First American is suing eight different companies for automatic valuation model, AVM, (or is it method?) including Zillow.com

AVM is basically defined as giving people an automatic value of their home. Zillow.com, back by more than $70 million, is the largest player in this arena. Among the real estate community, Zillow.com is notorious for giving completely inaccurate values making the job of real estate agents a tad more difficult.

First American, a large holding company that provides the MLXchange technology for the Regional MLS, Martin MLS and many others across the nation, is claiming that they hold a patent on this technology and that other companies are not allowed to use it.

This is the next chapter in an ongoing saga of the legacy real estate system including National Association of Realtors (NAR), Realtor.com, local Multiple Listing Services (MLS's) and their technology partners against new third party real estate information providers (Zillow.com, Trulia.com, Frontdoor.com, etc).

In the legacy system, everyone was happy. Real Estate agents could join together as one group, NAR. NAR could use their size and strength to police themselves and protect the real estate transaction process. Local MLS providers hired technology partners like First American to help them provide private real estate web sites for their members. Anything listed in the Local MLS web sites gets automatically pushed to the National web site, Realtor.com (see our Real Estate RoundUp for more info).

Then the apple cart got upset during an eight year pro big business Republican reign when the Department of Justice (DOJ) brought a law suit against NAR basically claiming monopoly on the information in September 8, 2005. No other company had access to the information Realtor.com had.

Eager business people decided to take a gamble and open their own sites hoping the DOJ would win and force the NAR to hand over the information to third party web sites. Web sites like Zillow.com goes live shortly after on February 7, 2006.

After a dismal two years of a negative return, Zillow.com laysoff 25% of it's human resources and outsources to India to try to stop the bleeding as well as beefing up its advertising sales department pitch to brokers, agents and anyone willing to listen.

NAR, supposedly sensing a loss, cuts a deal while they can which was finally entered in on November 18, 2008, only weeks after a Democratic reign is promised four years at the helm and protects the setup.

Almost a year later on November 7th, 2009, NAR's Realtors Property Resource project (RPR) takes over certain technology assets of Cyberhomes/LPS/FNRES to form a national database. There's only one other company providing the data, First American.

The RPR team has something called the RVM or Realtor Valuation Model, which obviously competes with Zillow.com's Zestimates.

It sure sounds like working hand in hand the legacy system is going to try to take out its competitors. If successful, it would spell disaster for Zillow.com et al.

However, I sense the game here is to strain Zillow.com as much as possible and then offer them a bargain: Rather than get the info directly from the Brokers, get the all the info from a single source, us. For a price, of course.

Wow, how kind.