The spring real estate market on Shelter Island has finally begun to bloom after a long winter season. Activity for both rentals and sales have picked up just in the last two weeks or so. Landlords whose houses are usually rented by mid February have been calling since the holidays to ask where the customers are hiding.
Many prospective buyers and tenants seemed to hesitate at proceeding with real estate commitments until they could examine their bottom line at the end of one full cycle following the passage of the Federal tax reform of December 2018. As tax day drew nearer, customers perhaps with a clearer awareness of their potential spending ability, have proceeded to sign leases and place offers on properties.
Simultaneously, there was an industry wide change to the real estate database called “Realnet” used for the last 20 years or so by real estate agencies throughout the East End of Long Island, and which included a co-brokerage sharing platform or a multiple listing system (MLS) named Open Real Estate Exchange “OREX”. The consumer listing portion of Realnet was Hamptons Real Estate Online or HREO, which many customers have recognized since its inception in the late 1990’s from the distinctive straw hats with ribbons under the masthead with names of assorted Hamptons real estate agencies.
In early 2017, Zillow purchased Realnet and renamed HREO to OutEast.com. In the following months, agents experienced slowdowns to the database but life went on. Consumers noticed that the new OutEast website was not as easy to navigate, with “average rental prices” in place of actual rental rates for specific months. If the consumer scrolled and clicked for specific rates, the detailed information would reveal itself, however those who had been accustomed to the old fashioned way of having them listed at the top of the listing, assumed in many cases that real estate agents were trying a “bait and switch” because the rates were never completely accurate.
In 2016, prior to Zillow’s purchase of Realnet, Andrew Saunders, the broker-owner of our firm, got all of the Hamptons real estate agencies together and said that the day would come when Zillow would begin to control how we collectively do business and share information, as has been the case in other markets throughout the country. All of the agencies agreed to work together to formulate a multiple listing system called East End Listing Exchange (EELE) which would be independent, owned by the agencies themselves. After considerable time, effort and money invested, a cohesive system was put together. Many agents who were introduced to the new database said that they preferred Realnet and its familiar, yet imperfect system. A day before EELE was to be formally put into action, Zillow purchased Realnet and two agencies, Douglas Elliman and NRT which owns Corcoran, Sothebys, as well as the brands that are franchised to operators including Daniel Gale, Century 21 and Coldwell Banker, decided to stay with Realnet and see how things proceeded with Zillow at the helm.
In February 2019, Zillow announced that they would be pulling the plug on Realnet and migrating all of the data to OutEast which would serve as both the listing database and the consumer portal. This sounded logical enough, but it would be a big change to agents who had come to depend on Realnet to share information between the various agencies. A select group of agents, staff and management from each real estate agency in the Hamptons was invited to hear from Zillow representatives how the transition would take place. The reaction from attendees was swift and overwhelmingly negative. Only a handful of people from each firm was invited and the Zillow personnel allotted an hour or less per agency. In effect, the OutEast platform would offer fewer functions and less information to the real estate agents who had worked over the last 20 years to populate the information in the database, and Zillow would retain the most important information on the back end.
On April 2, 2019, Zillow pulled the plug on Realnet with OutEast still not fully operational. Zillow agreed to give real estate agents more information on the front end, such as tax map numbers and the type of pool (eg Gunite or vinyl and dimensions), however the program was filled with glitches and not ready for prime time. When asked why this was done, Zillow reps responded that Realnet was “disintegrating” and it would “fall apart” so quicker the better. The real estate magazine, The Real Deal wrote about the disruption in their 4/3/19 article.
So what happens now? Despite the fact that the real estate agents out here in the Hamptons market work at different companies and are effectively competitors, we do share information and work together to transact and sell. Many of us have known each other through personal celebrations and sadness, socialize after work and care about each other. Shelter Island, while a part of the Hamptons market, is a very small town with 2700 year-round residents, and a totally different market from the the North Fork and the Hamptons surrounding us. Among the types of real estate agencies here on the island are: several “mom and pop” shops who have never been affiliated with any database or multiple listing system; a franchisee of a larger entity that is affiliated with the Long Island Board of Realtors and the MLS of Long Island which is headquartered in West Babylon, 60 miles west of Shelter Island; and a Manhattan based agency which also has multiple Hamptons and North Fork offices.
In New York City, StreetEasy.com, the Zillow-owned system under which OutEast.com operates, was once a website similar to HREO.com. Since its purchase by Zillow, agents whose listings are posted on StreetEasy are now charged per listing.
Many real estate agencies and their agents are concerned that Zillow will interject itself into the industry and do what its CEO Rich Barton did to the travel industry with his founding of Expedia.com, and along the way, reduce an agents’ earnings with charges for placement on their websites, leads and sales. Barton was interviewed by Jeremy Hobson on the NPR program “Here and Now” on 4/1/19 in a revealing interview that could have been more informative with better questions:
Many of us are trying to sort through OutEast, others are working off their memory or printed listings in three ring binders, and many are working off of Zillow.com. Through Realnet, exclusive listings were shared with 40 different agencies simply by checking off a box, after which another agent could easily send all listings available through the system. For the mom and pop agencies’ exclusives, each agency would hand input them to Realnet which would enable future sharing. “It’s as though we have gone back to the 90’s!” a broker told me the other day.
Fortunately, our agency did not abandon EELE and has maintained two parallel databases for the past two years, so our rental and sale listings have remained up to date. We are also members of MLS of Long Island so we can share with our customers the exclusives of the franchise that is primarily a member of that database. For the Manhattan based agency’s listings, OutEast is the imperfect method to share. For the exclusives listed by mom and pop agencies, we are typing them up in our system and communicate by email with co brokerage agreements shared the old fashioned way, by signatures on paper.
In the meantime, listings that consumers see on Zillow.com have disappeared, re-appeared with new listing dates, have been duplicated with errors and although reported and corrected by us, the listings re-appear often with errors. Yesterday I was explaining to a client why there have been problems online with their listing, after which he remarked, “that is all too much for me to take in!”
There are options for the long term that are being discussed between the Hamptons real estate agencies, and on Shelter Island, individual agents are coming together to discuss how to easily share information that will benefit us all. In a small community like Shelter Island, where most people have come to reside to have some peace and quiet, real estate agents are finding a path to quick cooperation amidst all the corporate chaos.