Xome Brings Banks Into The Paper Portal World

This article was originally published on Inman News:

On March 11, 2009, President Obama signed into law the FY2009 Omnibus Appropriations Act that permanently prohibits banks from entering the real estate brokerage and management businesses.

Legislation is often less effective than its framers intend. Whether it’s federal law or local Realtor board regulations, once a rule is on the books, profit-driven entities will look for loopholes.

That might be the common case for those who intended to keep banks out of real estate brokerage business and brokers who built IDX listing capabilities intending for their active selling members to use them.

Xome is a new portal backed by Nationstar Mortgage Holdings. Nationstar reportedly spent $18 million to acquire Real Estate Digital (RED). Its business model is based on the ubiquitous “discount via agent rebate” model. It claims to have access to 98 percent of MLS listings via RED.

If you’re furrowing your brow, you’re not alone. Banks aren’t supposed to be in the brokerage business, are they? An MLS servicer can’t just display all of its MLS feeds on a nonbroker portal, can it?

That familiar feeling

Sometimes you aren’t sure yet what the problem is, but you can’t help feeling something’s amiss. Maybe Nationstar isn’t technically a bank acting as a brokerage through Xome when it refers agents, takes a portion of their commission and rebates it to the consumer. Maybe its company structure, or its business model for Xome, is in line with the intended separation of banks and brokers.

But it looks a lot like the groom who’s dancing much too closely with a bridesmaid at his wedding reception. They might not be officially intertwined, but everybody is whispering that something ain’t right. When a potential buyer wants to write an offer on Xome, he or she must check a box that says, “I agree to use Xome affiliated companies for closing services/valuation/inspection.” And the whispers of an unholy union get a bit louder.

Commingling of MLS data on public portals is allowed via new Realtor guidelines, but the publisher of those listings, in most cases, will have to define itself in its online display as the local brokerage that received that MLS feed. That should make it clear how the listing data is being delivered.

Following the rules of 800 MLSs for proper display of data is no simple task, and even well-funded ventures make big mistakes. A betting man would put money on there being some rocky relationships ahead on that front.

When Redfin’s Agent Scouting Reports came out, there were a plethora of MLSs alleging violation of data agreements and threatening to shut down feeds. Hopefully, Xome has crossed a few more t’s.

Updating to define intent?

That bring us back to the concerns about paper brokerages. They’re playing within the rules, but many brokers with living, breathing agents believe they’re acting outside of the intent of IDX (and VOW).

There are quite a few fairly successful paper portals already, including Movoto, Estately and Blossor. Some have been built by relatively small companies with limited funding. Redfin uses the model to expand into more markets before going traditional.

Xome would turn that paradigm on its head. A big-money established player in the real estate industry would be funding a pseudo-paper portal, intent upon funneling consumers into its service providers, its rebate-driven agent pool and its purported “integrated way to buy and sell a home.”

If MLSs weren’t already re-examining their policies for access to IDX and VOW, they will be now.

There’s some light for the consumer in that big money is focusing on the need for better software to tie the consumer experience to the entire transaction, but it’s not a neutral platform. It looks like a walled garden of limited choice. Channeling the consumer’s choice of agent, appraiser, inspector, lender and closer into one fraternal funnel is enough to make anyone who’s dealt with industry regulators wince.

That’s the trade-off for a financial rebate, in most cases. This industry isn’t lacking in discount options. It lacks a fluid, engaging transactional experience via technology.

It’s possible that Nationstar’s weighty footprint will help Xome garner more adoption than other discount models. Its reputation among real estate agents for servicing responsiveness and reliability is less than stellar.

If its software exposes a better way to transact online, it will be a good thing for other software providers to follow. Our first glimpse at it looks like a fee-heavy business that will be walking on eggshells as it gets started. Stay tuned.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth and a director for Washington Realtors and Seattle King County Realtors. You can find his team at SeattleHome.com and SeattleCondo.com.


  • All opinions expressed herein are personal opinions and do not constitute the position or views of any organization. Sam DeBord is CEO of Real Estate Standards Organization (RESO). He has two decades of experience in the real estate industry, spanning real estate brokerages, mortgage lending, and technology consulting. He has served as President’s Liaison for MLS and Data Management with the National Association of REALTORS®, a REACH mentor, and on the board of directors for NAR, Second Century Ventures, and California Regional MLS. Sam began his career as a management consultant for PricewaterhouseCoopers. He is a recognized real estate industry writer for publications including REALTOR® Magazine, Inman News, and the Axiom Business Books Award-Winning Swanepoel Trends Report.