How Zillow Group’s latest buy could ‘muddy the waters’ for Upstream

When real estate brokers and agents enter the profession, they likely don’t have visions of data entry and management tools dancing in their heads.

Yet they often still end up entering and re-entering listing data in various systems, including multiple MLSs, a broker’s back-end platform, in accounting software or elsewhere.

To tackle that issue, large broker network The Realty Alliance spearheaded the creation of a data management platform called Upstream, which seeks to be the “single entry point” and “single source of truth” for broker data.

But could that vision be obscured by Zillow Group’s purchase of a small, specialized company?

On August 1, Zillow Group closed its acquisition of Bridge Interactive Group, an Atlanta-based firm that provides listing management software for MLSs and brokerages.

Considering Bridge’s offerings and Upstream’s plans, will Zillow Group use Bridge to compete with Upstream?

Both Zillow Group and Upstream say no.

Upstream’s CEO told Inman Zillow Group’s offerings could “muddy the waters” for the broker-backed project by offering an MLS-centric alternative, however.

A little company that powers innovation

Chances are, those who have heard of Bridge know of it because the company has provided MLSs with technology to enable them to innovate through data standards.

When North Alabama MLS wanted to pioneer a syndication platform that would allow the MLS to send direct listing feeds to third-party portals, when California Regional MLS wanted to give brokers the ability to upload listing data directly from their own back-end office systems to the MLS, when Florida Regional MLS wanted to power its listing data feeds while also preparing to offer third-party vendors standardized real estate data in real time through an API (application programming interface), they all turned to Bridge Interactive.

Bridge’s software is based on industry standards devised by the Real Estate Standards Organization (RESO) with the aim of allowing tech developers to spend less time trying to make products compatible between MLSs, and more time creating products that boost efficiency in real estate transactions.

These data standards include the Data Dictionary, a standardized set of data terms for the most common descriptions of property characteristics used in the industry; a Web API that MLSs can use to deliver data to vendors in one standardized format; and the Real Estate Transaction Standard (RETS).

RETS is a common framework used by the real estate industry to facilitate the exchange of data between systems that handle real estate information, such as MLSs.

“Bridge’s differentiator is the technology they’ve created to implement these standards — which [is] the reason many of the largest MLSs in the country have adopted Bridge’s RETS server,” Errol Samuelson, Zillow Group’s chief industry development officer, told Inman via email.

Bridge’s customer base includes more than 30 MLSs — including 10 or so of the largest — representing more than 400,000 agents.

Before the acquisition, Bridge had three employees and some contractors — a staff count Samuelson said Zillow Group plans to grow in the future.

Why Zillow Group won’t use Bridge to be an Upstream competitor

According to Zillow Group, the Bridge Interactive suite of tools includes:

• Contact, a RETS server that allows MLS administrators to review real-time queries for listing content, number of listings accessed, and amounts of data requested;
• Cheque, which enables MLSs to manage syndication of listings and billing for MLS data recipients; and,
• Compose, a web application for adding and editing listings in variety of systems.

The latter tool is “rare” given that most MLS systems have listing input baked in, Victor Lund of real estate consulting firm WAV Group said in a recent blog post. Lund is a consultant for Upstream.

“Bridge Interactive developed a specific application to solve the problem of overlapping market disorder for MLSs, whereby a single listing would go into two or more MLSs,” he wrote.

“As a case in point, the Atlanta, Georgia area has two MLS offerings: FMLS and Georgia MLS. Bridge Interactive allows brokers to enter a listing once into Bridge Interactive and publish it in both MLSs, as well as capture additional fields required by the broker.”

Some may see parallels to Upstream in this: Upstream will offer brokers a way to enter their listings in a platform once where they will then be distributed to any MLSs, third-party portals, broker office systems or other destinations of their choosing.

‘Night and day’ in terms of scope and architecture

But Zillow Group’s Samuelson said in an interview that “Bridge is not a competitor to Upstream.”

Bridge and Upstream are “night and day” in terms of their scope and architecture, according to Samuelson.

Upstream seeks to be a national industry platform with a single central repository for not just listing data, but also consumer information and other broker data, he said. With Upstream, brokers decide where their data goes, he added.

By contrast, Bridge is not going to be a national, central data repository, and its software is set up so that MLSs (and not brokers) control where listings go, Samuelson said.

“They both deal with listing data, yes. [But] they have very different purposes. Very different goals. Lots of different machines run off of gas,” but there’s a difference between a motorbike and an excavator, he said.

A continuation of Zillow Group’s acquisition theme

Zillow Group’s purchase of Bridge is a continuation of a theme seen with two of the company’s other acquisitions: dotloop and Retsly, according to Samuelson.

These acquisitions have been about trying to help brokers with their efficiency challenges, he said.

With its data distribution and management tools, Bridge offers “a better way of doing what MLSs have been doing since 2001,” he said.

When asked whether Zillow Group will integrate Bridge and Retsly, a tool that collects MLS data and standardizes it for tech vendors, Samuelson said, “Bridge and Retsly’s products are complementary. In fact, even prior to Zillow’s acquisition of Bridge some MLSs were using both the Bridge and Retsly products in tandem.

“Bridge enables brokers to enter listings into an MLS while also capturing fields for their own internal use (Retsly does not provide an input capability). Bridge also enables an MLS to manage the distribution of its listings in their local, ‘native’ format.

“Retsly converts those listings from their local format to a standardized format and provides tools that make it much easier for programmers to interface with the MLS. What Bridge and Retsly both have in common is that they make it easier for all involved to work with listing data, and they help brokers and MLSs ensure the security of their listing data.”

Bridge’s add/edit tool “enables a third party to create a lightweight listing input into an MLS, not listing input into Upstream,” he added.

“So to me it’s very, very different. Bridge is about making the interactions with the MLS easier for the brokerage. Whether it’s the input or the output.”

Moreover, Bridge’s software is not trying to address a future world where there’s an Upstream, but rather the data issues brokers have now, he said.

“People can imagine that there’s other things going on and project things on us, but Bridge is about solving today’s problems versus some future state scenario,” Samuelson said.

“In a perfect world, you shouldn’t care what brand of oil filter is under the hood of your car … just that it works well,” he added.

How Zillow Group’s purchase ‘muddies the waters’

Alex Lange, president and CEO of Upstream, was “not surprised at all” by Zillow Group’s acquisition of Bridge, he told Inman.

“They have a multipronged strategy to try to get the best data any way they can they can,” Lange said.

Because Upstream will give brokers the the ability to decide when and how much listing data they will send Zillow Group, he sees the acquisition as a hedge to ensure the company has the best data it can get.

While it’s possible for brokers to send Zillow less data, Lange doubts that most brokers will choose to deselect fields they send to Zillow. Only a small percentage of brokers choose to opt out of direct MLS feeds to Zillow today, he added.

But he understands the move. “If I were in their place I would have done the exact same thing,” he said.

“With a lack of information you plan for the worst and hope for the best,” he added.

He’s not suggesting that Zillow Group is doing anything “nefarious,” he said — Zillow still needs to ask for permission to use the data regardless of the source.

“They get data from a variety of sources today. From broker feeds, from MLS feeds. You cobble the data together the best way you can,” he said.

Zillow will “need to keep clean hands, otherwise the industry will come with pitchforks and torches. But they’re smarter than that,” he added.

For its part, Zillow Group said “nothing changes for Bridge’s customers” as a result of the acquisition and “Zillow Group will have no additional rights to publish broker and MLS listing data and Zillow will have no access to listing data stored on Bridge Interactive’s servers, other than for the purpose of operating Bridge Interactive’s systems.”

Lange expects Zillow Group to combine Bridge and Retsly and position the combination “as an MLS-centric solution where Upstream is a broker-centric solution,” he said.

“It just depends on where the control is. If you’re an MLS that’s still not quite sure what the intent of Upstream is, you can totally see Zillow positioning itself as ‘We’re an MLS-friendly solution; they’re not.'”

When asked whether such an alternative would be competition, Lange said, “I think you’re competing for cognitive space. Upstream is a broker initiative, a broker tool. MLSs work with us because their brokers have asked them to and want them to.

“So when I’m having a conversation with an MLS about integration and they are skeptical or concerned or worried, the Zillow offering is just one more thing where they’re going to ask ‘what about this or what about that’… so it just muddies the water a little bit. I wouldn’t consider it a competitor.”

MLSs have been getting both feedback and “push” from large brokers in their market and realize that they’re going to have work with Upstream anyway, he added.

“It’s not really threatening. It’s just distracting because you’re having repeated conversations and re-education. That’s normal too, having to reiterate and re-establish the value proposition,” he said.

Like Samuelson, Lange noted that Upstream’s roadmap extends far beyond listing data. Ten years down the road, Upstream would like give brokers the flexibility to switch vendors at will “so brokers aren’t held hostage to their own data assets,” he said.

Also like Samuelson, Lange noted that who makes data decisions differs in the two companies.

“Is the combination of Bridge and Retsly very similar to what Upstream provides? Absolutely. The difference is who is determining the control. For Upstream it’s always the broker. No one else,” he said.

What this could mean for agents

Russ Cofano, chief strategy officer and general counsel of large brokerage company eXp World Holdings, agreed with Lange that Zillow Group could be setting itself up as an MLS-centric alternative to Upstream.

“Upstream clearly is being built by and for brokerage companies. They make no bones about that,” Cofano said.

“Zillow … its customer is the agent, not the brokerage company. And it has a deep relationship with MLSs. It’s spent a lot of money growing that relationship. The flow of data from MLSs is very important to Zillow.”

Meanwhile, “many MLSs are wary of Upstream — whether there’s a reason or not, they are wary,” he said.

Cofano believes Zillow Group didn’t buy Bridge for its customer base or to be in the syndication business, but rather to be able to sell Bridge’s add/edit functionality to MLSs and agents, as opposed to the brokers Upstream will target.

“So saying one is competitive with the other — I don’t necessarily see that. They’re going after different users in theory,” he said.

Lange agreed. “That’s definitely how they intend to sell it,” he said.

Giving agents more choice?

Cofano noted that agents would most likely be the users of Upstream as well — under the aegis of their broker. If agents have an alternative, that could potentially put a strain on the broker-agent relationship, he said.

“The agents now may have a choice as to which one they use, unless a broker wants to be heavy-handed and require that agents use a certain platform,” he said.

“What Zillow could be offering MLSs is the ability to deliver an Upstream-like model to brokers at a collaborative MLS-level, not at an entity-level like Upstream, furthering Zillow’s relationship with them,” he added.

“But I think at the end of the day, the agents are the ones that are going to have to put in the data in some input form, and they essentially have to choose, whether willingly or not, which platform they might choose to use.”

This means that Upstream’s vision of having agents enter data in one place for distribution is less likely to become reality, though not every broker will use Upstream because the company has not yet said how much it will cost, Cofano said.

In response, Lange said in an email, “I think Russ is overestimating the percentage of agents actually doing the input versus filling out forms in the office and handing it to a coordinator.”

Upstream has support from the largest brokerage and franchises, Lange added. “[Keller Williams] is pushing hard to 100 percent adoption coming from Gary [Keller] himself,” he said.

“We only need to integrate with an MLS one time. Once done, it’s available for everyone. KW alone can drive MLS adoption.”

As for Upstream’s cost, “our mandate is to be capital efficient and run Upstream at break even. We’re not supposed to be profitable. It will cost as close to zero as possible,” Lange said.

He doesn’t know when Upstream will announce its pricing. Realtors Property Resource (RPR), Upstream’s vendor, will start billing Upstream quarterly for ongoing operations in 2018. Lange will receive an estimate of that bill in first-quarter 2017, but then have a year to negotiate the fees and services.

“I have a few business models I can deploy, but it depends on what break-even looks like,” he said.

Cofano said he is not involved with Upstream or Zillow Group, but he will be watching both closely for his brokerage company.

“Centralized data input can create lots of efficiencies. Today it’s not [centralized],” he said.

“We have over 100 different MLS relationships that our agents use for data input. The ability for that data to have a centralized input platform or consistent input platform as opposed to the way it is right now, which is every single MLS is different, creates efficiencies.”

In response to Lange and Cofano’s comments, Samuelson said, “Our focus with Bridge Interactive is to help solve the real world problems that our broker and MLS partners are facing today. This is about helping drive efficiencies for our partners today rather than speculating about what might happen in the future.”

How Zillow Group and Upstream could work together

Zillow Group’s acquisition of Bridge “doesn’t preclude Zillow from leveraging Upstream as well,” Lange said.

“Ultimately, Zillow will be a downstream client to Upstream just like any other vendor,” he added.

WAV Group’s Lund also doesn’t rule out the possibility of the two working together.

Brokers participating in Upstream may have multiple options in regards to the tool they use for entering listings, including tools provided by their MLS, Upstream or Bridge, according to Lund.

“In some ways, Bridge Interactive is like Upstream, but not a competitor. Bridge is about helping brokers solve data problems and may become a conduit that more easily permits Upstream to allow brokers to deliver listing content to MLSs,” Lund wrote in his blog post.

When asked to elaborate, Lund told Inman, “Once the broker load port is open in an MLS, it becomes eligible for a variety of broker load options beyond a single one — hence the word ‘conduit.’ Think of the API as being a two-way street.”

“The important note is that broker load is not a new or unique concept. Upstream is just an effort to make it a national feature that allows all brokers to load to any MLS or other technology firm they wish to connect their data to,” he added.

Email Andrea V. Brambila.

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