Digital Disruption: New Listing Service Cracks Real Estate Status Quo


By Peter Boody

When national real estate goliath Zillow jumped into the South Fork real estate pool last month with its purchase of the only listing exchange service focused exclusively on the East End, some aghast brokers and agents in the region braced to ride out a tidal wave of worry.

Would a remote corporation, with no understanding of matters unique to the Hamptons market, start calling all the shots when it comes to propagating local listings on the internet — which is practically the only way that buyers and sellers find each other these days?

Zillow Group, based in Seattle, is buying the Hamptons listing website and its affiliated data management companies OREX and RealNet Solutions Inc., which for a decade have offered the only game in town for South Fork brokers to propagate their listings and access data across the web in a way that is narrowly focused on the Hamptons and sheltered from non-member brokers from outside the region.

East End brokerages have traditionally used HREO as a primary listing exchange.

Some East End firms do use listing services provided by HANFRA, the Hamptons and North Fork Realtors Association, and by the Long Island Board of Realtor’s Multiple Listing Service, but those in the most high-priced areas of the East End market say they cast too wide a net.

Maung Htun Han, a principal broker at Hamptons Realty Group, had been planning in January to let his costly enrollment in RealNet’s service expire so he could “jump ship,” as he put it, for an entirely new listing and data management service rolled out this winter by the new East End Real Estate Association (EEREA), a non-profit organized by five of the largest brokerages in the Hamptons: Saunders, Sotheby’s, Brown Harris Stevens, Douglas Elliman and Corcoran.

Several local brokers said in interviews that RealNet has been too expensive and too slow updating and customizing its service and technology to their needs. A large firm with scores of brokers and salespeople could spend $1 million a year on the service while small independents might spend $40,000, according to some brokers.

With EEREA’s five founding members set to switch their listings — estimated by several brokers as about 85 percent of the entire Hamptons market — from to their own new portal, the East End Listing Exchange at, RealNet and its site seemed to be headed for irrelevance.

But with Zillow’s financial resources and broad access to listings, however, RealNet and HREO suddenly seemed to have been thrown a lifeline.

Just after news of Zillow’s purchase had broken last month, Mr. Han said he was no longer sure what to do. “Everything is up in the air,” he said, adding that some smaller, independent brokerages generally can’t afford to enroll in both services or spend the time and money to enter data through two sites.

Simon Harrison, who runs an independent brokerage in Sag Harbor, said he planned on using both services. “That is why people give me their listings,” he said. “You can’t go on either Zillow in Sag Harbor or and not see my face or the face of my business.”

At Compass real estate, “We’re going down both roads,” said Joe DeSane, senior managing director of sales. “We can’t very well not participate” in both portals “because our agents might be at a disadvantage.”

But “it remains to be seen what type of arrangement the two listing systems intend on having with one another,” he added. “If they do not communicate directly with one another — and what I mean by that is electronically, with an open feed — then we’re going to have to make a decision” about picking one or the other.

Zillow’s arrival did not appear in the least to rattle broker Andrew Saunders of Saunders & Associates, president of EEREA. He said it proved for him the wisdom of having broken RealNet’s virtual monopoly over the area’s listing exchange and data management services.

“If ever there were a reinforcing event that reaffirmed the integrity of our efforts to migrate to a new system,” he said in a phone interview, “this is the ultimate data point.”

“We didn’t know the credibility of our move would be borne out so quickly,” he said.

He surmised that RealNet founder Nicholas Khuri had “seen the handwriting on the wall” and had sold to Zillow in the nick of time, just as EEREA was getting its listing portal up to speed. Mr. Khuri did not respond to a voicemail message.

“If they don’t have most of the data,” Mr. Saunders said of, “it won’t be a successful acquisition for them.”

“We may work with Zillow but it has to be under terms that benefit our group,” said Mr. Saunders. Seven additional firms had joined the founding five as members as EEREA members by late last month, he said.

A screenshot of the homepage on the new Eat End Listings Exchange.

Zillow will have plenty of clout to encourage brokers to stay with RealNet’s and its related co-brokering service, OREX, according to broker Judi Desiderio, president of Town & Country Real Estate. “They will have the bigger hammer,” she said, by denying access to Zillow’s nationwide listing networks to brokers and agents who are not RealNet customers.

She cited Zillow’s success with, a New York City listing exchange that Zillow purchased for $50 million in 2013. will be a co-brand with StreetEasy under the Zillow umbrella.

“HREO and StreetEasy are leaders and experts in two real estate markets that are not only critically important on their own, but are also intrinsically linked to one another: the Hamptons and NYC,” said Susan Daimler, general manager of StreetEasy, when the purchase was announced. “We’re excited to bring our resources and focus to another unique market that also has a large shared audience among the buyers, renters and real estate professionals in NYC and to work closely with our industry partners to develop even better tools and experience.”

Outside the Hamptons — especially in New York City and western Long Island, where many Hamptons second-home owners and potential buyers live —some real estate professionals complain there’s an effort to keep them out of the market here.

Acknowledging that local firms did not want “Joe Smith, some broker from Syosset, putting his name at the top of your listing because he paid Zillow,” Mr. Saunders denied that the launch of EEREA constituted a scheme to discourage the co-brokering of sales.

“There is a point I want to make very clear,” Mr. Saunders said. “We are co-brokering with everyone, so if someone doesn’t join EEREA, we will be co-broking with non-members.”

The suspicions “are all nonsense. We want as big a tent as possible,” he said, explaining that a principal function of EEREA — besides offering what he called agile and customer-focused technology services — will be a lobby organization to push industry interests before local boards.

EEREA, he said, will be more “cost-effective” than RealNet with a fee of “$800 per agent covering technology and all the [lobbying] efforts of the EEREA,” he said.

“We are now in control of our destinies, which we never were before,” he added.

In December, a lawyer representing Nicholas Khuri sent a cease-and-desist letter to Joseph Sabella, executive director of EEREA, and Dawn Pfaff of the New York State Multiple Listing Service, accusing them of “engaging in or directing the automated scraping of data from RealNet’s website.” The letter was also sent to RealNet subscribers.

Ms. Pfaff did not respond to a list of emailed questions that she had offered to review. Mr. Sabella declined to discuss the matter on the record. Christopher J. Sprigman, the lawyer who wrote the letter on Simpson Thacher & Bartlett stationery, did not respond to a voicemail message.

Mr. Saunders said on February 1 that the letter “had been withdrawn” by Nicholas Khuri after EEREA denied the allegations, called the letter libelous and demanded that it be retracted.

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