I’ve been pretty focused on my new role at NAR for the last six months, but finally made some time to write again. This white paper is a side project I did for the Center for REALTOR® Technology. The Intelligent Internet Lead explores some of the cool stuff happening behind the scenes when it comes to converting Internet leads into client relationships. Here’s the blog post I wrote about it, while the full report can be downloaded here.
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:
It’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?
Fact: most listing agents choose maximum exposure for their listings and publish them to the nation’s largest real estate portals. Maybe these agents love the portals. Maybe they hate them. But overwhelmingly, they choose to work with them.
Today, most MLSes that choose to promote syndication as a value added service are basically farming it out to ListHub or Point2. Both syndicators provide a dashboard to help brokers opt-in/opt-out of syndication (most brokers opt-in for every listing) and then handle the transfer of data to publishers multiple times a day. This service is free to the MLS, and very reliable, so many MLSes are hesitant to syndicate directly to Zillow, Trulia, etc.
I think that for many MLSes, they are missing out on a good opportunity. These syndication services are free, but remember if you’re not paying for it; you’re the product.
ListHub requires that Zillow, Trulia, Homes and realtor.com (which is owned by the same company that owns ListHub) provide reporting data on the performance of each listing that it then compiles and sells back to MLS participants. Why not ask the portals to give you this data directly (in exchange for a direct, opt-in listing feed) and then sell the reports yourself? ListHub has already done the heavy lifting of requiring all the publishers to report the data in the same format, so just use their data-set. I imagine that Trulia and Zillow might even help you set that up if you made it a condition of direct syndication.
In addition to reporting, MLSes have the opportunity to drive traffic from publishers, to the MLS’s own public facing web site. For instance, Trulia links to the “listing source” for every listing they publish. Most of the time, the listing agent has provided enough information for Trulia to link to the broker’s website. However, when no other URL is available they link to pages set up by the feed provider. ListHub receives these links in most cases, but they could be going to your MLS.
Finally, there’s another missed opportunity that might go in the crazy ideas folder, but still deserves consideration. Make Trulia or Zillow one of your technology providers. You know who builds awesome real estate websites and mobile apps? Those guys. Zillow is already willing to build real estate search sites for agents on the cheap, I bet Zillow, Homes, or Trulia could build one heck of an awesome MLS site (or mobile app) for you. They may even do it for free if you’re willing to deliver listings direct.
Crazy? Maybe. But while Zillow and Trulia aren’t about to pay for listings, they really, really don’t want to be so dependent on syndicators like Point2 and ListHub. Going direct doesn’t have to mean you are giving it all away. Let me know if you’d like learn more about the pros and cons of direct listing syndication.
Photo: Creative Commons license via Flickr user gabriel amadeus
Back when I was just getting started as a Loan Officer, my first big break was being introduced by a REALTOR® at the Jefferson County Board of REALTORS® monthly breakfast meeting. That day, I officially joined my first real estate based social network. Technology had come a long way since the days of index card file cabinets and MLS books. In Denver, an agent could pull potential listings through a device that looked something like a cross between a telephone and a typewriter. Shortly after, agents could even access the MLS via the web.
Not a lot has changed since the first days of MLS access. Agents and brokers use the MLS as their primary distribution hub for sharing listings between other agents and to the public. From a technology standpoint, the MLS structure fits the client/server model. Brokers and agents (the clients) share listings with the MLS (the server) who then shares those listings with other clients. This system has served the MLS structure well, but as the value of data is realized, some brokers and agents see the status quo as a hinderance to building a competitive advantage, especially when old guard MLS politics begin to suffocate innovation.
Enter peer-to-peer sharing.
The concept of P2P sharing, popularized by Napster in the 90s, is largely responsible for fundamentally disrupting the music industry. Instead of a server that each client must talk to, the clients simply talk to each other. Each client is also a server. In real estate, a peer to peer (P2P) network could be as simple as a network of brokers who publish their own listings to feeds that they syndicate to each other.
We’re already seeing a business case for their creation today. Agents and brokers are using online networks to share pocket listings and pre-MLS listings. Frank Llosa, broker/owner of FranklyRealty.com, recently started “coming soon” Facebook forums in several markets and launched PreMLS.com. David Faudman, the CEO of Top Agent Network, has established an exclusive network of top producers for sharing listings that likely never make it to the MLS. Technically, these are still client/server relationships, but this model would be better served with P2P platforms.
While there are diverging views on whether or not pocket listings are good for real estate, technology has now made it very easy for agents and brokers to do it.
While P2P sharing is in its infancy today, I believe there’s a high potential that you’ll see this model used to share pocket and MLS listing data in the future. The MLS will simply be another client, not the server. Just as this self-published blog syndicates an RSS feed to its subscribers, brokers and agents have the technology in place to syndicate their own listing data. Bigger brokers have done it for years, but now that RETS has become an industry standard data set, building a listing feed isn’t a lot more difficult than building an RSS feed for a blog. The technology allows the broker to take control of how their listings are shared, and with whom (other brokers, publishers, data analytics companies like LPS…). The MLS would simply be another channel that brokers syndicate to (or not).
Should MLS executives freak out? No. So long as the MLS focuses on their core value proposition, they will survive. However, last week’s departure of Bob Bemis from Zillow was the result of frustration around their lack of progress in building direct relationships with MLSes. Meanwhile, a silent majority of brokers and agents want their listings on Zillow. MLSes need to decide if providing listing distribution is one of their value propositions. If so, working directly with the portals is something they really ought to consider. Zillow isn’t going to give up on securing direct listings, but they may give up on getting them through the MLS.
Organized real estate is a centuries old social network. Its primary reason for being is to share listing data. MLSes need to make sure they aren’t perceived as the bottleneck for that sharing.
Photo: Creative Commons license via Flickr user Gruenewiese86