New Listing Exchange Is Being Pitched To Local Real Estate Brokers

South Fork real estate brokers have been kicking the tires of a new shared listing platform, called the East End Listing Exchange, that is just about ready to roll out—a “big change” with a potential ripple effect throughout the entire industry in the region.

Listing exchanges allow agents to share listings to make it easier to find buyers and make commissions from the sale of the properties they list, as well as other agents’ listings that they help to sell. The databases are private among participating brokerages, but the listings are also advertised on the firms’ websites and on a community web portal, called a “billboard.”

Five local Goliaths—Saunders, Corcoran, Douglas Elliman, Brown Harris Stevens and Sotheby’s—have already started entering listings into a new, private database due to be shared among participating agencies by mid-October. It will be connected to a public portal scheduled to go live in January.

The five firms have also formed a nonprofit, called the East End Real Estate Association, that boasts 1,100 members—mostly their own agents.

“It’s going to bring a new level of professionalism to the East End,” said Joseph Sabella of East Islip, who came aboard as the association’s executive director in May and very recently has been making the rounds of other brokerages to promote the association, which must be joined to use the listing exchange, and the exchange itself.

The association’s board of directors consists of two members from each of the five largest brokerages. It will have its own set of rules and regulations, including standards for ethics, mediation and arbitration.

To join, brokerages must pay a four-tiered fee that starts at $25,000, for a company with as many as 10 agents, and rises in increments to $55,000 for a company with more than 100. Each agent also must pay an $800 fee annually.

“It’s a large undertaking,” Mr. Sabella said of the rollout, which also means offering technology training at Stony Brook University and opening an association office on the East End. Formerly a top producer for Merrill Lynch Realty and president of the RealPro consulting firm, he has been working out of the big brokerage offices temporarily while he pitches and demonstrates the new system.

Whether it’s listings, photos, maps, comparable sale prices or how long a property has been on the market, quick, searchable access to up-to-date information is critical to real estate agents and brokers. On the South Fork, most use OREX, or the Open RealNet Exchange, which is the sharing mechanism of Real Net, whose billboard is HREO.

Another option—which some local brokers choose to supplement that with, although it means re-entering the data—is the MSL Stratus system provided by the Long Island Board of Realtors. The downside of MLS, they say, is that data fields don’t leave spaces for property details unique to the Hamptons—“south of the highway,” or limited rental time periods, for example.

South Fork agencies have also been reluctant to rely on MLS because that means “co-broking” listings with agents elsewhere on Long Island—a reciprocal arrangement in which they may have little to gain, considering not only the relative wealth on the South Fork, and potential loss in commissions from local sales, but also simple geography.

“You really can’t represent the seller’s best interest if you’re not in that area,” said Judi Desiderio, CEO of Town & Country, expressing a commonly shared idea. “I wouldn’t go into Nassau [County] or the city—I refer them to people who have boots on the ground.”

On the other hand, brokers say the alternative, the OREX system, is outdated and too expensive, with opaque and inconsistent prices for subscribers. Using OREX can run in the six figures annually for large brokerages with hundreds of agents, and in the mid-fives for a brokerage with about 15 agents.

And therein lies one rub: the “nuance” of a new system that essentially offers a significant discount for firms with a very large number of agents, while at the same time it puts the onus on those agents to pay much of their own way, said Simon Harrison of Simon Harrison Real Estate in Sag Harbor, who, like other local brokers outside the five major firms, is still evaluating the new exchange system.

“Do the math,” he said. If the five large firms collectively claim approximately 1,100 agents, an average of 220 agents apiece, then the entry fee breaks down to only $250 per agent for the brokerage to join the association—far less than the $800 each agent would pay annually.

That also is a far cry from the $25,000 it would cost an agency with no more than 10 agents—perhaps as few as three for a mom-and-pop brokerage—which works out to thousands of dollars for the brokerage to pay for each agent.

And since the next tier rises to $35,000, for a brokerage with 11 to 50 agents, “if I let go of some agents to get down to 10, the focus suggests that is something I should consider,” Mr. Harrison said hypothetically. The third tier rises to $45,000 for a brokerage with 51 to 100 sales agents.

To avoid paying for access to the new exchange, some might think that sticking with OREX would be a better option—especially if its prices go down with a new competitor on the scene.

However, listing systems need to be heavily “populated” to be competitive; that is, the listings need to be as inclusive as possible so that the agents know what’s available and can also maximize exposure to potential buyers. That means that if the largest brokers pull out of Real Net, the brokerages that do not join the new exchange could be left out of the industry loop.

“Data is key,” explained Richard T. Stauffer of HANFRA, the Hamptons and North Fork REALTORS® Association, adding that for Real Net there might be “a dropoff in traffic because it will not longer be relevant or useful.”

According to Mr. Sabella, the association has broached the subject of exchanging listings with Real Net, which he said could be a “win-win” situation down the line.

Joseph Kazickas of Rosehip Partners in East Hampton said the existence of a public portal would be key, both for the consumer, who is best served by a “one-stop destination,” and for brokerages in need of exposure. Without a community billboard like HREO, the agencies would be “duking it out on Google” to bring attention to their own websites, Mr. Kazickas said—which could only turn out badly for non-Goliaths placing low in consumers’ search results.

According to Mr. Sabella, the new exchange portal, tentatively called www.eastendlistingexchange.com, will have a “high-end” look, with high-resolution photos, act responsively with users, work on all mobile devices, and have a “Google-like search feature” as well as listing numbers.

The listing and sharing platform is like that of an MLS, he said, but “the back end is all different.” The service will provide instant access to listings shared among the group members, comparable sales data, “state-of-the-art listing system custom reports,” listings syndicated to major sites like Trulia and Zillow and internationally as well, listings on realtor.com, and access to the Real Estate Transaction Standard server, which dictates the language used by real estate agents.

Brokers will be able to feed the system using their own software, he said, and data fields will allow Hamptons-specific terms.

“I’ve been out there and met with one-agent companies and two-agent companies and five-agent companies,” Mr. Sabella said, noting the benefits to smaller firms of being able to “fill their shelves” with information, create and feed their own software, and have access to nationwide databases and professional training.

The association will offer discounts on products like real estate signs and laptops as well as continuing education, with technology training beginning as soon as November. Anyone with a current real estate license and up-to-date continuing education credits can join as long as they want to conduct business in one of the five East End towns, Mr. Sabella said.

“You’ll probably see some of the up-island businesses opening offices on the East End,” he said, calling that good for competition.

“I’m getting incredibly positive feedback,” Mr. Sabella said. “I’m amazed at how well it’s been received … just about everyone thinks it’s time.”

“It’s a big change in the real estate industry,” said Mr. Harrison, noting that it is not the first one he has seen over his 30 years in a business subject to periodic cycles and “disruptions.”

“The jury might still be processing this new system … but the five large companies framed it to be competitive and to be an advance in technology,” he said.

“However,” Mr. Harrison said, “what’s not clear yet is whether there’s a slight nuance in where it’s different. Does it favor the larger companies? Does it help buyers and sellers? Are they looking to go to an agent-centric model?”

“Wise men say, ‘More will be revealed,’” the broker said.