Another resource perspective

Here are some possibly overlooked elements of national property resource ecology.

Broker and Owner sign listing agreement/agency disclosure. Exclusive representation, fiduciary duty--best interests of Owner paramount and all that. 

The listing very shortly becomes associated with a considerable amount of information--alpha numeric data, creative marketing copy, photos, etc.

The listing agreement grants Broker the right to place that information into the MLS system--with the tacit understanding that such placement is consistent with fiduciary duty in the process of reaching the best deal possible for the Owner.  

The MLS system may then make the information available to other member brokers AND the public via IDX display, public portal--other websites, etc. Typically the information is not modified, just displayed in whole or in part. No one edits the photos and the copy may be truncated, but is not rewritten.  

Ok, now we're getting to the national property resource part. Owners can opt out of property resource display, but do they know what they're opting out of and why they might want to? It may be a little delicate for most brokers to gracefully explain?! Most will go with the flow and let the Automated Valuation Models (AVM) fall where they may. 

Here's where it gets a little sticky. The national property resource AVM application is VERY LIKELY TO exhibit predictable inaccuracies in the value figures produced. Special properties will tend to be undervalued and some properties in poor condition and/or with other, off site, issues that negatively impact value, will tend to be overvalued. In addition, properties in certain areas may owe significant value to factors that are NOT evaluated by the AVM--some of those factors mat not be adequately represented in the MLS data in the first place.

Neither situation is good for BUYERS, who are also represented by a Broker operating under the terms of fiduciary duty. Buyers could be misled by AVM figures on the low side or high side, depending on the property. A Seller whose property is undervalued is obviously at a disadvantage and less likely to receive full value for the outstanding benefits the property provides. A Seller with an overvalued AVM figure may also be at a disadvantage because many Buyers aren't stupid--they'll see a number of houses and AVM figures that are out of sync will jump out of the price grouping.   

The national property resource has no doubt done "ground truthing" and PRETTY MUCH KNOWS where the AVM applications tend to produce errors, BUT their profit model depends on repackaging the information (that originated way back at the Listing Broker/Owner agreement) and SELLING it to third parties, among wall street/banking firms and who know where else. How candid are they likely to be about the inherent errors of their model? Their failure to disclose the predictable nature of the inaccuracies is problematical for Brokers and MLSs.

Do Brokers ignore the AVM? What if the Buyer makes a claim that the figure was material, the Broker had access to it an failed to provide it? Pandora's box syndrome launched? Broker could do individual analysis to debunk AVM, but how many Buyer's representatives will do that for SEVERAL houses being shown? Listing Brokers have it easier-one house and a few comps, but there's still the Buyer's Brokers bringing in the offer.   

AVM applications have been around for a long time, but they have always, until now, relied on public records and other data drawn from sources linked to a fiduciary level of representation arising from an agency relationship.

Those new end users of the information obtained from the national property resource, who are unknown to MLS, Brokers or Owners of the property, may use that information for purposes NOT representative of the best interests of the public--particularly the SELLER and prospective BUYERS -- who are perhaps still expecting a fiduciary level of representation from their Brokers consistent with the contracts and agency disclosures still in effect. 

We know when fiduciary duty begins in this flow of information--but when does it end? Does it end?

If it doesn't end, to whom does the responsibility fall, if a claim is made that an AVM value resulted in breach of fiduciary duty and/or financial harm to a Buyer or a Seller?

Would a reasonable observer (as in juror) of this flow of information feel the Owner of the property gave up all claims when the Broker placed the information in the MLS? OR would a reasonable observer feel that the Association/MLS and the listing Broker had an ongoing responsibility to take reasonable care to see that the information was not used in a manner inconsistent with the fiduciary duty created by the listing agreement and agency disclosure?

Furthermore, would a reasonable observer feel that a Broker who believed inaccuracies in the AVM figures might exist AND also felt that the nature of those inaccuracies should be disclosed to client should also take steps to provide alternative verification of the validity of AVM figures?

Does the the national property resource agreement hold Associations, MLSs and Brokers harmless from monetary damages as well as charges of breach of fiduciary duty? Hold harmless may not be possible where fiduciary duty is concerned.

Regardless, is it a good business practice to knowingly provide an unknown entity with information that may then be modified and ultimately used by another, unknown party, to the disadvantage of a predictable proportion of the individuals who provided the information in the first place?

Is such a shiny techie bling really worth all these complications? It it worth disrupting the future of real estate sales for corporate profit and the promise of staggering power? The corporate profit part is questionable and the power will ultimately follow the money--wall street and the banks have way more of that.