Broker Non-Compete with Portals

by Victor Lund on October 29, 2014

puzzleThe great real estate portals of America are trusted partners to brokers. As trusted partners, they are able to collect a lot of information that brokers have held close. For example, portals have access to a broker’s agent roster. They know which agents respond to consumer inquiries the fastest and the best. They even know which agents sell the most number of homes and which ones have the best consumer reviews.

Beyond the information portals have about listings and agents, they have collected a massive amount of consumer information including the identity of the consumer. Moreover, with direct consumer email marketing, portals have built a trust relationship with consumers.

There is nothing harmful about any of this. Indeed, it makes portals great partners to brokers as long as they stay on their side of the fence. Executives with portals have been consistent in their remarks claiming that they do not intend to get into the brokerage business. That is a good thing, because if a leading portal became a brokerage they would be a powerhouse right out of the gate.

Could it happen?

It is not going to happen, but it could. Many leading portals have brokerage licenses in every State in America. I do not know why, but they do. Many portals also provide products to agents and brokers that leverage IDX data – the same data that is used by agents and brokers to power solutions from other vendor partners, and the same data that brokers use to power their own website. Every day, the number of full IDX feeds to portals expands. If a portal wanted to get into the brokerage business tomorrow, they would have all of the ingredients. It is kinda scary to think about, but do not fret. Portals adamantly deny any plans or prospects of becoming a brokerage. Who could blame them? Brokerage margins are razor thin. Maybe they would consider becoming a franchise, but again – the executives of portals have denied any likelihood of this.

Lets make sure.

There is a simple way to make sure that the partnership between brokers and portals remains non-competitive. In the portal license agreement, or any other agreement between the parties, should contain a non-compete clause (even as an addendum to current agreements) that outlines the the understanding. Given that the understanding is implicit in the relationship between the two parties today, putting it in writing should be an immaterial matter.

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