Privacy and Real Estate

It’s late at night. I do my best thinking right about now, when most sane people are asleep in their beds. And one topic that I was discussing with a friend earlier today keeps me awake.

That topic is privacy.

I read comments from time to time talking about privacy concerns. A recent comment on a Musings had someone who had concerns about privacy of floor plan measurements. Who has that data? Who can use that data? Who can keep that data?

I know that one of the big arguments that TREB brought up in its seven year battle with the Canadian Competition Bureau was consumer privacy of listing data. The court dismissed that one, but it isn’t as if privacy concerns are raised every time you login to Facebook, so there is a reasonable concern about privacy.

And yet, as technology continues to advance, it isn’t all that clear what privacy concerns there actually are in real estate and if there are, how they should be addressed.

Let’s delve in together, shall we?

Privacy in General

As a general matter, the New York Times has a surprisingly decent overview of privacy laws and regulations in the United States. The main takeaway is that the U.S. doesn’t have a single comprehensive law covering privacy, but a patchwork of various laws like HIPAA and Fair Credit Reporting Act and the like. States have their own laws as well.

But at the heart of all privacy laws, of all privacy concerns, is some idea that a person should be able to control what is and is not known about him by others. It is actually a difficult concept to pin down.

The Stanford Encyclopedia of Philosophy has a fairly lengthy treatise on the topic of privacy, which I found useful. The essay describes the history of the concept of privacy, and points to the essay “The Right to Privacy” by Samuel Warren and (future Justice of the US Supreme Court) Louis Brandeis as the first real treatment of the concept. Because it was an article in the Harvard Law Review, written by a couple of lawyers, the primary focus was on legal treatment of privacy, and a legal right to privacy, but we do get this:

Urging that they were not attempting to protect the items produced, or intellectual property, but rather the peace of mind attained with such protection, they said the right to privacy was based on a principle of “inviolate personality” which was part of a general right of immunity of the person, “the right to one’s personality” (Warren and Brandeis 1890, 195, 215). The privacy principle, they believed, was already part of common law and the protection of one’s home as one’s castle, but new technology made it important to explicitly and separately recognize this protection under the name of privacy.

Whatever the philosophical grounding of the idea, there is a widely accepted sense by just about everyone that some things are simply not meant to be known to everybody in the world.

Things like one’s medical status, financial information, number and identity of sexual partners, or other myriad things that may be damaging to one’s reputation, create real consequences, or have implications for personal safety are widely accepted to be private, whatever that means. Other things that may not be as serious are still often considered to be private simply because it is nobody else’s business, and the individual doesn’t want whatever it is to be widely known. How many shoes I own isn’t necessarily the same thing as my bank account balance info, but somehow, I don’t want some random website to publish how many shoes I own. It just isn’t anybody else’s business. There’s a privacy element there.

While we all enjoy Amazon using all kinds of data collection to serve up Recommendations to us while we’re shopping, for some not-clearly-explainable reason the idea of Amazon publishing all of our purchase history to the world seems like a real violation. It’s creepy as hell then.

So there is this gut feeling, a natural sense, that we all as human beings want to be able to control what is and is not known about us.

Maybe at the heart of this “privacy” issue is the idea of control and consent. If I make my bank account info available on Twitter, then I’ve chosen to do that; there is no privacy concern no matter the topic. But if I don’t want my odd musical tastes known, then I should be able to prevent the world from knowing that I really do have quite a few Air Supply songs in my phone.

Privacy in Real Estate

This brings us to considerations of privacy in real estate.

It seems safe to say that there are privacy concerns in real estate because there are privacy concerns in everything. If it’s about control and consent over what is known about me and mine, then of course there are privacy concerns.

Openly publishing my name and phone number and email address on Zillow as the owner of a particular home seems like a privacy violation, even though my name is certainly in the public records. Said public records not only have my name and address, but they often contain mortgage information. Yet, all of that is public information in the U.S. by function of law and tradition. But still, it’s an easy call to say that no information about how many kids the owner has, what times they are home, etc. should be publicly available.

We all know of stories where a buyer will send a request to the portals or to an MLS requesting that all photos of the house be removed after the sale is complete. He no longer wants strangers to be able to see what his living room looks like, or figure out the layout of the home. There is a safety consideration here as well as a privacy concern. Maybe he can do nothing for the exterior of the house, since that is by definition public, but nobody needs to see the inside of the house on the internet. That seems like an easy one.

Then there are easy cases on the other end of the spectrum.

Any information on a listing for sale is by definition non-private. You are selling a home, and the information included is relevant for the potential buyer to consider your home. There can be no privacy considerations on the data about your home, and no privacy considerations in the photos and floor plans and 3D tours you (or your agent) created in order to market said home. That’s an easy one.

Or is it?

Lifestyles of The Rich and Famous

Those of us in the industry all know about the problem of pocket listings and off-market deals. We know about the MLS status that lets certain sellers withhold the listing from public display. And in just about every case, privacy is the concern that is raised to justify this non-public marketing.

The scenario brought up most often: it is a celebrity who is selling his home. Perhaps it is Nick Saban who certainly wouldn’t want the people of Alabama to know that he has put his home up for sale, as that leads to all kinds of uncomfortable questions at press conferences.

Sometimes, there are safety considerations. I’ve heard of very wealthy art collectors or wine connoisseurs who don’t want just anybody being able to see photos of the Picasso hanging in the dining room, or the very expensive wine collection in the wine cellar.

The idea here is that only certain buyers are even qualified to buy such a home, so there is no benefit to sharing any information about the home with the general public. This becomes a private sale, if you will, rather than a public one.

And yet, that kind of privacy is not extended to the everyman. If Nick Saban can pick and choose who gets to know about his home for sale, who gets to see the photos, and who gets to find out details about the property, why can’t Joe the auto mechanic? Is it simply because Joe isn’t famous? If a wealthy wine collector has privacy concerns because of her expensive wine collection, why wouldn’t Jill the widow with her figurine collection have the same privacy concerns? Is it because Jill’s figurines are less valuable?

Now the answer as to privacy concerns isn’t as simple. Not as easy when it’s Joe and Jill who want to restrict marketing due to privacy concerns instead of Nick Saban and private equity billionaires.

Historical Information

Also difficult is the request of the new owner to take photos and information about his new house off the MLS.

All of the information and photos he wants taken down were absolutely non-private during the sale. Those things made up the advertisement of the home for sale, and product details that allowed him to want to buy the house in the first place. There were no privacy concerns then, and in fact, I would argue that all of that information isn’t his to control with since the house wasn’t his when it was made public.

At the same time, I can’t argue that there is something awfully creepy about the floor plan of my home being available to anybody on Zillow simply because the previous owner decided to make that public — despite the fact that I used that floor plan to pick this home.

That floor plan, however, along with all of the interior photos, may be relevant to an appraiser working my area. They might be important to brokers and agents and other sellers trying to price their homes.

What is the proper balance to be struck between privacy concerns that might arise after the transaction with the needs of the marketplace that remain after the transaction is done?

Today, we strike that balance by allowing only licensed professionals access to historical information via the MLS, which restricts membership to that set of people. It is a balance that has more or less worked over the years, and at first glance, seems to make sense.

At second glance, however, it doesn’t really make sense.

A big MLS, like say Las Vegas, has over 20,000 members in it. Every single one of those 20,000 people have access to floor plans, interior photos, and the like of my house. That’s not exactly private anymore, is it? I mean, if 20,000 people could look at my medical records, then it’s hard to say that information is private as well.

Technology, Real Estate, Privacy

I do know that technology continues to advance, and advance exponentially. It is a matter of when, not if, we will start to see big data and AI and blockchain and all of that come together to expose all information about a property to the world. Most of that information is, after all, public records data.

The problems of privacy in other areas of our lives with technology — like Google and Facebook and all these mobile apps tracking the living shit out of everything we do, say, consume, hear, etc. etc. — are increasing, and increasingly troubling. We have already seen legislation and regulation on this topic, and I suspect we will see increasing government efforts to try and deal with this conflict between technology and privacy.

The issues are even more difficult, I think, when it comes to privacy concerns in real estate. Because the data and the information is not about a person, but about a property. Imbuing a piece of land with privacy concerns is going to be somewhat challenging… and yet, as I have written above, there is something deeply weird and creepy about the world knowing what the floor plan of my home is and where my family sleeps.

We’re going to have to figure this out.

I don’t have any answers. Only questions. But I suppose the journey to answers begins with asking questions. I hope I asked the right ones.

-rsh

Alison Krauss – You Don’t Know Me

From Windy City