Real estate agents in Colorado already faced a sea change in how they will be compensated next month, only to have their boats rocked further by the turbulent sale of the platform where a majority of property listings are posted.
“It could be a good decision, but the way this all was handled takes away credibility. People want to know where their information is going and who this is owned by,” said Bret Weinstein with Guide Real Estate in Glendale.
Weinstein has raised a red flag on how the sale of REcolorado, the state’s largest multiple listing service or MLS, has gone down after the abrupt firing of the group’s executive team last week, not to mention a broader lack of detailed information on a platform agents consider vital to their livelihood.
REcolorado is the exchange or marketplace for about three out of four home and condo listings in the state. It is owned by two Realtor associations — the Denver Metro Association of Realtors (DMAR) and the South Metro Denver Realtors Association (SMDRA).
Multiple listing services, starting Aug. 17, can no longer post how much a seller is willing to pay a buyer’s agent in commission as part of legal settlements that the National Association of Realtors and leading brokerage firms reached earlier this year and late last year.
Buyers now must decide how much they are willing to pay their agents. Realtor groups across the country, fearful of additional anti-trust litigation, plan to spin off or sell their multiple listing services and on that front, the Denver associations were early movers.
Last week, the two Denver area associations announced they had signed a letter of intent to sell REcolorado to MAZL LLC, a new company headed by J. Burks, who is described as an industry veteran.
But the announcement came earlier than planned after the leadership team at REcolorado, who had tried to arrange a buyout of their own at the start of the year, sounded an alarm over a potential sale.
“We disagree with their approach and are dedicated to keeping REcolorado a broker-focused business partner and will continue to pursue all options to make certain your MLS remains a locally owned organization that is operated in your and your clients’ best interest,” according to a statement REcolorado issued last week.
REcolorado executives described the buyer as an out-of-state private equity firm with no real estate experience. A private equity buyer of an MLS would have been an industry first, but the information, published in the trade press, was incorrect, according to DMAR.
On June 28, DMAR and SMDRA fired almost all of the executive team at REcolorado, replacing them with current and former leaders from the two groups. The associations said the dismissals were for violating non-disclosure agreements. But to agents outside the process, it looked like retribution. The lack of details raised concerns about self-dealing and whether the interest of agents and their clients would be protected.
“The lack of a clear operational plan post-settlement from (National Association of Realtors), coupled with the poor PR and misinformation from DMAR and SMDRA, leaves us in a precarious position this summer. As realtors, we are left in the dark about our future while those in power make decisions behind closed doors. One thing remains certain: the future is unpredictable for us all,” Weinstein said last weekend.
Part of the problem DMAR and SMDRA faced last week was that they had a letter of intent but not a signed sales contract and this week they still were handcuffed by non-disclosure agreements. Weinstein has since moderated his opposition as he and others in the real estate community wait for more details on the deal, including who precisely owns MAZL LLC, their motivation for acquiring REcolorado, and what they plan to do with it.
Just one example of the confusion. Joseph Burks, whose first name was not initially provided, is president of Equity Title, a subsidiary of Orange Coast Title Co. Some confused Equity Title with the Equitable Title Agency, an arm of HomeSmart, a Denver-area brokerage firm.
As concerning as a takeover by a title agency might have been, having a rival brokerage firm own the local MLS, which is supposed to be a neutral platform where all licensed agents can post a listing, is a lot more disconcerting.
And if it isn’t complicated enough, MAZL LLC is not to be confused with MAZEL LLC, which is owned by Shames Makovsky, a long-time commercial real estate firm based in Denver.
MAZL’s address listed on its filing with the Colorado Secretary of State is 8480 E. Orchard Road, Suite 3000, in Greenwood Village. A Google search shows the address associated with Metro Brokers Elite. But the relationship, if any, hasn’t been made clear.
Lindsey Hall, a spokeswoman for DMAR, said Burks, whose first name is Joseph, is not associated with HomeSmart. She also said more detailed information will be provided in the coming days as non-disclosure agreements are worked out.
To quell concerns, REcolorado, under its new board, released an update and FAQ around the purchase on Sunday.
“We have every confidence that working with MAZL will not only enhance REcolorado’s ability to serve you, but will also bring added protections given our current legal environment,” REcolorado said in a statement.
The statement said MAZL has expressed a commitment to a “broker-centric” platform, that REcolorado would continue to operate as an MLS and that data would be protected as in the past. Brokers were also assured that listing fees would remain the same or only increase by minimal amounts in the future.
And as for consumers buying and selling homes, they shouldn’t see any changes regarding the platform. That said, a lot of other changes will come Aug. 17.
Weinstein said REcolorado represents the most valuable asset that DMAR and SMDRA own. Smaller buy-side commissions could reduce the number of active agents and hurt membership counts at the associations in the months and years ahead.
The two groups, not to mention the National Association of Realtors, will be under increasing financial pressure going forward, so it makes sense to get the best price possible now. His regret is that the region, rather than showing how to do it right, provided an example of what not to do.
And there is a scenario where multiple listing services, at least in their current form, could eventually disappear. Weinstein said he hopes that client information, which agents work hard to protect, continues to be protected even under private owners.
Matt Leprino, a Denver area Realtor with Remingo LLC, said he isn’t concerned about private ownership and sees fresh capital investment bringing much-needed improvements, including better technology platforms to replace the outdated and somewhat clunky ones now used.
But he also acknowledges that some members of the two associations may reject REcolorado under new ownership. That’s why it was so important to have a transparent and smooth handoff. Larger firms might decide to post their listings on their own websites. Or brokerages of all sizes might decide to go directly to national platforms like Zillow where consumers already head first.
“We can be the ones who collect the data and push it out to the syndicated sites,” he said.
Licensed agents now pay to list a property, the key source of income for REcolorado. However, alternatives could emerge where brokers are paid to provide listing information, which is highly valuable.
The Colorado Association of Realtors, the state association, isn’t commenting on the upheaval, other than to say it wants what is best for the industry.
“While CAR doesn’t have a specific comment on the REcolorado situation unfolding this past week, the state association supports all of its local associations as they navigate the changes coming to the MLS,” said spokesman Martin Schecter. “We are all working hard to do what is best for the short- and long-term interests of our collective members and Realtors across the state.”
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