There’s a fantastic article on the topic of VOWs that Inman published last week. It’s written by David Kully, an antitrust partner for Holland & Knight LLP. Mr. Kully worked for 18 years at the Antitrust Division of the U.S. Department of Justice, where he played a central role on the DOJ’s litigation against the NAR.
From the article…
The DOJ’s litigation against NAR settled in 2008 only days before trial was scheduled to begin in federal court in Chicago. To settle the case, the DOJ and NAR negotiated a “consent decree” under which NAR committed that its affiliated MLSs would not discriminate against or impede the operations of brokers using VOWs to deliver brokerage services to customers. On November 18, 2008, the federal judge overseeing the case entered the consent decree as an enforceable court order, which meant that if NAR or its MLSs violated the terms established in it, NAR could be subject to penalties for being in contempt of court.
On November 18, 2018, the ten-year consent decree will expire. At that point, NAR and its MLSs will no longer be compelled by federal court order to support VOW-based business models.
This issue started when eRealty partnered with Yahoo! Real Estate in 2001. (Here’s an article on the topic). ZipRealty and eRealty were competing in the race to get full listings from a few dozen markets while Yahoo! was replacing Realtor.com at the time. If you had a password on Yahoo!, you had a VOW password with eRealty.com. As a result of that partnership, the industry started colluding to shut down eRealty. (ABOR tried and the judge issued a temporary restraining order).
Fast forward, and the likes of Compass (which I’ve never understood) and Redfin (which I’m bullish on) are the most prominent Virtual Office Websites in the country. ZipRealty was a VOW for many years leading up to the sale to Realogy. Curation models which operate as brokerages (which I’m bullish on for the future) operate as VOWs since they require highlighting only a subset of properties searchable in IDX.
A trend I’m watching is financial service providers working closely with real estate brokers and consumers to manage — yes, you guessed it, the home. The home just so happens to be most people’s largest financial asset. That experience can done in a VOW. I see this trend playing well with the history of the home opportunity I’ve been thinking about for so long.
What’s going to happen with VOW’s (virtual office websites) after the decree expires? Maybe a return to the dark ages. Maybe nothing changes. We’ll have to wait a year to find out for certain.
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