Google for real estate

HomeOpenly Open Marketplace(tm) is Google for real estate

“Only other two-sided platforms can compete with a two-sided platform for transactions” Jonathan Hatch Danhui Xu

This distinction is ever relevant in the US online real estate sector. HomeOpenly is a two-sided marketplace where one side is consumers (home buyers and home sellers) and another side is Realtors. We need both to function.

Now, the question is: HomeLight a two-sided marketplace, as it claims? The answer is no.

HomeLight is a licensed broker, like any other. However, HomeLight does not perform any services of a Realtor, it organizes its competitors into a network — the same side of the market begins to agree on terms and sells services to consumers on the basis of agreements that restrain free trade outside of the scheme. Consumers hire two brokers with HomeLight, where one brokers does not do anything to earn a commission from a home sale or a home purchase.

In effect, HomeOpenly and HomeLight are never competitors, because it is impossible for a two-sided marketplace to compete with real estate brokers who are supposed to one of the sides on the platform as genuine users. At the same time, HomeLight as a brokerage that cannot become a genuine user on HomeOpenly because it does not offer any tangible services. I do not consider kickbacks and broker-to-broker collusion a tangible service, therefore, it can’t be offered on the platform.

HomeLight is a broker-to-broker collusion scheme, where “partner agents” unlawfully agree to pay massive kickbacks to receive consumers’ information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, C.F.R. § 1024.14.

Why can’t HomeLight simply abandon its brokerage status?

The HomeLight scam relies on a statutory loophole 12 C.F.R. § 1024.14(g)(1)(v) (Regulation X) and RESPA 12 U.S.C. § 2607(c)(3) that narrowly allow to receive payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and real estate brokers. This loophole, of course, does not allow for kickbacks between “shell” brokerage entities.

Shell entities, such as HomeLight, account for $15 billion in illicit kickbacks paid by consumers annually in a form of inflated broker commissions — the largest real estate scam in history. As long as brokers have a pathway to collusion, they will NOT compete for consumers with savings. Meaning, an unethical Realtor is more willing to pay kickbacks into HomeLight scam, rather than to offer that same money to consumers as savings on HomeOpenly.

Marketplaces compete with marketplaces, but active collusion between participants on the same side of the market causes damages to both: legit marketplaces and consumers.

To break this pattern of broker-to-broker collusion, specifically, to destroy Zillow Flex, Zillow 360, Xome, UpNest, Tomo Brokerage, SOLD.com, Rocket Homes, ReferralExchange, Redfin Partner Program, Realtor.com ReadyConnect Opcity, Ramsey Solutions ELP, Opendoor Brokerage, OJO Labs, Nobul, Neighborhoods.com (aka 55places), NAEBA, mellohome, Localize NYC, LemonBrew, Landed, IDEAL AGENT, HomeStory, HomeLight, homegenius by Radian, Home Captain, FastExpert, Estately by Realogy, EffectiveAgents.com, Clever Real Estate, Blend Realty, Better Real Estate, Agent Pronto, etc. is to build the “Google for real estate.”

Author: Litesand

Antitrust, real estate, e-commerce, fintech, proptech, bigtech

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