What is the value of a real estate listing?

There’s a lot of talk lately about monetizing real estate listings as a new income stream for MLSes. It’s an interesting concept built on the populist notion that “Zillow should pay us for our listings.” On the surface, it makes a lot of sense, right? Especially on days like yesterday:

Screen Shot 2013-09-04 at 5.35.43 PMIt’s hard not to think that Zillow is making money on the backs of listing agents, but does that mean Zillow should pay for listings? Sam DeBord recently inked a great opinion piece over at Inman News where he called for brokerages to come together and let MLSes lead:

 “Brokerages need to allow the MLS the ability to negotiate on our behalf from a position of power. Whether that means negotiating a revenue model for listing syndication, restricting that dissemination, or creating new and creative ways to improve our processes, the MLS needs the flexibility to work as our voice in the industry. Mistakes will be made, but as MLS organizations across the country collaborate over the most effective processes, the efforts will become streamlined and our ability to direct industry momentum will continue to strengthen.”

Here’s my problem with this idea, and all ideas that revolve around monetizing listing data. No one seems to be able to tell me what a single listing is worth. How much should Zillow pay for it? One hundred dollars? Ten dollars? Five? One dollar? And who gets paid for said listing? The MLS? The broker? The agent? Is there a split of some sort?

Nobody wants to answer these questions with real numbers because, no matter how you slice it, the agent’s cut is just a tiny fraction of what they will earn as a commission on the sale of the home. So what’s more important to them? The potential to earn $5 on a listing syndication deal, or the potential to lose thousands of dollars because they refused to list a property on the nation’s largest real estate portal?

Is it fair that Zillow is making all this money? Is it fair that listing agents feel obligated to put their listings on Zillow? No. But who said capitalism was fair? If, as an MLS, you think you are ready to cut off your syndication feed to Zillow over a revenue deal, make sure it’s not a bluff. Zillow already knows what the current market price is (their massive exposure), and isn’t likely to pay more. Agents don’t need the MLS to post listings on Zillow. What’s the carrot you intend to provide that will keep them from doing it without you? Which brings me back to the question at hand: what is a real estate listing really worth?

23 thoughts on “What is the value of a real estate listing?

  1. Eric Hempler

    I guess if you were to determine how much a listing is worth you would have to determine how many leads the average listing generates, determine how many of those leads are converted to clients and then determine how much in commission you would probably make.

    BUT….all that doesn’t matter if the agent doesn’t PICK UP THEIR PHONE!!!!

    Maybe Agents should worry less about what Zillow is doing and focus more on generating business.

  2. Jeff Turner

    Since the broker is the one who officially “owns” the listing, isn’t it the big brokers with the large % of listings who stand to benefit from any (unlikely) deal that included payment for the listing data? I’m not sure it changes the argument much, but at some roll up level, even small numbers per listing begin to add up.

    1. Todd Carpenter Post author

      Jeff, that’s a good point. However large brokers who refuse to syndicate often end up letting their agents post their listings anyway (Like Edina Realty) because they don’t want to lose the agent. On top of that, many of the largest brokerages (NRT for example) not only syndicate their listings, they pay for added exposure. This is a recruiting tool for them to attract top agents.

  3. Robert Drummer

    They must be pretty darn valuable if Zillow’s market cap is $3 Billion dollars. As to the value of a listing from Zillow or Trulia’s standpoint, it’s a simple eCPM calculation. Personally, I use 30% of total received revenue.

    Of course, the true value of Zillow is a small fraction of that. It’s a bit like a Zestimate: Fun to talk about but no way is it close to reality.

    Greg Schwartz intimated that Zillow *would* pay MLSs “if they made money” but you “can’t get water out of a stone” (or money from smarmy Revenue Officers, apparently)

    It would’ve been a nice gesture to provide stock options to the MLSs that allowed Zillow to be a $3B company. That ship has sailed though since the stock is overvalued to the point of being ridiculous. >6,000 p/e ratio.

      1. Robert Drummer

        The “number” is the result of a simple equation.

        LV = (TR/TL)*.3

        LV = Listing Value
        TR = Total Revenue
        TL = Total Listings

        Or do it per listing, to keep it fair.

        It’s not hard, you’re just trying to make it sound difficult.

        It’s all moot since it won’t happen.

  4. Luke Brookhart

    If this revenue-share scenario were even plausible (again, unlikely), I would wonder how the seller would then feel about their agent receiving revenue from the listing data. Would the seller then come to expect some sort of cut from that revenue, since it is their property that is generating the revenue? Perhaps they would inquire about a reduction in commission?

    The typical thought process is that the seller is paying the commission to the brokerage because of the variety of costs incurred to advertise the listing (both in time, expertise, and actual financial outlay). In contrast to this quid-pro-quo relationship, it seems like monetization of the listing data to syndicators may cause more headaches and strain in the client relationship than it’s worth, based on the possible new sets of expectations from the seller. This especially seems impractical if the “value” you’re proposing for the listing is nominal.

    1. Todd Carpenter Post author

      I think this is an awesome point, and one that some MLS boards are not considering. Legally, the broker owns the listing. Practically the agent really controls if the listing is syndicated or not, and realistically, the seller is the one who makes the decision to list with any one agent. The decision the MLS get’s to make is whether or not they are offering syndication as a value added service. Quite the opposite of a revenue stream.

      1. Robert Drummer

        How does the seller feel about the agent receiving revenue from the home warranty? Do they want a cut of that?

        What about the JV title company that the broker owns? Or the mortgage company that pays rent to have an office in the brokerage, etc.

        And since this whole discussion is getting nit-picky, what about the rebate the agent received for buying new printer?

  5. Todd Carpenter Post author

    Robert, let’s estimate a number based on your math. Looking at Zillow’s Q1 and Q2 revenue, we can estimate that their total revenue for 2013 will be around $150,000,000. Even though Zillow derives revenue from other sources beyond listings, let’s use it. NAR reports that about 4,650,000 homes sold last year. Let’s say say 5,000,000 sell this year. We also know that not every listing on Zillow results in a home sold, but let’s just use the sold number for now. (TR/TL)*.3 is ten bucks per listing. Now, assuming the agent gets ALL ten bucks, is that potential carrot enough for the agent to risk losing a listing to an agent who will put those listings on Zillow? This is the math that any MLS needs to look at before deciding to cut their syndication feed.

    1. Robert Drummer

      Great point. But take it up to the MLS level. Excuse the following extrapolations, but I think it’s close enough.

      Your example works out to $50/agent. An MLS with 29,500 agents would see about $1.4 million dollars. Smaller MLS maybe only $50,000 or $25,000.

      Dues reductions, enhance education programs, rainy day fund, REALTOR® PAC donation, or just use it to buy (or short) $Z or $TRLA stock.

      1. Todd Carpenter Post author

        What the MLS could potentially earn is a useless number if no one will pay it. Zillow knows they can get the listings direct from brokers and agents. So, what can the MLS do to convince agents and brokers NOT to send Zillow the listings without them?

      2. Robert Drummer

        Zillow knows they can’t get all the listings from brokers and agents which makes their site less valuable.

        Zillow also knows that if the MLSs stop syndicating then their stock price and revenue would fall off quickly.

        The brokers and agents that would consider sending their listings to Zillow would quickly realize that Google does a great job of directing buyers to the right page, even without Zillow.

        What’s interesting is that the MLSs having NOTHING to lose with this gambit while Zillow could lose everything.

        Believe or not, there was a time before Zillow and houses still sold. If Zillow and their ilk went away tomorrow, houses would still sell. MLS sites would see more traffic and the sun would still rise in the East.

        All of that said, it won’t happen. But that doesn’t mean I’ll stop posting on these posts anytime soon. For every Zillow apologist, there needs to be a champion for the other side.

  6. Roger Hance

    In due respect to all of you in the conversation… This is the wrong discussion to be having.
    1. Zillow and the others cant pay enough to off set the damage it is doing to the perception clients are developing about the overall need of real estate brokers/agents.

    2. The real discussion needs to be around how does the industry change the public perception and not how do they get paid for a listing on those services. The public in general is starting to view these sites as MLS’s. In fact I am often told stories by agents that clients know about properties for sale before they do OR that they can find info on listings faster than they can. Isn’t the next natural and logical question…. Why do I need a broker?” We understand there are a lot of good reasons to work with GOOD brokers.. but lets face it, most agents are not good or qualified, and so the experience that MOST of the clients have with those agents will support that theory… If you dont believe that catch a video or meeting of a group called HEAR IT DIRECT. It is a day long seminar that has been on the road for awhile where clients are put on stage in front of agents and ask questions about their beliefs about agents…. It is not pretty!!

    3. My belief is our industry should start framing the public perception of all those sites as modern day newspapers. Newspapers do not have all the listings advertised yet they still generate exposure for listings and introduce clients and agents to each other. That by the way is the real reason to advertise at all. So should the Zillows of the world. Brokers who want to buy leads great.. they in effect buy leads by paying for advertising space in the newspaper. Same thing…. but dont let the world beleve they (Zillow and others) are mls’s. Why contribute to our demise?

    Our job as an industry is to make sure they never have more than 50% of active listings. So clients can only find the info from us or at least faster from us and the ONLY accurate info. So the best long term thing we can do for our industry is to instantly cut in half the listing we supply them which can easily be done. In doing so we maintain the advantages of a marketing tool without creating a competitor to the most valuable tool REALTORS have…. THE MLS.

    Realtor.com made about $4 million last year. NAR owns roughly 7% of MOVE INC which operates realtor.com. That means our share is about $280,000. OR 28 cents per member. How much is it costing us to have our overall value to the public reduced?????????????????????????

    1. Todd Carpenter Post author


      Zillow has more than half of all active (on the MLS) listings in virtually every market. In addition, the consumer perceives that they have MORE listings than the MLS since they also list FSBO’s, new construction, and distressed properties. NAR’s own survey of homebuyers now ranks the internet ahead of agents as the source for where a consumer found they home they purchased. I think ship has sailed.

      However, if consumers begin thinking they don’t need an agent, it won’t be because of Zillow. Guiding a consumer through the transaction itself is still the highest value proposition an agent has to offer. If they fail at this, I think it’s their own fault.

  7. ryan

    The question nobody is asking is what is all the free exposure on all of these listing sites worth to me, and my brokerage, and my brand? With a small investment I can leverage content on these sites to drive my business, and people are complaining about this?

    These sites are the new MLS like it or not.

    What is your membership with the board and MLSs worth?

    The problem with Sam’s article is that MLSs are no longer the go to resource for information in real estate. Our company, along with many others, send direct feeds to Zillow, Trulia, and another listing portals. If MLSs try to throw their weight around and demand compensation, demand kickbacks, or whatever… Agents and brokerages will go directly to listing portals.

  8. Dale Alverson

    Aggregators, Nationwide should all be required to pay a nominal fee to broadcast MLS listings. That fee should go to the Local MLS areas for use in education and promotion of MLS Realtors. By empowering our MLS universally as an organization with most all of the listings, we have the power to make the aggregators pay back for part of the profit they receive for our information.

    It doesn’t need to be complex to work, it just needs Total Cooperation by ALL of the Brokerages to ensure the best needs of the customer/client is met.

    1. Drew Meyers

      “Aggregators, Nationwide should all be required to pay a nominal fee to broadcast MLS listings.”

      Why should they pay? Isn’t the goal to SELL the listings (in which broadcasting would be good)??

  9. Sarah

    MLs’s should be separate (arms length) from the listing or buying actions. Many times an MLS becomes a way for agents to .control the local market. As a result many MLS’s tend to be monopolistic fort t he local markets. By separating the MLS marketing function (the real reason for MLS’s) from the sales function we will have a more understandable field of data for both seller and buyer. The MLS should be about these players seller and buyer. If their were no sellers or buyers why bother with an MLS? Too often aggressive commission incentives trump the representation of seller or buyer. With a flat playing field, neither buyers agent or sellers agent (listing agent) is able to have an advantage over the other. True capitalism ( in the absence of a monopoly on listings) instead of cronyism will be one of the results. Properties will be listed and properties will be sold and the commissions structure will not be affected, but the perception of honesty and truthfulness to both buyer and seller will be transparent. The REAL value of estate agents can only be improved with this change. TRANSPARENCY ie REAL advocacy for seller and buyer by the respective agents, instead of opaque asymmetrical information from a listing agent controlled system that exists today in many areas.

    1. Sarah G

      There are only TWO main issues with US residential real estate:

      1) The MLS system where listing agents are supposed to share commission with buyers agents in a “cooperative” attempt to market listed property.

      2) Perceived lack of honesty of both listing agents and buyers agents.

      !) The current MLS problem has to do with asymmetrical information. The seller has more information about the property than anyone else. The Listing agent only knows what the seller tells her. When obtaining a new listing, many agents caution the seller about the “rules” BEFORE the listing agreement is signed. Unless the property is in total disrepair, the seller knows they must disclose defects that THEY know about and they want to unload the property for the highest and best and as fast as possible. Lets look at many sellers economic position./
      If a seller is losing their house to foreclosure or a short sale and they have minimal or no assets, there may be a cause of action IF and ONLY If in a court of law, it can be proven they concealed the information. However in a “down” market with many sellers in debt or insolvent, what is the likelihood of a buyer of ever collecting a judgment? The seller is already broke or has concealed assets.

      One solution is to remove the asymmetry from the transaction. Present listing agents have CONTROL over the marketing information about the house. For the transaction to be fair it must be equal (a fair market). It is true that many of the old tricks of selling have been slowed down because of more data in third party websites such as Zillow and Trulia the buyer is always at a disadvantage. Today a buyer can quickly determine if the house has been recently flipped and/or really on market for 600 days instead of a “new” listing of ten days.

      This asymmetry in information can be leveled by having a third party handle the listing. This will limit the hiding of properties for sale from willing and qualified buyers, it will also limit the use of “confidential’ listing information that if known by the buyer, they would never buy the property. By divulging this “confidential” information after loans have been approved and Escrow has begun, the worn out buyer may lose focus and allow emotion to control the most expensive financial transaction of their life. To the buyer the MOST important issue on making an offer is: WHY ARE THEY SELLING? This information is usually known by the listing agent.

      In the third party MLS plan, the ONLY person who really knows is the seller.

      2) Perceived lack of honesty by agents: There are many areas of concern. From the ” Highest and Best” offer where ” I have ten other offers on the table, including all cash offers”. When the truth is the house has just been re-listed for the 5th time after being 400 days on market. The buyers agent won’t tell the buyer this because they need the commission. Many buyers find themselves wondering if they are really bidding against themselves. Maybe there are NO other offers? This is a common scenario. Many listing agreements do not specify to “Show ALL offers” to the seller using the excuse, you don’t want just anyone walking through your house or making a low ball offer. I can protect you by not telling you which will waste your valuable time (and allow me to get both sides of the deal if I can find ANY buyer). The knife cuts BOTH ways. The seller can sell at a lower market price and never know it.

      Today, with the internet, many buyers only want a buyers agent to show them a property and handle the offer and the transaction. The days of driving around endlessly to look at properties from a “secret” lists of “available” house sis over. Maybe it’s time for the listing agents to do more than write up a listing agreement and keep the offers competing against each other. It may also be the time to evaluate the duties of a buyers agent. Many buyers agents are focused on the SALE and not whether the property and it’s price are out of line with the market.


  10. Lee

    Makes me question the value of an MLS… How close do you need your “service center” to be with the syndication of big partners today. With our regional MLS in central Florida, the value of our local “dealer” is seeming to wain…


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