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Real estate markets scramble following cyberattack on listings provider – Ars Technica



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Enlarge / MLS (Multiple Listing Service).
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Home buyers, sellers, real estate agents, and listing websites throughout the US have been stymied for five days by a cyberattack on a California company that provides a crucial online service used to track home listings.

The attack, which commenced last Wednesday, hit Rapottoni, a software and services provider that supplies Multiple Listing Services to regional real estate groups nationwide. Better known as MLS, it provides instant access to data on which homes are coming to the market, purchase offers, and sales of listed homes. MLS has become essential for connecting buyers to sellers and to the agents and listing websites serving them.


“If you’re an avid online refresher on any real estate website, you may have noticed a real nosedive in activity the last couple of days,” Peg King, a realty agent in California’s Sonoma County, wrote in an email newsletter she sent clients on Friday. “Real estate MLS systems across the country have been unusable since Wednesday after a massive cyberattack against major MLS provider, Rapattoni Corporation. This means that real estate markets (like ours!) can’t list new homes, change prices, mark homes as pending/contingent/sold, or list open houses.”

Rapattoni does not provide a way for reporters to contact representatives. In a memo sent to regional MLS providers and reported by Cincinnati TV station WCPO, Rapattoni representatives wrote:

As we have previously communicated, Rapattoni’s production network was hit by a cyberattack and we are working diligently around the clock to get systems restored as soon as possible.

We are actively investigating the nature and scope of the event. The confidentiality, privacy, and security of information in our care is one of our highest priorities.

All technical resources are devoted to this effort. We do not have an ETA at this time, but we will continue to update you and keep you informed of our efforts.

On Sunday, Rapattoni wrote: “We are continuing to investigate the nature and scope of the cyberattack that has caused a system outage and we are working diligently to get systems restored as soon as possible. All technical resources at our disposal are continuing to work around the clock through the weekend until this matter is resolved. We still do not have an ETA at this time, but we will continue to update you and keep you informed of our efforts.”

While Rapattoni has referred to the incident as a cyberattack, it has been widely reported that the event is a ransomware attack, in which criminals gain unauthorized access to a victim’s network, encrypt or download crucial data and demand payment in exchange for decrypting the data or promising not to publish it. Rapattoni has so far not said publicly what sort of attack shut it down or other details. Rapattoni has yet to say whether personal information has been compromised.

The outage is a potent reminder of the real-world disruptions that cyberattacks can impose on large numbers of people or businesses that depend on a service that gets hacked. On Monday, people continued to make do as best they could. In an email, King wrote:

We are having more in person meetings where we share new listings, price reductions, buyer needs, etc. And obviously we do this by phone as well but on a more individual basis. For instance, I am showing clients two properties tomorrow. I had to call/text/email each agent to track them down to see if the status was still accurate—luckily they are both available to be shown. When MLS is working correctly, I wouldn’t have had to make those calls as the MLS tells me which properties are available/in contract/sold. So that ate up an extra 10 minutes that I normally don’t have to do.

We find ourselves scouring the public websites (Zillow/Trulia, etc) and MLS (as of 8/8/23 @ 10pm) for new information, open houses, price reductions, etc. It all just takes a couple extra minutes to get the correct information.

As far as updating listings, we still have no way of doing this. We can search via a reciprocal MLS (MetroList) but are unable to enter new listings ourselves or change current listings. So, the public really isn’t getting the latest/greatest information. It trickles out but it’s delayed and slow.

The president and CEO of BAREIS, a broker-owned multiple listing service serving realty professionals in Northern California, said that the MLS data it provides hasn’t been updated since August 8. She has received no estimate from Rapattoni on when updated data will become available.

“BAREIS has created many workarounds to allow BAREIS members to stay informed, including access to alternative databases with MLS data for their counties,” KB Holmgren wrote. “We have established temporary systems for posting new listings, open houses, and broker tours.”

Not all regional listing services are affected because some use data vendors other than Rapattoni. The damage the outage is causing to agents, buyers, renters, and sellers could get worse unless services are restored in the next few days.

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Hong Kong shares drop 3%, dragged down by real estate and energy



Hong Kong’s Hang Seng Index dropped more than 3% Tuesday, dragged by its real estate and energy sectors.

The benchmark index’s loss of over 500 points is a significant decline, Everbright Securities’ Kenny Ng told CNBC via e-mail.

“On one hand, this was driven by profit-taking following a 400-point rise last Friday,” the securities strategist explained. “Additionally, the US dollar index has remained relatively strong, exerting downward pressure on the Hong Kong stock market.”

The index was last trading down 3.16% after coming back from a holiday on Monday.


Ng highlighted how property stocks were among the largest decliners Tuesday, given the high-interest environment.

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Hang Seng Index
*Data is delayed | Exchange | HKD
17,305.40quote price arrow down-504.26 (-2.83%)

Hong Kong listed property stocks were firmly in the red. Country Garden Holdings plunged 7.67%, leading losses in the sector, while Longfor Group Holdings lost 4.82%. New World Development shed 6.69%, and Henderson Land Development traded 6.15% lower.

“Coupled with the relatively sluggish mainland Chinese real estate market, it is expected that this sector will continue to face downward pressure in the short term,” Ng added.

China’s property market has struggled with faltering consumer confidence, as property giants Evergrande and Country Garden were mired in debt problems.

Separately, beleaguered Chinese property giant Evergrande resumed trading in Hong Kong. Shares have been volatile since resuming trade in late August following a 17-month suspension. The stock rose 22% in early trade. The firm’s EV unit also halted trading Tuesday.

Energy stocks also posted losses, with PetroChina losing 5.93% and China Petroleum & Chemical Corp dipping 5.14%.


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Toronto real estate class-action could affect billions of dollars in commissions



A Federal Court judge on Sept. 25 allowed a class-action lawsuit alleging home sellers in the Toronto area have been forced to pay artificially inflated commissions for years. The lawsuit alleges major brokers and real estate organizations in Toronto implemented rules that essentially stifled competition for buyer brokerage services, leading to higher prices. But what exactly is buyer brokerage and what is its role in the potentially landmark lawsuit? The Financial Post’s Shantaé Campbell explains.

What does ‘buyer brokerage’ mean?

Buyer brokerage refers to a real estate agreement where a broker represents the buyer in a property transaction, in contrast to the traditional setup in which brokers primarily represented sellers. The shift toward buyer representation began in the 1990s in Canada, leading to the development of buyer agency agreements, allowing buyers to have exclusive representation in the homebuying process.


This transformation prompted the creation of specific legislations and regulations by provincial governments and real estate regulatory bodies in Canada, such as the Real Estate Council of Ontario (RECO), the Canadian Real Estate Association (CREA) and the Toronto Regional Real Estate Board (TRREB).


These rules and protocols serve to formalize and oversee buyer brokerage relationships by instituting a framework governing duties, responsibilities, disclosure, consent and confidentiality.


Where do commissions come in?

Nationwide, commission structures for real estate agents and brokerages typically involve a percentage-based commission derived from a home’s sale price, but the rates vary.

In Toronto, the prevalent rate is five per cent on the entire sale amount and it is customary for the seller to pay the commission on a property sale, which is subsequently divided between the representatives of the seller and the buyer.

For example, if a home sells for $1 million with a commission of five per cent, the total commission amounts to $50,000. This sum, paid by the seller, is generally shared equally between the seller’s and buyer’s agents, each receiving $25,000. However, the precise division can fluctuate, being contingent on the agreement established between the seller and their agent.


Why are commissions split this way?

According to CREA, the organization does not mandate a specific commission split or dictate how commission should be allocated between the listing and buyers’ realtors.


Rule in CREA’s by-laws and rules states: “The listing realtor member agrees to pay to the co-operating (i.e. buyer’s) realtor member compensation for the cooperative selling of the property. An offer of compensation of zero is not acceptable.”


In an email, RECO said commission rates are not fixed. “Commission rates are not set or approved by the Real Estate Council of Ontario, government authorities, real estate associations or real estate boards,” it said.

While five per cent is considered the “standard” commission in Ontario, the origins of that figure are unclear.


The splitting of commission between the buyer’s and seller’s agents is nonetheless a well-established practice in real estate designed to promote cooperation, balance and fairness within the industry. The idea is that a shared commission incentivizes buyer agents to introduce more potential buyers to the home, leading to a faster and possibly more profitable sale.


Furthermore, the commission model serves to reduce potential conflicts of interest by eliminating the buyer’s direct financial obligation to their agent, preventing undue pressure on buyers and ensuring accessibility to agent services.


Why is this a problem?

The lawsuit lodged by plaintiff Mark Sunderland against defendants TRREB, CREA and various real estate brokerages contends that an arrangement known as the ‘buyer brokerage commission rule’ has been in effect since at least March 2010.

Sunderland’s lawsuit posits that this arrangement has impeded market competition, compelling sellers to incur costs they would not otherwise bear in the absence of such an agreement. Furthermore, it contends that this setup precludes the negotiation of price and quality of the service.

In a study sponsored by Kalloghlian Myers LLP — the legal firm that submitted Sunderland’s lawsuit — expert witness Dr. Panle Jia Barwick, a specialist in the economic structure of real estate commissions, argues that the “buyer brokerage commission rule” incentivizes buyer brokerages to direct buyers away from properties where sellers offer below-average commissions.


Barwick says that even without formal policies mandating uniform rates, brokers, reliant on peer co-operation to draw buyers to properties, can help uphold a standard commission rate locally, especially for buyers’ brokers.


Michael G. Osborne, an attorney who specializes in antitrust and competition law at Cozen O’Connor in Toronto, says that from a competition point of view, there is a potential issue pertaining to the mechanism wherein brokerages must become members of CREA and TRREB to operate. Essentially, though Broker A and Broker B have no direct written agreement between them, by aligning with an association’s rules they can be seen by the Competition Bureau to be operating under an indirect “hub and spoke” agreement.

However, this issue has not yet been litigated in Canada and isn’t addressed in the most-recent decision.


How much is at stake in the lawsuit?

Kalloghlian Myers LLP is seeking compensation for anyone who has sold a home since 2010, though they have not yet put an overall dollar value on what they are seeking.

If every transaction covered by TRREB is affected, the sums involved could be substantial.

According to annual sales and average price figures on TRREB’s website, more than $880 billion in residential real estate changed hands between 2010 and 2022. Five per cent commission on those sales would amount to $44 billion, with as much as half going to buyer brokerages.

Can home sellers participate in the lawsuit?

In a class-action lawsuit, individuals who are similarly affected are generally automatically included, meaning there’s usually no need to actively “get in on” the lawsuit. If the ruling is in favour of the class, affected individuals will be notified about their entitlements. The duration of such lawsuits can vary widely, depending on the complexities involved and the legal pathways taken.

The next step will likely involve an appeal from the defendants against the decision to proceed with the lawsuit, followed by a motion for class-action certification. The defendants have 30 days to appeal the verdict. Absent an appeal, the court will determine whether the case qualifies for class action certification. Succeeding here would lead to a trial to determine whether the brokerage agreement constituted an illicit conspiracy.


Should compensation be awarded, the distribution could take several years.



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Katy Perry real estate battle inspires a bill to protect elders from financial abuse



Katy Perry real estate battle inspires a bill to protect elders from financial abuse

While Katy Perry prepares to take the stand in court, a bill with her name might be going to DC.

The “Fireworks” songstress and her partner Orlando Bloom are currently tied up in a legal battle with 84-year-old Carl Westcott, the founder of 1-800-Flowers, who claims he was on painkillers when he agreed to sell the couple his Santa Barbara mansion. Perry and Bloom are not named in Westcott’s filing, which is against the couple’s business manager, Bernie Gudvi.

As the trial rages on, members of the Wescott family are throwing their support behind a newly launched campaign for the Protecting Elder Realty for Retirement Years (PERRY) Act. “The Katy PERRY Act addresses the risks of elder financial abuse, especially as it relates to property and real estate sales and transfers,” a website for the act explains.

Representatives for Perry did not immediately respond to EW’s request for comment.

Katy Perry attends The 56th Annual CMA Awards at Bridgestone Arena on November 09, 2022 in Nashville, Tennessee.
Katy Perry attends The 56th Annual CMA Awards at Bridgestone Arena on November 09, 2022 in Nashville, Tennessee.

Jason Kempin/Getty Images Katy Perry

In an op-ed for The Federalist, Carl Wescott’s son, Chart Wescott, called upon California and other state legislators to pass the act, which establishes a 72-hour grace period during real estate sales and transfers of personal residences that allows either party to rescind the agreement without penalty, if one party is over the age of 75.

The website also lists the 38 state and local politicians who are backing the act.

Per PEOPLE, Perry and Bloom originally purchased the 9,285-square-foot home from Wescott in July 2020 for $15 million. Days after the deal was finalized, Wescott claimed that he had been recovering from spinal surgery at the time of the agreement.

During opening statements last Wednesday, Westcott’s attorney Andrew Thomas said that his client, who was diagnosed with the genetic brain disorder Huntington’s Disease in 2015, had been showing signs of “delusion” and “intrusive thoughts” after taking the painkillers and was still recovering from “post-operative delirium.”

In a countersuit, Perry is seeking more than $5 million in damages due to loss of potential rental income and for the cost of maintaining other properties that she and Bloom rent. She is expected to remotely testify this week in the non-jury trial which began last Wednesday.



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