Earth Shattering News From Inman Connect!

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newsflash photo courtesy of kemp edmonds

I enjoy going to the Inman Real Estate Connect conferences.

They are wonderful networking opportunities, and they form a wonderful stage for the stories in Inman news that week. Sadly, for the first time in many years, doe to the press of business and my speaking and teaching schedule, I had to miss the San Francisco Connect event, so I’ve been following it online through Inman news and various social streams.

The headline of one late breaking story from Connect was”Zillow: Seriously, we don’t want to be an MLS or broker“. On the stage at Connect, Chief revenue officer Greg Schwartzbeing interviewed by Brad Inman said he (Schwartz) wanted to state “unequivocally” that Zillow doesn’t want to be an MLS, or, for that matter, a broker.

In other news; The sun is still very,very, hot, and water is still very,very, wet.

Teke Wiggin, the writer of the article goes on to say “Schwartz’s statement comes amid renewed discussion of Zillow’s arguable potential to undermine the MLS. The debate has stemmed from the listing portal’s introduction of “coming soon,” a feature that allows agents, brokers and MLSs to market homes on Zillow for up to 30 days before listing them on the MLS”

Teke is right on the money, – there has been substantial conversation online about that very topic, and Brad was right to ask Schwartz the question in that very public venue. But the conversation only exists because there is a huge amount of confusion in the real estate industry about the roles of publishers of listings and the real estate cooperatives known as Multiple Listing Services.

Zillow, Trulia, and Realtor.com are all media companies, or publishers, or advertising companies – take your pick of titles – but whatever you call them, they are for profit commercial ventures driven by IPOs, shareholder requirements and profitability. And all of them make huge amounts of money because real estate agents pay them to advertise.

Multiple Listing Services are, for the most part, non-profit cooperatives operated by real estate professionals to provide efficiency in a chaotic and fractured marketplace and to ensure cooperation and compensation between its members. Generally the cost to their members is minis clue compared to the cost of advertising on any of the media sites we mentioned, and they do not make money comparable to the aforementioned media companies. However they do their job so well that its importance is lost in the glare of the aggregated data product that is the by product of their primary purposes.

Why would the former, profitable, business entities want to take on the onerous and thankless jobs of aggregation, organization and regulation that are the mainstay of the latter?

Real estate professionals and consumers are so accustomed to a world where cooperation is facilitated, competitors work closely with one another, and the conversation about compensation is much more “How much” than “Can I have some” – and all of that could easily go away if there is no regulated cooperative marketplace operated for the benefit of the participant.

Of course the deterioration of cooperation would take a little time, but judging from the haste that people employ in applying short term fixes to their business , combined with the law of unintended consequences, leads me to believe that in relatively short time, chaos would arise out of order.

But imagine a world where, every time you call a listing agent to show a property, instead of asking “Is your listing at a1234 Anywhere Street still available ?” you need to ask “Will you cooperate on the sale of the property at 1234 Anywhere Street?” followed by a conversation about the compensation that will be paid, followed by obtaining a written confirmation of your agreement – which leads to contemplation of the various forms that would be written in lieu of having uniform agreements. And if you didn’t do that for every showing, you would run the risk of not being compensated if you finally made a sale.

From the perspective of the listing agent, the effective marketing of real property becomes a Byzantine nightmare of email campaigns , spam filters, syndication, and countless hone calls with buyer agents trying to determine the way the agreement between you and them to facilitate exposure of the property.

Cooperation and compensation are like air and clean water – we don’t notice them until we don’t have them – at which time we are gasping for life wondering how we ever took such an important thing for granted – just because we hadn’t experienced a world in which it was not plentiful.

The conversations about the end of the MLS as a part of the real estate marketplace seem filled with both a lack of understanding of the core of the mater (the need for cooperation and compensation), and a lack of appreciation for just how much of what we do is simplified and facilitated by the MLS in your marketplace.

These conversations are the very epitome of “first world problems”. Problems that are not real problems, but are inconveniences or annoyances enlarged in the minds of the privileged. And we are all truly privileged to work in a time where the industry has NAR as a forum to discuss and craft policies and procedures for MLSs designed to keep them put of court and out of trouble while reflecting their desire to be the engine of efficiency for the real estate professional , and member operated MLSs that make the search for property and the operation of a cooperative business model function as efficiently as it does.

Zillow (or Trulia or R.com) replace the MLS or become a brokerage? Not a chance. They didn’t get where they are by being stupid, and barring a rapid, unanticipated and unexplained loss of IQ points among their C level executives, that isn’t about to change.

REALTORS taking the MLS for granted and chattering about its possible demise? Yeah, that’s a thing, and it’ll probably continue to one until we clearly understand the value of what the industry has built for the benefit of the realestate professional. In the meantime, MLS and Association executives all over the country keep the engine of efficiency chugging along as best they can, and consumers and real estate professionals will benefit from that.

(NOTE; Thanks to Jay Thompson for pointing out to me that Greg Schwartz is Zillow’s CRO, not Greg Robertson, a fact I knew and a mistake I made in the original post for which I apologize- the moral of the story being you shouldn’t hurry when you’re writing and you should fact check before you publish!)

 

 

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3 comments for “Earth Shattering News From Inman Connect!

  1. Patrick Gallagher
    July 20, 2014 at 2:57 pm

    This whole idea never really made a nickel’s worth of sense to me… why in the world would Zillow want to take their highly streamlined information publishing business and drive their margins into the dirt by becoming a broker or an MLS?!?!

    The only reason I could ever see Z even remotely dipping their toes into the brokerage game would be if they somehow lost all access to all the listings by some massive movement to cut them off. But they’re getting more more access every single day with brokers building direct realtime connections to them, completely circumventing previous syndication channels.

    The entire things makes about as much sense as all the “they want to eliminate all the real estate agents just like their founders killed the travel agent profession” argument.

    Sure, right… they’re gonna do that right after Nike eliminates feet globally and Netflix plucks everyones’ eyes out.

  2. July 20, 2014 at 6:12 pm

    Never say never as to Zillow becoming a brokerage. If they do…who cares. sht happens. I say this as there was a time when Redfin also formed partnerships with agents as their income stream…and then became a brokerage. I personally didn’t bump into Redfin until they became a brokerage. But my homebase RainCityGuide did, and there was at least one scathing article written by Anna before I became a writer there. She was fuming mad that the agent partnerships formed with a lead-generator-Redfin turned into building up the software recognition for what later became a competitor-brokerage-Redfin. This is clearly a possibility for Zillow in the future.

    That post (and maybe others) are almost 10 years old now and so a bit disjointed due to the addition of repeated new and better WordPress Plugins. But back in 2005 the Redfin won’t become a brokerage and then did become a brokerage debacle, well, let’s just say that door is always open for Zillow.

    But again. Who cares if they become a brokerage or not. No one can promise what will happen in the future. As you say, they are a business…with stockholders and a man’s gotta do what a man’s gotta do.

    http://raincityguide.com/2005/06/20/redfin-the-anti-google/

    As to Zillow becoming an mls, with all due respect you are missing the point. They are not going to be “an” mls. They are never going to be “the” mls in any area in the traditional sense.

    Zillow already is to some degree a public “mls”, and using “mls” for lack of a better term. We define mls quite differently than the public at large. Just as Redfin only opened initially in markets with high priced property, this issue of “a public mls” is more of a concern in areas where “starter homes” cost a million dollars or at least $500,000 and up.

    Our mls recently outlawed ANY and all pre-marketing, and so Zillow’s Coming Soon was nipped in the bud here before it even started. Zillow started here…Zillow is here…we are not as naive about Zillow’s potential to replace “an mls” by being NOT an mls…but an mls alternative for FSBOs. It already is that. Whether it is a coming soon or a for sale by owner or a make me move, people do buy and sell property outside of the agent and mls system using Zillow…every single day.

    Waiting for them to be what WE call an mls…well that is not going to happen. That is why they can honestly say no to that question. They already ARE a public mls for buyers and sellers with no need for agents to broker the “deals”. In these days of very limited inventory…part of the reason there are few homes for sale “in the mls” is because more are selling outside of “the mls” at foreclosure, as pocket listings, and via Zillow. It’s already a reality.

    Oddly and to drive this point home, the last time I had to help a buyer purchase a property via Zillow that was not listed in the mls…the owner was an agent. Agents want to save money on commissions too. And when the person using Zillow as “an alternative mls system” to sell the house with less commission is in fact an agent…well, the handwriting’s already on the wall. It’s not about what the WILL be…it is about what they already ARE.

  3. July 20, 2014 at 7:47 pm

    I’ll take it as a compliment Bill. : )

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