in part to automatically generate and display a corresponding GUI (graphical user interface) that is overlaid on and augments displayed images of the environment surrounding the mobile device during the image acquisition process, so as to control the mobile device’s geometric orientation in 3D space.

2. “Estimating the value of property in a manner sensitive to nearby value-affecting geographic features” – Filing Date 7/7/2014

  • A facility for determining an estimated value of a home is described. The facility applies a first valuation model that is insensitive to value-affecting geographic features near the home to obtain a first valuation. The facility applies a second valuation model that is sensitive to value-affecting geographic features near the home to obtain a second valuation. The facility combines the first and second valuations to obtain an estimated value of the home.

3. “Automatically determining a current value for a real estate property, such as a home, that is tailored to input from a human user, such as its owner Utility Patent Grant (B2)” – Filing Date 9/4/2015

  • A facility procuring information about a distinguished property from a user knowledgeable about the distinguished property that is usable to refine an automatic valuation of the distinguished property is described. The facility displays information about the distinguished property used in the automatic valuation of the distinguished property. The facility obtains user input from of the user adjusting at least one aspect of information about the distinguished property used in the automatic valuation of the distinguished property. On a later the day, facility displays to the user a refined valuation of the distinguished property that is based on the adjustment of the obtained user input.

4. Providing Simulated Lighting Information for 3D Building Models – Filed Date 4/6/2020

  • Techniques are described for using computing devices to perform automated operations related to, with respect to a computer model of a house or other building’s interior, generating and displaying simulated lighting information in the model based on sunlight or other external light that is estimated to enter the building and be visible in particular rooms of the interior under specified conditions, such as using ambient occlusion and light transport matrix calculations. The computer model may be a 3D (three-dimensional) or 2.5D representation that is generated after the house is built and that shows physical components of the actual house’s interior (e.g., walls), and may be displayed to a user of a client computing device in a displayed GUI (graphical user interface) via which the user specifies conditions for which the simulated lighting display is generated.

But what do these patents do to the market? They are cornering their position as THE online real estate company. The stranglehold on any competitors is going to be hard to fight. The numerous patents typically tend to revolve around automated or multi-faceted searching and pricing on people homes. One of the newest ones actually takes images and translates into pricing.

This patent trolling technique is definitely something to take into account for other companies. This way, businesses hold their top place is to sue people into the ground with scrupulous patent lawsuits based on patent law. They throw red tape and paper on top of new competitors to drown them in fees before they can actually become competitive. Personally, I find it disgusting but from what I’ve learned, that’s capitalism at its finest. Beat them down with paper so you can stay on top.

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Real Estate Corporate

REX anti-trust lawsuit accuses Zillow, NAR of being in a ‘cartel’

(REAL ESTATE) Real Estate Exchange, Inc. (REX) is suing Zillow and NAR, alleging a cartel wherein non-MLS members like themselves are edged out of the marketplace.

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Real Estate Exchange, Inc. (REX) has today filed an federal anti-trust lawsuit against Zillow and the National Association of Realtors (NAR).

REX accuses NAR of “non-negotiable” compensation structures baked into the MLS, an assertion that has been proven otherwise in the past.

They go on to accuse Zillow of making changes recently to their site that makes “non-MLS listings accessible only via a recessed, obscured, and deceptive tab,” leading to REX’s listings (on Zillow) losing traffic, “severely impacting REX’s reputation, its ability to execute its innovative and disruptive business model, and driving consumers away from REX and back into the MLS regime, ensuring higher commissions that benefit NAR’s members” which they say ultimately disadvantages consumers.

REX claims that Zillow (and other real estate aggregators) have helped them “to maneuver around the NAR/MLS cartel’s high commission structures” by aiding them “to reach a large audience of potentially interested buyers.”

But then Zillow went and became an ibuyer, shifting their focus from search to owning inventory, eventually joining NAR in 2020.

REX accuses Zillow of hiding non-MLS listings like theirs through their redesign. All of their homes are listed by a licensed real estate agent, but they are not NAR members and proclaim they never will be.

The crux of REX’s argument is that as a newly minted member of NAR, Zillow must follow rules set by NAR (which is done by members in committees, not the executives), and so they have joined forces to conceal non-MLS listings on Zillow’s site, thus entering into an anticompetitive posture together.

“Zillow began like so many other platforms: it served a great value to American consumers. Unfortunately, we see Zillow as backtracking on their original mission to serve consumers, instead focusing on their own profits,” said REX CEO Jack Ryan in a press release today.

In the last week of February, REX presented this case to 35 states attorneys general, leading up to their federal filing (their presentation can be found here).

The full lawsuit can be found here.

In a statement to The American Genius, Mantill Williams, NAR VP of Communications states, “This lawsuit has no legal basis, and we intend to vigorously contest it. This is an example of a brokerage trying to take benefits of the MLS system without contributing to it. It has been long recognized that the MLS system provides considerable pro-consumer, pro-competition value. REX’s lawsuit seeks to undermine that consumer value—simply for REX’s own benefit.”

Williams continues, “The MLS system levels the playing field for small businesses and allows innovation to flourish, all to the benefit of buyers and sellers. The advanced MLS technology gives publishers access to all the same information, allowing buyers to see as many properties for sale in one place as possible, while simultaneously ensuring sellers have access to the largest pool of buyers. Because of MLSs, we’re at a point in the market where we’re seeing unprecedented benefits to consumers and competition among brokers, especially when it comes to service and commission options.”

A Zillow spokesperson tells us, “We are aware of the lawsuit and believe the claims are without merit and intend to vigorously defend ourselves against it. Zillow is committed to giving consumers the most up-to-date housing information on the most amount of listings possible on a single platform. As part of our switch to MLS Internet Data Exchange (IDX) feeds and becoming formal MLS participants earlier this year, we were required to make changes to the way some listings appear on the site in order to be compliant with MLS rules. As a result, when using one of our platforms to search for homes, buyers may see two options to view their search results – “Agent listings”, and “Other listings” – which include For Sale by Owner listings or Coming Soon listings not on the MLS or, for that matter, on most other real estate sites.”

They conclude, “As part of our efforts to empower consumers, we have been actively working to update the industry rules, including those around ‘co-mingling,’ to allow a seamless search experience so we can continue to display all types of listings on our platform.”

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