Chicken Little in Black by dbgg1979

I really like Rob Hahn and think that he’s a really smart guy- then he goes off and shows me that even being smart doesn’t help if you push off on the wrong foot.  Rob wrote a post called “Extinction Event Horizon: Real Estate” in which he takes a flying leap into space, and with his feet planted firmly in a vacuum begins to leap frog from one preposterous premise to another. I really felt that I needed to chime back with some facts and some opinions of my own. Let’s start by looking at his premises;

• Premise 1. There is an organized group of brokers that are large enough to create a meaningful national MLS. Rob quotes an article at Agent Genius revolving around the members of the Realty Alliance and their discussions at their meeting last spring. The conversation as Agent Genius reported it was less about leaving the MLS than it was about withdrawing their listings from third party aggregators like Zillow, Trulia and REALTOR.com. Edina Realty actually took the step to remove their listings from XXX just this week. Whatever you think about the third party aggregator issue, it does not signal the end of the MLS.  When even the largest and  most dominant companies in a given market  area don’t control more than 24-26% of their market (a huge share), they will not leave a vehicle to access the remaining 74%.
• Premise 2. That the lack of contention between the Realty Alliance, other Large independent Brokers and  National Franchisors is significant. The fight is over, its a non-issue for now, and the parties will move on to other strategies to achieve their business goals.
• Premise 3. “a “rebel alliance” will not simply pull out of the MLS or the Association; they will pull out of both, because they must pull out of both in order to achieve their aims of independence from existing policies and governing bodies.” Its just not needed, nor does one follow the other. Most of the large brokerages in the country are run by people who are members of NAR’s volunteer leadership. They value the organization highly and would not detach themselves from the largest PAC in the country (or debilitate it) just because they want to start their own MLS (which they don’t). Additionally they value the Code of Ethics, and the pride that active REALTORS feel in their organization. Though many of the MLS systems in the country are owned or operated (or both) by REALTOR Associations, another important reason for MLS systems to follow the model bylaws created by NAR is for the E&O insurance, and for the protection of the Legal Affairs committee when they have huge industry wide litigation, as well as having access to the world class legal minds at NAR (did you see how Laurie Janick negotiated an incredible settlement on the Civix law suit at the Mid-Year meetings?)
• Premise 4. “The existing paradigm of the MLS today is that its core mission includes helping its members market properties” That is truly not the primary purpose of the MLS. The purpose of the MLS, is, was, and will continue to be to facilitate cooperation between real estate brokers and agents. In most companies, more than 70% of their business required the cooperation of another firm. The creation of the MLS is born of our need to foster cooperation, not from our need to market properties. The MLS is a B2B system, not the most important marketing system for the real estate industry. The MLS does not bring us clients, it helps us service our clients, both buyers and sellers. In fact, it works so well that we take that function for granted and ignore it. The fact that we use versions of the MLS data to feed our marketing channels doesn’t make marketing the primary function of the MLS
• Premise 5. “The most important change, then, has to be that within the Rebel MLS, there can be no such thing as Internet Data eXchange, or IDX. The whole purpose of IDX is to allow participants to use MLS data to earn a customer.” In fact, the conversation reported by AG that started this whole flight of fantasy was more about a rebellion against syndication than it was about sharing inventory with other brokers. When 90% of consumers buy their home from agents, getting your inventory out to other agents is imperative-

So while Rob’s post is timely, articulate and interesting as always (I love reading Rob’s posts) it just doesn’t have any roots in reality. That being said, he then lists some consequences that are, by themselves sort of interesting to me.

• Zillow Takes Over – I hate to say this, but we already lost this fight-property information has become so ubiquitous that it is no longer the key to contact with consumers. According to NAR’s 2008 Profile of Home Buyers & Sellers , when asked what actions they took as a result of internet home search only 27% of consumers found and chose an agent. That means that 3 out of 4 consumers chose their agents for reasons not connected to the home search. Frankly, if it were possible to remove the syndicators from the equation, it might benefit the real estate professional, but it would take a massive paradigm shift in our industry to make that happen (though I am watching the Edina situation cwith interest) and I just don’t see that happening.
• The end of Buyer Brokerage – Buyer brokerage originated because consumers were confused about who represented whom in a real estate transaction. Issues like vicarious liability, litigation resulting from dual agency (which was generally undisclosed in those days), and growing consumer demand (in many instances from consumer advocacy groups) created buyer brokerage which became codified with the advent of the ABR designation. Today most states have legislation regarding buyer and seller agency, so this part of the business is just not going away regardless of MLS issues. On a practical level, more young agents count potential buyers in their spheres of influence than any other type of real estate consumer, and buyers seek agents to help them in their complicated transaction, so working with buyers that aren’t the listing agent is again a part of the bedrock of the real estate business.
• Mass Extinction of Vendors – Real Estate is a business that generates a lot of money and has tons of practitioners. There have always been, and will continue to be people who sell stuff to that large market. We wouldn’t have fewer vendors, we would have different vendors. I would expound on that, but it seems to obvious to me to need explanation.
• The End of Associations as We Know Them – This is so wrong, and indicates so little understanding of the history and function of our trade associations on all levels, that its difficult to know where to begin. Do we start with the Code of Ethics, and the benefits it provides to members? The REALTOR movement, by its creation and adoption of the COE has established the standard of practice and professional care for real estate professionals for the past 98 years. Arbitration proceedings alone have saved members millions upon millions of dollars of legal fees, and resolved business issues more rapidly than any courts. Our local state and national political advocates have helped create a usable space for real estate professionals to practice their trade. The National Association has provided legal and financial support to local and state associations when landmark litigation has been fought. All levels of Associations provide good low or no cost education for their members, where no one is selling them anything. And NAR, through its designations and certifications programs, offer specialized training of the highest quality with no product to sell or ax to grind, aiming solely to improve member’s businesses through specialization and professional development (Disclosure- if you didn’t know- I was the lead author in the 2010 re-write of NAR’s e-PRO certification,teach that course internationally, have been approved to teach GRI in the past,  and am currently a Certified CRB instructor as well) . And perhaps, most importantly , the REALTOR Associations are a place where professionals can gather and learn from each other in a non-threatening less competitive environment.  People that don’t get any benefit from their Association membership typically haven’t put anything into it. I can only speak from experience. The courses that I have taken, the seminars that I attended, the people that I have met, the volunteer positions I have held, and the events that I have participated in have profoundly and positively impacted my real estate career and are in part responsible for the successes I have achieved as a real estate professional. It is not an accident that people from all over the world come to NAR meetings to learn and network and bring knowledge back to their countries. NAR, the state and local associations may have their flaws, but they are an amazing resource to the industry and a major force for positive change and improvement in our industry.

Rob ended his post saying “Is all this mere Chicken Little’ing? God, I hope so.” – I think, without question , that this time Rob was running a little too quickly without all the information needed to make his predictions – which, as I remember the story is almost exactly what Chicken Little did – Luckily Rob’s a lot brighter than Chicken Little, not to mention more creative – making him an interesting guy to listen to – just don’t run for cover just yet.

In a recent search, I noticed a post by another brokerage firm about a relationship with RealtyTrac that was promulgated by their national franchise. .

It reminded me why I hate salespeople sometimes.

This post would indicate to a real estate consumer that the agent and firm had some benefit through the publication of their third party information, and that this would make them some kind of foreclosure experts. And while the writer is a pleasant enough person, and just trying to create a business advantage for themselves, its just nonsense, and its frankly misleading – though I will give them the benefit of the doubt and assume that it is unintentionally misleading.

I have been selling foreclosures for 21 years in Philadelphia, Bucks, Montgomery, Delaware and Chester Counties, and for the past year or two also in Burlington, Camden and Gloucester counties in New Jersey. I have also been an active real estate investor for even longer than that, so I think that I would be considered an expert in the marketing, purchase and sale of foreclosure properties. From my experience I know that , for the most part third party relationships like the one touted by this broker don’t work. And I know that for the past 21 years, most of the calls from services like these that I received were from people that were calling on outdated properties that were published long after they were sold and settled.

Third party listings of foreclosures have a number of problems. As I mentioned, their information is often outdated.They often provide too much information seeming to provide value but muddying the waters for most consumers – for example “pre-foreclosure” data which is useless to most of their subscribers. The source of the information is not disclosed in many instances, and is therefore questionable. For real estate professionals, the third party information is less accurate than the Multiple Listing Service .

I understand the need for the third party company to sell subscriptions, and their right to advertise and boast about their services to do so. And I understand the need for the national franchise to create affiliate relationships to obtain income opportunities and to position themselves as providing value to their franchisees, I even understand the writer pimping this out as a benefit to the public – but it is indicative of their lack of understanding about the product and the foreclosure product that they even do so. It just burns me up that they are so busy posting something to appear at the front of the pack, that they don’t take the time to actually determine if it accomplishes that before they publish.

As salespeople I think we have an obligation to balance our need to market with the need to be genuine and transparent. Its too easy to lay claim to expertise when you’re writing alone in your home or office. Don’t just claim a position, have the position. Be the expert you claim to be – or claim to be the expert you are.

It seems that everyone is always trying to improve on the poor old “For Sale” sign.

I was reading a recent Blog at Sellsius which speaks about  Custom Fit Realtyin Wisconsin who  is using Matrix codes on its house for sale signs to reach mobile users. The company’s new technology allowing buyers to take a photo of a “For Sale” sign on a house, and then get taken to the property information through their smart-phone browser.

I’ve got to say I was underwhelmed. While this latest piece of technology is pretty neat, and one that I would want to try just because I like to play with toys. I don’t think it ie unique or even new. People have been inventing ways to disintermediate the salesperson as long as there have been sales signs. Without thinking deeply I can think of…

• “Talking” Houses – FM transmitters that play the property information for the potential buyer. This is actually more efficient since almost every auto today has an FM receiver, while not every phone is a smart-phone.
• Property Brochure Boxes – OK , so this is a little Lo-Tech, but come on, its doing the same thing isn’t it? And it has the advantage of being a little more durable and easier to share than the site on a cell phone.
• Marketing Voice Mail Boxes which use a code number on the sign to allow people to call for property information. Again, every mobile phone user can do this, while the smart-phone, though more common is not yet ubiquitous.
• Single Property websites posted on the property sign
• MLS number and Company Web site printed on Yard Sign Riders

All of these marketing support systems have one thing in common however. You need to have located the property, and be sitting in front of it to utilize them. So the marketing system that worked here is obviously the Yard sign – the original real estate technology to advertise a property for sale. (In all fairness, they might have located the property through print advertising, but if they had called the office or seen the property on a website, they would have already had the information these systems provide)

 We need to remember that the purpose of a real estate brokerage is to make money, and that under the most common current business model, that means that our sales associates need to interface with consumers at the earliest possible point in the sales curve. So why would we want to provide them with yet another method of avoiding contact with a sales associate , who should  be able to provide them with better information than a website , pre-recorded message or property flyer?

Image via CrunchBase

A Couple of days ago, a press release was sent out that said , in part

NEW YORK, Nov. 12, 2008 – ForSaleByOwner.com today announced that it has become the nation’s first “by owner” real estate website to enable home sellers to advertise their home on Realtor.com without appearing on a local Multiple Listing Service (MLS). This new direct access to Realtor.com follows the May 2008 settlement between the U.S. Department of Justice and the National Association of Realtors.

“The DOJ-NAR settlement benefited consumers by giving them access to Realtor.com without the expensive cost of a commission fee,” said Greg Healy, Vice President of Operations at ForSaleByOwner.com. “We’re proud to be the first to offer this new consumer-friendly access to Realtor.com. In today’s challenging housing market, sellers need cost-saving ways to sell their homes.”

“Our typical home seller saves nearly $13,000 in commission and this new access to Realtor.com will help even more people sell their home without using the services of a real estate agent,” added Healy.

Realtor.com is a popular real estate website that attracts nearly five million monthly visits. The new Realtor.com Showcase Listing service from ForSaleByOwner.com will allow sellers to have their homes marketed on Realtor.com, and interested buyers will be able to directly contact these sellers.

The press release generated a ton of interest in real estate circles. Agents were stunned, and the connection between the National Association of REALTORS and REALTOR.COM (the official Web site of the National Association of REALTORS® operated by Move Inc) generated astonished and angry reactions from real estate professional all over the country.

In fact, the press release was inaccurate, self-serving, and misleading. It referenced the NAR/DOJ settlement earlier this year as if that was the source of the relationship between the company and REALTOR.COM, indicating that unrepresented sellers would now be able to list their properties through the company and have the properties exposed on REALTOR.COM. The truth was forthcoming shortly when the following information was provided by NAR, but the RE.Net being what it is the truth has to battle back against the first onslaught of inaccurate information.

Here are the clarifications NAR and REALTOR.com published to set the record straight 

1) The settlement agreement between NAR and the U.S. Department of Justice made no provision to allow unlisted properties, such as “for-sale-by-owner,” to be posted on REALTOR.com.

2) ForSaleByOwner.com does not in any way enable home sellers to advertise their home on REALTOR.com without broker representation; every property on REALTOR.com must be listed by a licensed real estate broker.

3) REALTOR.com has not authorized ForSaleByOwner.com to resell REALTOR.com’s Showcase Listings Enhancement package.

4) There is no relationship between ForSaleByOwner.com and REALTOR.com.

5) There are no unrepresented homes on REALTOR.com. Every property on REALTOR.com must be listed by a licensed real estate broker, and unrepresented properties would not qualify to be submitted to a REALTOR®-owned and operated MLS.

REALTOR.com® has asked ForSaleByOwner.com to issue a retraction. ForSaleByOwner.com did not discuss in advance the statements in its press release with REALTOR.com® nor did it request or receive permission to use the REALTOR.com® name in its press release.

I would be more upset about the misrepresentations made by Forsalebyowner.com if I did not have a low personal opinion about their marketing strategies to start with. However I guess that if they position themselves as some sort of consumer advocates, the truth isn’t as important to them as it is to the rest of the real estate practitioners around the country.