The real estate industry spends WAY too much time worrying about going out of business. I guess some of it is warranted. Things change; just ask a former travel agent. Certainly, a new model for buying and selling a home will come along, and when it does, it will be pretty obvious to all of us that we’re screwed. That day is not here yet, and I happen to think it’s a long way off.
Fears of disintermediation often peak in the lead up to Inman Connect. New companies/models launch, press releases are written and pundits ponder. As a result, the establishment freaks out and tries to figure out how to quash the innovation uprising. Relax. Unless someone figures out how to improve on your core value proposition, you’re going to be okay.
Take for instance the MLS DeathWatch. Pundits have argued for years that the MLS will be a casualty of the internet. Bill Chee warned us it could happen nearly 20 years ago. As Trulia and Zillow launched, the hysteria really started to blow up. But in case it’s not yet obvious to you, there is no danger of these portals wanting to go into the MLS business. In fact, the opposite is true. They benefit greatly from partnering with MLSes. Those who theorized that “Zillow + a couple fields for a copay = an MLS” aren’t taking into account the MLS’s core value proposition to its members is, “the orderly correlation and dissemination of listing information to participants so they may better serve the buying and selling public.” Emphasis on ‘orderly’ is mine and it’s key to why the MLS is in no danger of being disintermediated by the portals. The technology to share listing data is the easy part. Building and enforcing a governance system that ensures a fair marketplace is far more difficult.
More recently, it’s been the rise of the pocket listings, and non-MLS transaction platforms that seem to have the industry all worked up. The argument is that technology and social media are creating opportunities to sell homes outside of the MLS. The idea is that when two agents have a strong enough relationship, they trust each other to work together without the enforcement of the MLS. They share these listings in non-MLS online forums. I can understand why this would concern quite a few MLS execs, but consider some of the realities of the situation. Many agents start out marketing these listings in a private forum, but eventually list the property in the MLS. Even if a deal is practically done, and it’s just for a day. Why? Because they want the security of the MLS governance structure. In other cases, the property sells off the MLS, but the agents selling them continue to pay their MLS dues. Why? Because they don’t do every deal off-MLS. Most consumers aren’t going to go for it. Furthermore, those agents want access to the listings already there.
Pocket listings could lead to bigger problems for MLSes, but measuring the percentage of off-MLS closings that occur to judge how this is effecting the MLS’s bottom line is misguided. Figure out how many actively selling participants are dropping out of the MLS and you’ll understand the impact a lot better. My guess is that the number is very small.
There will be a day when the sharing of listing data is far more communal than it is today. Technologies like RETS can make syndication a lot more democratic. But as long as agents need a governance system to help assure they can work with an agent they’ve never met before, I think MLSes will be fine. The key will be for them to adapt their core value proposition to the realities of innovation.
Photo: Creative Commons license via Flickr user Alex Holyoake