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When real estate juggernaut CoStar acquired real estate tech firm Homesnap for $250 million at the end of 2020, Homesnap said it was committed to its partnership with the Broker Public Portal, a company formed by a large group of brokers and multiple listing services to launch the nation’s first national public-facing MLS website.
But nearly two years later, the two companies are going their separate ways. The National Broker Portal LLC, a joint venture owned 50-50 by the two companies since December 2016, will shut down on Oct. 31.
The change is a turning point for an industry initiative that hoped to create a national listing site to beat out third-party portals such as Zillow and Realtor.com for consumer traffic and adhere to industry-friendly policies at the same time.
BPP and Homesnap will continue to exist as separate companies, but Homesnap will no longer be BPP’s tech partner or national listing site. BPP will pivot to creating and providing a national listing data “superset” and forming multiple joint ventures with tech vendors that wish to use that data for their tech products.
Homesnap and Homes.com, a national listing site CoStar acquired in mid-2021, will launch in November as brokerage websites powered by Internet Data Exchange (IDX) listing feeds from MLSs across the country. The MLS data licenses for the sites governed by agreements with the joint venture will terminate on Oct. 31. Homesnap Pro, the company’s agent app, is now free for MLSs to offer as a core product if they choose.
What happened, according to BPP?
After CoStar acquired Homesnap, CoStar proposed several changes to the joint venture agreement, according to BPP Chair Alon Chaver.
“BPP held several owner meetings so that we could discuss the proposed changes presented by CoStar,” Chaver told Inman via email. “BPP was ultimately not able to accept the new proposed terms. Therefore, it was mutually agreed to wind down the joint venture partnership.
“The wind down means we are parting ways, so CoStar can freely pursue its vision for Homesnap and Homes.com, and the BPP can pursue our Unit Holders’ (brokers and MLSs) vision and uphold our commitment to the Fair Display Guidelines.”
BPP and Homesnap originally came together, in part, due to their adherence to industry-devised “fair display guidelines,” which means ads for other brokers or agents don’t appear next to a brokerage’s listing; all leads are sent to listing agents and brokers for free; and listing search results are displayed according to a consumer’s search parameters, without preference to any type of featured listing or paid placement.
Asked which terms BPP could not accept, Chaver said, “The specific terms are confidential,” but indicated that CoStar’s intention to offer listing brokers the ability to pay to have their listings featured or promoted on Homesnap was a sticking point.
“CoStar/Homesnap has publicly stated their desire to build a consumer marketplace based on promoted listings, while the BPP is focused on the premise of selling real estate, not ads, and maintaining a user-friendly display of listing information based on search results and not paid promotion,” Chaver said.
What happened, according to CoStar?
Both BPP and CoStar told Inman that the parties negotiated in good faith over the course of a year-and-a-half after Homesnap’s acquisition. But CoStar offered a different, not necessarily mutually exclusive, reason for the breakup. In a document obtained by Inman that CoStar provided to MLSs to inform them about the upcoming end of the joint venture, CoStar suggested that BPP’s standard agreement did not meet the needs of some MLSs.
“After receiving significant input from many MLSs and brokers that are a part of the BPP, it became clear there was no ‘one size fits all’ solution that would work for all MLSs and brokers, many of whom prefer to deal directly with Homesnap and Homes.com rather than through a standard BPP agreement,” the document said.
“Therefore, Homesnap and the BPP have mutually decided to wind down their joint venture agreement.”
Asked about CoStar’s assertion that some MLSs and brokers prefer to deal directly with Homesnap and Homes.com rather than through a standard BPP agreement, Chaver said, “This appears to be the opinion of the document’s author. The MLSs and brokers on the BPP Board of Managers had broad support from the BPP owners to negotiate a new agreement with CoStar, but the parties could not reach alignment.”
Steve Barnes, Homesnap co-founder and senior vice president of residential at CoStar, confirmed the authenticity of the CoStar document and the stated reason for the venture’s end.
“What really it came down to is we on our end are building a national product, both in terms of Homes.com running as a portal that needs to compete nationally, and Homesnap Pro as a product that’s available to agents across the country, so we were looking for a standard set of rules so that we knew how we could operate both those businesses,” Barnes told Inman in a phone interview.
“We’ve always operated under an agreement with the BPP where it was spelled out what we could and couldn’t do, which worked very, very well. We wanted to similarly do that going forward, but MLSs, given how big CoStar is, [were] wanting to have more say individually, particularly large MLSs, about what we could do or not do with Homesnap Pro in their local markets.”
There were not any specific planned features or products that MLSs wanted to have more of a say over, but in the wake of Zillow acquiring ShowingTime, MLSs wanted more control over the products in their marketplace, according to Barnes.
To that end, as part of the termination agreement with BPP, Homesnap Pro has been free to MLSs as of Aug. 1 and will continue to be free, and MLSs will be able to choose whether they offer it as a core product to their subscribers or whether agents and brokers get it directly from Homesnap, Barnes said. Previously, under the joint venture agreement, MLSs paid $1 per subscriber per month.
What’s next for Homesnap and Homes.com?
In order to keep Homesnap Pro, about 100 or so MLSs will need to sign a direct vendor agreement with Homesnap by Nov. 1 to ensure uninterrupted service, according to CoStar.
CoStar plans to launch Homes.com and Homesnap.com as national IDX sites by the National Association of Realtors’ annual conference in November, Barnes told Inman. To accomplish this, CoStar is taking a page from Zillow and currently joining individual MLSs through its licensed real estate brokerage subsidiary, Ten-X. Barnes said that Ten-X would comply with MLS participant requirements “at whatever level is necessary, but our intention is not to hire a bunch of agents. We will look more like Zillow than we do like RE/MAX.”
Zillow’s acquisition of ShowingTime was contentious in part, because agents and brokers perceived the deal as a rival brokerage buying up a tool they used in their everyday business. But Barnes does not anticipate that being an issue for CoStar because the company intends to follow the “your listing, your lead” rule that is a part of BPP’s fair display guidelines.
Even though IDX websites inherently advertise another broker other than the listing broker for the vast majority of the listings displayed, IDX rules don’t prevent CoStar from sending all of the leads to the listing agent or broker exclusively and for free without charging referral fees, which is what CoStar plans to do with Homes.com and Homesnap.com, according to Barnes.
“CoStar is going to be sending more leads for free to agents and brokers than anyone has ever done before,” he said. “So it’s very different from Zillow who is taking all the leads and putting them into a referral network. So I think the goodwill we’re going to have is going to be unmatched.”
The relationship between Homes.com and Homesnap.com will be similar to that between Zillow and Trulia.
“Homes[.com] will be the dominant consumer brand that we advertise, that we promote,” Barnes said. “Homesnap has a fairly significant following, particularly in its consumer app. Much like Trulia, we’ll keep that brand going, I’m sure, but Homes.com will be the primary consumer site.”
The revenue model for the sites will have two prongs, according to Barnes. Homesnap currently offers a subscription product called Homesnap Pro Plus, which offers various tools to help agents promote their listings across digital networks. Homes.com and Homesnap.com will also offer paid preferred placement for listings in search results.
“It’ll be consistent with what we’ve done [on other CoStar sites],” Barnes said.
A broker on the board of directors of an MLS who received the CoStar document announcing the end of the joint venture was bothered by the secrecy surrounding the upcoming change.
“Agents using Homesnap have no idea this is happening and they’re being approached to buy a year’s worth of advertising [on Homesnap],” the broker said.
“It was because of BPP that [my MLS] decided to sign up for it,” he added, referring to Homesnap.
Asked whether agents were being told about the upcoming change when being solicited, Barnes said, “We’re not trying to deceive anyone. We’re still offering a service and agents can use it or not. I guess I don’t know what we need to tell them other than we’re gonna deliver a service. I don’t know that agents buy listing ads, for example, from us because they think we were part of the BPP. What they care about is are they getting the same product and the same results. I don’t see the relevance too much there.”
What’s next for BPP?
Neither CoStar nor BPP would share the terms of the joint venture’s termination agreement. But Chaver told Inman that the brokers and MLSs who own BPP “intentionally adopted governance provisions that expressly preclude them from receiving any dividends, investment returns, or other compensation from the BPP.
“The BPP treasury has therefore been fully allocated — by the BPP Board of Managers following the guidance of the BPP owners — to doubling down on the mission of providing a national consumer search experience that follows the Fair Display Guidelines.”
But BPP will no longer focus that “national consumer search experience” on one site. Last week, the company began a Request for Proposal process asking for new candidates to form joint ventures with BPP.
“The next version of BPP will be structured differently,” Chaver said. “Instead of partnering with one exclusive vendor, our intent is to create a community among MLSs, brokers and vendors who are committed to the enhanced Fair Display Guidelines.”
BPP will be updating the nearly decade-old guidelines “to ensure that they reflect the current values of the industry and assure our owners that future joint venture partners will not undermine broker or MLS interests,” Chaver added.
In the immediate future, BPP plans to create a “national data superset” that MLSs can tap into for their own listing sites as part of an “MLS reciprocity framework.”
“This is probably the biggest change in the BPP’s strategy and is designed to enable every participating MLS to provide a national consumer-facing website,” Chaver said.
“At its core, the framework is a set of reciprocity agreements between and among both MLSs and brokers that wish to exchange listings and technology (to better support agents helping consumers achieve home ownership) for consumer-facing platforms. It facilitates listings reciprocity between MLSs, and expands the principles of reciprocity to technology.”
BPP’s request for information, created by real estate consulting firm WAV Group and sent out to potential joint venture candidates on Sept. 19, states that the company’s goal is to create a data repository that will “normalize” (standardize) all of the MLS feeds of participating MLSs.
“Today, more than 80% of all MLS data nationally is fed into the Broker Public Portal,” the RFI says.
“We expect that we will have similar participation among MLSs nationally. Strategically, the BPP plans to make these data feeds available to participating MLSs to serve on their regional websites.
“For example, a regional website like HAR.com would not only display listings from the Houston MLS but be able to access all BPP listings for display on their regional website. Additionally, brokerages who operate across multiple MLS areas would be able to leverage the normalized aggregation for their websites.”
BPP is looking for companies that will help BPP create a national dataset, national code base and unified national display rules, according to Chaver.
“We are looking to partner with companies that are good at things like data aggregation, developing consumer marketplace technology, and have a track record of managing digital rights responsibly,” he said.
“Stewarding brokerage and MLS intellectual property rights through the ‘tapestry’ of real estate advertising technology requires high levels of competence and trust.
“The obvious candidates are companies who build websites for brokers and MLSs today, as well as MLSs, brokers, and industry organizations who have a proven track record of consistently developing well-adopted technology.”
BPP also expects the framework to offer brokers and MLSs a fairer exchange of value than that currently offered by IDX.
“Under the current IDX structure, the value from brokerages are the listings and subsequent information that can be derived from listings (stats, analytics, etc),” Chaver said.
“Under the new framework, MLSs, brokers and vendors would also be able to contribute in-kind to the BPP framework — for example, open their proprietary source code into a common repository. This will allow more ways for brokers and MLSs to contribute and exchange value with one another. Using metrics like agent adoption and consumer utilization will allow participants to better measure the value exchanged and promote fairness.”
BPP hopes to become the industry’s “dream partner” by developing “a ‘Fast Pass’ for real estate innovation,” according to Chaver.
“The Fast Pass is a ‘stamp of approval’ indicating that a new product, feature or functionality has been reviewed by the BPP for compliance with its policies,” he said.
“If other entities choose to use similar policies, then they could avoid duplicative work in their own audits of compliance. The BPP’s vision is to create an easy on-ramp to lower the barriers to innovation for real estate consumer platforms of the future.
“We’ve nicknamed the ‘Fast Pass’ as a way to show that our intent is to support those embracing our policies and quickly get their innovation to market — because BPP has focused on ways to take out inhibitors that slow technology adoption in real estate.”
He added that the Fast Pass will offer a compliance tool to help existing MLS compliance departments determine which companies have the best compliance practices.
Asked what the difference is between what BPP is building and other initiatives like MLS Grid and MLS Aligned, Chaver said, “Both MLS Grid and MLS Aligned are building technologies that may be complementary to the BPP’s work, but not the same.”