Move & NAR File Suit Against Zillow and Former Chief Strategy Officer, Now at Zillow

Forget Crimea, the biggest battle brewing in the U.S. right now is between Realtor.com, owned by the National Association of Realtors, its digital company Move.com, which operates Realtor.com’s websites and social media, and Zillow, the huge and ever-growing third party real estate portal that agents both love and hate.

What’s happened? A key higher-up left Move for Zillow last week without saying goodbye, then his successor at Move joined him, then Move filed a lawsuit against Zillow.

Last week, a guy named Errol Samuelson, left a ten-year stint as Chief Strategy Officer and President of Realtor.com, to hop over to Zillow as Chief Industry Development Officer. The Move folks say he had inside knowledge on everything at Move, as one would expect.

But the left Move.com CEO Steve Berkowitz steaming hot, mostly because Samuelson left without notice. Rob Hahn, a Houston-based real estate consultant and blogger who once worked for Zillow, actually got Berkowitz on the phone and asked, what gives? Why no notice?

Berkowitz said he was blindsided,

Berkowitz told me that he was at an investor meeting all day on Wednesday (that would be the Morgan Stanley Technology Conference), and that the entire senior staff knew that he would be at that meeting and presenting. While he was at the meeting, he got a call from HR and from Errol, but because he was sitting in session, he didn’t answer immediately. Later that day, during a break, he checked his voicemail and that’s how he found out that his President was resigning, effective immediately.

Berkowitz said that he called Errol immediately and had a short conversation, with the only question he asked being, “Can I have some time?” As events transpired, we all know the answer must have been, “No.” Inman News published its story mere hours afterwards, and Errol started at Zillow on the same day. Berkowitz said that he would have been happy to have had even one day to react.

That was last week. Yesterday, as I was pulling the story to advance it, came word that Move.com and Realtor.com are fighting back. They are suing Errol Samuelson for alleged breach of contract, breach of fiduciary duty and misappropriation of trade secrets. Basically, they think he is feeding info to the Realtor’s enemy, Zillow.

Oh and get this: apparently the guy who replaced Samuelson at Move, Curt Beardsley, ALSO defected for Zillow.

Zillow is headquartered in Seattle, so we know it’s not the legalized marijuana attracting these guys. Zillow is an online real estate database that was founded in 2005 and created by Rich Barton and Lloyd Frink, former Microsoft executives and founders of Microsoft spin-off Expedia. Spencer Rascoff is the current CEO of Zillow, Inc., and he was in Austin last week at South by Southwest. I.E: he’s cool. Zillow creates revenue by selling ads, often to Realtors, who complain that it takes their data from the MLS (which Realtors support through heavy duty dues) and then sells back their own data. That’s one reason why some agents bristle at the mention of the “Z word”.

They also don’t like how Zillow is so off with data, because the information, i.e. home prices, is so darn tootin’ off base. Like giving Champ d’or a Zestimate of $500,000. We all know it sold at auction a few years ago for what 9 or 10 million? Zillow cannot obtain accurate pricing info unless the MLS’s across the country provide it.

And a few are choosing not to. Come spring, the Austin Association of Realtors will no longer feed Austin listings to Zillow. How will they get their info? From public records. Will it be accurate? Probably not.

But the public LOVES Zillow. It has data on 100 million homes, and 34.6 million visit the site monthly, they say.  Traffic there is out of control — Zillow and Trulia lead the pack in real estate traffic, with Realtor.com now in fourth place as far as traffic. Agents tell me that consumers love to read Zillow and Trulia first, to kind of kick start the house hunting campaign.

Consumers tell me they love Zillow because, while the home pricing may be off, the pricing trends and other info are not. Plus Zillow has just gone hog wild to be a consumer-loving site. They have acquired companies like I buy shoes — Postlets, Diverse Solutions, RentJuice (one founder of this company is the son-in-law of local businessman Gary Kusin), Buyfolio, a mortgage company called Mortech, a listings service called Hotpads, and last year, StreetEasy. Zillow’s blog also feeds to many on-line news orgs, such as AOL Real Estate and Yahoo, who found it cheaper to farm out real estate news rather than hire real estat journalists.

There is no doubt that Zillow is trying to give consumers everything they have ever needed to shop for real estate on line, where most consumers now shop for real estate. In our hot market, if you don’t shop on line, you are too late. I have no doubt the founders intended to make Zillow the Expedia of the real estate world. Still, I go to Realtor.com for all my real estate info searches because I know the writers there are stellar, and the information is solid. How hard can that be?

Of course, what we really need is a national MLS. How ridiculous is it that there is not one MLS even in the state of Texas?

So what’s the big deal? Some say that the MLS’s are afraid that Zillow may render them obsolete. Some say that Move “fence straddles” too much to please the mothership NAR, who would like to retain control of listings. Some say it may be time for the NAR and Move.com to severe their relationship. Some say the NAR needs to give Move.com MORE freedom.

How does all this business affect consumers? Ultimately, if it affects how you get the information about homes to buy, or selling your own home, it will affect your home buying process. I still believe that real estate is the most localized story ever, so whoever defects from Move to Zillow doesn’t really matter today in Dallas, Texas, but it could matter in a few years. I think Move.com would be very smart to start regionalizing real estate news right now.

Also: curious how agents feel about footing the bill for this lawsuit.

Move and NAR vs Samuelson and Zillow by Joanna England

Press release on NAR/Move vs. Zillow/Samuelson