HomeServices CEO ‘skeptical’ of real estate’s litigation trend
As a “recovering” lawyer, Chris Kelly doesn’t think issues like private listings should be decided by a court — especially if consumer interests get overlooked.
Key points:
- Instead of turning to the legal system, HSoA President and CEO Chris Kelly believes the industry needs to focus on what actually benefits consumers.
- Kelly noted that industry consolidation — like the Compass-Anywhere merger — tends to ramp up during periods of increased antitrust activity.
- While he expects the private listings trend to continue, he doesn’t support pre-marketing as a way to test “aspirational” pricing, or hiding insights like days on market.
Editor's note: This is the second part of a two-part series exploring the changes that HomeServices of America plans to implement in the coming year as the company strives to establish a more visible role within the real estate industry. Read part one here.
HomeServices of America President and CEO Chris Kelly — a self-proclaimed "recovering" lawyer — doesn't understand why real estate companies are increasingly asking the courts to settle some of the industry's biggest questions.
"I'm skeptical of important issues being solved through litigation alone," he told Real Estate News earlier this month.
From what Kelly has seen in his first year at the helm of HomeServices, these lawsuits haven't resolved much when it comes to the industry's root issues. As for HomeServices' biggest concern as litigation piles up? Decisions made by a judge or jury often apply a simple answer to a complex issue — and consumers can get lost in the shuffle.
The private listings dilemma
Over the past year, private listings have been the focus of new legislation and litigation as the debate over pre-marketing intensified among brokerage, search portal, and MLS and association leaders. Even after the lawsuits are resolved, Kelly expects private listings to remain part of the industry — though perhaps as less of a hot-button topic.
"It'd be much easier if we were just like, 'We're 1,000% in favor of exclusive listings' or 'We're 1,000% in favor of public marketing,'" Kelly said. "But the truth is, it's much more nuanced."
There are cases in which "it is appropriate" to take a narrower marketing approach "based on the uniqueness of the seller or the uniqueness of the property," he said. "The best people to make those decisions are the seller and the real estate professional that they've chosen to work with."
From Kelly's perspective, the current push toward private listings seems to be coming from those who have never experienced a buyers market. With sellers currently outnumbering buyers, the pressure will be on agents to get listings out to the widest audience possible. And when sellers who go the private listings route eventually become buyers? It'll be "a bit of a Catch-22" situation when they see firsthand what some argue are disadvantages of the trend, Kelly believes.
Meanwhile, the idea of masking information — like days on market or price cuts — doesn't sit well with Kelly.
"It seems like you're kind of admitting to the seller, 'I'm not quite sure how to do this, so let's put it in a private network so that we can kind of aspirationally price it — and then we'll find out if we've done this right,'" Kelly said. "I'd rather go with a doctor that knows what they're doing as opposed to someone who just wants to cut me open and explore around a little."
'Not surprised at all' by Compass-Anywhere deal
To Kelly, last fall's announcement that Compass and Anywhere — the nation's two largest brokerages — were merging wasn't that surprising. This kind of M&A activity previously occurred in the railroad, airline and telecom industries following antitrust probes, he noted.
"It just seems to naturally happen after these efforts go into falsely creating more competition by changing the rules. You end up making it harder to compete — and then consolidation happens," Kelly said. "I was not surprised at all to see that announcement."
There is one aspect of the deal that Kelly believes is being glossed over: The independent nature of Anywhere's six franchise brands, which can decide how they want to market listings.
While these companies will "get a lot of benefit from being part" of what has become Compass International Holdings, "there's also things that you can't automatically do" — such as moving listings into private listing networks, Kelly said.
Staying mindful of RESPA
With Zillow and Rocket Companies currently facing lawsuits over steering allegations, Kelly said he's being mindful of the Real Estate Settlement Procedures Act (RESPA) as HomeServices moves toward an end-to-end consumer experience model.
"We cannot tell the agent or consumer what to do. All we can do is demonstrate and put in front of them the value and experience that happens when they transact under our umbrella," he said.