Taking Your VOWs
Originally appeared in Hills Publications, Oct. 31, 2003 and ANG Newspapers, Nov. 1, 2003
The Internet continues to change the practice of real estate in ways that are not fully comprehended by buyers, sellers and many in the business. The current hot topic is called “VOWs,” an acronym for “Virtual Office Web sites.”
A VOW is a real estate brokerage Web site that allows consumers to search Multiple Listing Service (MLS) active listings without personal interaction with the broker or his licensees. Although the convenience and anonymity may seem appealing, VOWs have some features that could commit you to a relationship you may not want.
Before you make a serious mistake, take the time to learn how to avoid the pitfalls of online real estate. VOWs can only be understood in the context of what preceded them.
Multiple Listing Service
In most areas of the country, real estate licensees cooperate with each other by placing their listings on the MLS. This database of properties is an indispensable asset for agents and their clients.
Prior to the popularization of the Internet, Realtors tightly controlled this resource; it was not available to the public. As the Net matured and real estate became an important online phenomenon, programs were developed to enable MLS members to incorporate a listing search engine into their Web sites. Today, anyone with a computer and an Internet Service Provider (ISP) can quickly search for active listings anywhere in America and Canada.
Internet Data Exchange (IDX)
In mid-2000, the National Association of Realtors (NAR) developed rules for MLS participants who wished to display active listings online. These regulations were then adopted by state Realtor organizations, including the California Association of Realtors (CAR). By January 1, 2002, each local MLS had created its own guidelines for users based on the NAR and state model rules.
The point of the policy is to create fairness and uniformity in how listings are displayed. It is also intended to minimize abuse of the system.
For example, it is mandatory that both the listing office and the listing agent’s name be displayed near the listing information. This prevents someone viewing IDX Web pages from being mislead that the agent or broker who has created an IDX site personally has all those listings and is the only one who can be contacted about them.
There are other stipulations limiting use of the information for consumers to “personal, non-commercial use” and specifying a maximum number of listings that can be downloaded per search. For Internet-empowered buyers and sellers, the ease of online IDX searches has been highly desirable and the Realtor policy regarding its use has been imperceptible.
VOWs
Many in the industry feel that VOWs were created by individuals, not bound by the Realtor Code of Ethics, who were looking to do an “end-run” around the system. Those who wanted to use the MLS data, but not play by the rules, said their Web sites were different from IDXs. They claimed their site was a “virtual office,” i.e., an online real estate brokerage, and, as such, it was not subject to IDX policies. In response, new NAR and CAR VOW guidelines were created this year. Local MLSs must incorporate these VOW rules by January 1, 2004.
Although they may look similar online, the basic difference between an IDX and VOW is that IDX is considered an “advertising” site, whereas a VOW is where “consumers receive real estate brokerage services, including the opportunity to search for MLS data.” Perhaps you look at this and say, “It does not matter to me, as long as I can get the information I want.” You should care.
An unknown, but presumably large, number of VOW sites have been established for the sole purpose of creating lists of potential buyers and sellers and then selling those names to legitimate brokers for a referral fee. New VOW rules prohibit this.
Interestingly, now IDXs have some loopholes that can be exploited until IDX rules are made more consistent with those for VOWs. The one most significant to you may be that, currently, IDXs do not have the same stringent prohibition of selling names for referral fees as do VOWs.
Do not agree blindly
VOW sites require you to agree to “Terms of Use.” In order to access MLS listings on a VOW, per CAR rules, you will need to “acknowledge entering into a consumer-broker relationship” with the company running that site. This may mean you will agree to an agency relationship.
On another part of the Web site, you might be asked to accept a Buyer-Broker Agreement, or some other condition that could obligate you to paying this invisible, cyberspace entity. You may be required to submit confidential information about yourself. Before doing so, make sure the site has a privacy policy you find acceptable.
Virtual real estate?
Buying or selling real property is not a make-believe or virtual experience. Unless you have virtual dollars you do not mind losing, you need to be clear on what to know before buying or selling. You will want a virtuous Realtor, but what does it mean to choose a virtual one?
Realtors serve a vital function. Only about one third of all real estate licensees in California are Realtors, members of NAR, CAR and a local Association of Realtors. First and foremost, Realtors are pledged, by the Realtor Code of Ethics, to represent your best interests. Why would you ever agree to an agency relationship with someone you do not know, have never met and may not be a Realtor?
Experienced, local Realtors know the territory and can help explain neighborhoods, problems to avoid and property values. Cyberbrokers, even if you meet them in person, tend to cover a large area, which means they may not specialize where you want to buy or sell. Working with someone who lacks in-depth knowledge is risky.
Final Thoughts
Buying and selling real estate in the Bay Area is complicated and expensive. Whichever side of the sale you are on, you need an agent who is professional, competent and caring. Although there are many high quality individuals in the business, those who do not fit this criteria could be dangerous to your financial and emotional health.
Do not be lulled into complacency about the process by the simplicity with which you can locate real estate information online. Your ability to find listings does not make you an expert on the ins and outs of home buying and selling.
Be careful what information you give about yourself. Do not commit to an unknown company or agent. Keep in mind that the promise of “saving” you hundreds or thousands of dollars may actually cost you many times that amount if you work with the wrong people. The only vow you take should be to be responsible to yourself and make choices based on sufficient data and facts.
Related Articles:
Understanding Agency,
Use Local Agent
Seven Sins of Selling & Buying