Home Real Estate Great Expectations, or On the Purpose of IDX

Great Expectations, or On the Purpose of IDX

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I had high hopes and fond dreams for IDX...
I had high hopes and fond dreams for IDX...

In all seriousness, if you’re a student of the real estate Game, you need to be reading Brian Larson on a regular basis.  The man gives out knowledge like the government gives out your money.  One of his recent posts is a fantastic read as it goes into a bit of the history of the IDX and charts some of the problems that have arisen because of it.  Go read the whole thing.  It’s an important post.

What I find especially compelling about Larson’s post is that he articulates the purpose of the IDX:

There is no definitive statement of the purpose of IDX. NAR did not adopt one with the IDX policy in 2000. The NAR IDX Implementation Guide did not articulate one in 2001. Even RMLS did not adopt an explanation for why it had done IDX. But the message of the leaders at Northwest MLS and at RMLS was very consistent:

The purpose of IDX is to ensure that brokers are unsurpassed as a source for real estate listing information on the web.

I looked back at my communications and presentations from the 2000-2001 era. Back then, we focused on IDX as a tool for brokers to make their sites ‘sticky,’ to keep the consumers on their sites once they arrived. We expected brokers would get the consumers to their sites using traditional marketing; brokers were already spending heftily on it, and adding a web address to display advertising would not increase their costs. That angle also helped to persuade large brokers, who held most of the listings, that it was cool sharing their listings in IDX with smaller competitors. Yes, the large broker and small broker sites would have all the listings, but the large broker’s greater marketing budget assured more traffic per capita (with the capitae here being those of agents). (It turns out we were wrong about that, too. Some small and medium brokers get much more traffic per agent to their sites than even very successful large-broker sites.)

This is a crucial missing piece.  I hope the IDX Implementation Guide adds a purpose statement soon as clarification.  Without this purpose statement, one could reasonably claim that the purpose of IDX is to benefit sellers as much as possible, or that IDX is meant to empower agents to be more competitive, or whatever.

Larson does point out that expectations have been… ah… shall we say unexpectedly changed with respect to IDX:

I’m spending this time on history and the way things were to make a point: I expect many brokers in IDX share my antiquated views about how IDX ought to work, and that those expectations shaped the brokers’ strategies to participate in IDX. Now that brokers have built web strategies around IDX, they cannot respond to expectation-breaking uses of the IDX data just by pulling out of IDX, as some have suggested. Preventing other brokers using your listings in IDX means giving up your own IDX. I can’t imagine a broker doing that.

Well, I can.  And I’m frankly surprised that the extraordinarily perceptive Mr. Larson did not see the possibilities.  Let me sketch out the reasoning for why a broker might pull out of IDX, and the New Expectations that such a world sets up.

IDX, ShmIDX – The Game is Over

The original “antiquated” views about how IDX ought to work was based in a world where Google was in its infancy and still known mostly as the search provider to Yahoo!  (Boy, I wonder what the guy who signed off on that deal thinks of it today….)  I remember back in the Bronze Age of the Internet of 2000-2001, getting the right AOL Keyword was considered the height of accomplishment for an interactive marketer.  Concepts like “Search Engine Optimization” simply did not exist.

Damn Google! Just cant beat those guys...
Damn Google! Just can't beat those guys...

By winning the search engine wars in such dramatic fashion, Google has permanently altered the shape of the Internet.  There was a more innocent time when things like putting your URL into print or broadcast advertising had greater impact.  Not anymore.  Today, if the Great God Google decides to blacklist your site, you are rendered more or less invisible.  It’s the kind of excommunication that the Catholic Church can only dream of.  If Google declares you anathema, you may as well abandon that website — or go begging on your knees to the various high priests and bodhisattvas at Google to have mercy and restore your site back to the good graces of Google.

In today’s world, the very purpose of IDX has to be reexamined in light of Google’s dominance.  What does it mean to be unsurpassed as the source of real estate information on the web?

If it means authority, being the first go-to place on the Web, then the game is over.  Google has won that, as it has won that battle over every single other website and content provider.  Consider the fact that the top search terms for any real estate website (or any website) is often the name of the site.  This blog, for example, gets a fair amount of search traffic — but the keywords used are things like “Notorious ROB” and “notorious r.o.b.” and “that annoyingly sexy guy rob hahn”.  That means even those people who KNOW about your site is going to Google to find it.

The controversy over “IDX fishing” arises precisely because the world has changed around us.  Prior to the emergence of Google as the arbiter of the Internet, big brokerages that held most of the listings had an incentive to participate in IDX since their bigger marketing budgets nearly guaranteed more traffic to their sites.  In the Googleified Internet, that simply isn’t the case.  Small, medium, large — the gateway is Google.  That changes the calculations.

Unsurpassed Source as Completeness

If “unsurpassed source of information” means completeness… then things get a bit more interesting.

First, IDX is not complete; it is by definition not “unsurpassed”.  The actual unsurpassed source of information would be the VOW (Virtual Office Website).  All brokerages, large and small, may have one of these, and display all of the detailed information to a consumer that enters into a client relationship with the brokerage.  Question is, does a brokerage need IDX to get this relationship in place, especially when the relationship requirement is so very low: signup on the website?  I don’t believe so, although empirical evidence is somewhat lacking.

Second, the emergence of the public facing MLS website is an extremely meaningful event in this context.  As I’ve noted before, it is my belief based on the reading of the NAR vs. DOJ ruling that the MLS’s are completely exempt from the requirements of the DOJ settlement and may provide a full VOW feed to the consumer if they chose to do so.  Brian Larson and Michael Wurzer both thought I was being a bit to “way out there” with this line of reasoning, but I believe that the success of HAR.com suggests a way forward for MLS’s interested in becoming the unsurpassed source of real estate information: send all leads to member brokers/agents without cost.

Third, unless brokerages start taking a very different tack on third-party content, namely by allowing and aggregating everything, it will be very difficult to be the unsurpassed source for all real estate information.  What do I mean?  I mean something for which the precise term doesn’t yet exist… let’s call it “social metadata”.  If I go to Delicious and tag a house listing with words like “ripoff, houses to avoid” and the like, that is information about real estate that a brokerage site is not capturing.  If I write about a real estate listing on my personal Facebook page to share with friends and family, that is not data that the brokerage site is not capturing.  Multiply this effect by millions and you’ve got something like the “real estate metaweb”.  Agent ratings are certainly an important part of the “real estate info-sphere” — yet, few brokerage sites are setup today to aggregate all of this data into a single place.  Well, to be fair, no website today is setup to aggregate all of this data into a single place, although Zillow and Redfin are trying like hell to do so.

So where does this leave the broker?

On the one hand, trying to become the “unsurpassed source of information” is an extraordinarily difficult and costly enterprise.  On the other hand, it isn’t at all clear that any of that will lead to greater business or better control over the customer relationship.  The strong incentive for the large broker who controls many listings is to eliminate IDX, and go to a full-blown VOW strategy, and rely on the public facing MLS website to be the traffic driver to its website.  The public facing MLS website, of course, will need to rank high on Google but that can become one of the core value propositions of an MLS and by spreading out the cost of such SEO/SEM campaigns across the entirety of the MLS membership, I can see advantages of scale for the MLS to do just that.

Brave New World

So here’s the brave new world scenario — one that Victor Lund of WAVGroup is pushing strongly:

  • Big brokerages pull out of IDX; they then focus on VOW and getting consumers signed up
  • Big brokerage also lobby/permit the MLS to setup a killer public-facing website offering the full VOW feed
  • At the same time, the MLS (together with Big Brokerages) create obnoxious IDX rules tending to discourage folks from using IDX for, well, much of anything.  For example, prohibiting search engine indexing — which drove a firestorm — but frankly, if the MLS has the big brokers behind it… what are the little guys gonna do?  Switch MLS’s?
  • Without IDX, the Public MLS Site will find it easier to rank higher on Google over all others, including the aggregators like Realtor, Trulia, Zillow, etc. because it has 100% of the listings on the VOW feed.
  • The Public MLS Site drives traffic to brokerage/agent website proportionally — he that has the listings gets the traffic.

I’m not sure how I feel about that scenario yet, but I think it is entirely possible — likely even, given the incentives as they line up.

Google + MLS + VOW = Win!
Google + MLS + VOW = Win!

The MLS has all sorts of incentives to do this: additional value delivery to members, becoming indispensable, and saving money for its membership (they don’t have to spend all that money on their own websites).

The Big Brokerages have all sorts of incentives to do this: beat the stuffing out of the little guys, get proportionally larger percentage of traffic (and therefore leads), which then enables a far stronger recruiting/retention pitch for its agents.  (Note: this assumes that the Big Brokerages have the listings; if they don’t, then they’re doomed one way or another.)  Furthermore, the sort of lead-generation dominance that this strategy sets up gives Big Brokers a greater chance of managing its agents and enforcing its brand promises (whatever those may be).

The Little Guys have no incentive whatsoever, but… they don’t really have much of a choice.  They don’t have the market power to setup a new MLS, and can’t leave the MLS unless they’d really like to cut off their noses to spite their faces.

That’s the New Expectation, the new rules of the Game in this Brave New World: Google + MLS + VOW Websites = Win.  And the new Great Expectation will be far more in line with the science of emergence theory and chaos theory: He that has, gets.

-rsh

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Rob Hahn
Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

37 COMMENTS

  1. Hi Rob –

    If the big brokers pull their listings out of IDX, then IDX will eventually die. I would think the logical next step would be for all the current IDX providers to have their programmers develop VOWs. Then all the big AND little guys will have VOWs.

    The biggest difference for consumers will be the ability to see the listing agent’s contact info along with the selling agent commission offered. While some consumers will choose to “cut out a middleman” and go straight to the listing agent, many will still want and need their own representation.

    This could eventually lead to “divorcing of the commissions” where each party pays his own agent, and there are no selling commissions offered at all. Each agent would have to justify his own value to his own client. I’m not sure that the “big brokers” would have a significant advantage in that scenario.

  2. Hi Rob –

    If the big brokers pull their listings out of IDX, then IDX will eventually die. I would think the logical next step would be for all the current IDX providers to have their programmers develop VOWs. Then all the big AND little guys will have VOWs.

    The biggest difference for consumers will be the ability to see the listing agent’s contact info along with the selling agent commission offered. While some consumers will choose to “cut out a middleman” and go straight to the listing agent, many will still want and need their own representation.

    This could eventually lead to “divorcing of the commissions” where each party pays his own agent, and there are no selling commissions offered at all. Each agent would have to justify his own value to his own client. I’m not sure that the “big brokers” would have a significant advantage in that scenario.

  3. This is just delicious! Try living in an area with its head in the sand, utilizing an antiquated MLS AND IDX options that are less than desirable. While I think the big brokerages will continue to evolve and some will dissolve, I’m not convinced that being with a big brokerage will be critical in the new RE business model.

  4. This is just delicious! Try living in an area with its head in the sand, utilizing an antiquated MLS AND IDX options that are less than desirable. While I think the big brokerages will continue to evolve and some will dissolve, I’m not convinced that being with a big brokerage will be critical in the new RE business model.

  5. Rob,

    Thanks for your tweet regarding Brian Larson, I have him on RSS and I’m working through his excellent articles on MLS, IDX and VOW’s.

    Your post really bothers me and I can’t put my finger on why. Going to have to ponder it for a day or two to make some intelligent comments as to why I don’t agree. Of course, maybe it’s your statement that the little guy is doomed – seen from the trenches my view is much different.

    Back in a few days once I thought it out. Jeff

  6. Rob,

    Thanks for your tweet regarding Brian Larson, I have him on RSS and I’m working through his excellent articles on MLS, IDX and VOW’s.

    Your post really bothers me and I can’t put my finger on why. Going to have to ponder it for a day or two to make some intelligent comments as to why I don’t agree. Of course, maybe it’s your statement that the little guy is doomed – seen from the trenches my view is much different.

    Back in a few days once I thought it out. Jeff

  7. Ahh…So meaty…

    Why include VOW or MLS in the equation? Should be “Google + Trulia + Zillow + Anyone else who embraces aggregation = Win for consumers and brokers inclined to understand that noone (or everyone) truly controls crowdsourced info.”

    Along these lines, I think Jeffrey Douglass’s comment above nicely illustrates the problem with including broker based organizations in the equation… Too many differing (often antiquated) opinions scrambling to keep up with company’s (like Trulia or Zillow) that care only about doing what it takes (mass aggregation) to please and attract visitors.

    A few big forward thinking companies are gonna cook up the extinction of IDX I think. Agents who commit to observing and understanding that these guys aren’t the enemies will spend more time obsessing over who controls the inventory (noone and everyone) and more time helping their clients wade through transactions.

    • Hey Ryan –

      Thanks for the comment! 🙂

      See, I left Trulia & Zillow out of my equation simply because they are not the #1 go-to place for information: that would be Google. I’ve done consumer focus group studies where people immediately went to Google to start any search no matter what topic.

      The thing to keep your eye on is “who controls the info”? It’s too easy to say something like “crowdsourced info” but that isn’t true: someone somewhere goes, takes photos of a house, stages it, writes it up, and enters that data into some system somewhere. Today, that system is the MLS, and the listing agent/broker is who owns that copyrighted information.

      It’ll be an interesting Brave New World in real estate in the next few years.

      -rsh

  8. Ahh…So meaty…

    Why include VOW or MLS in the equation? Should be “Google + Trulia + Zillow + Anyone else who embraces aggregation = Win for consumers and brokers inclined to understand that noone (or everyone) truly controls crowdsourced info.”

    Along these lines, I think Jeffrey Douglass’s comment above nicely illustrates the problem with including broker based organizations in the equation… Too many differing (often antiquated) opinions scrambling to keep up with company’s (like Trulia or Zillow) that care only about doing what it takes (mass aggregation) to please and attract visitors.

    A few big forward thinking companies are gonna cook up the extinction of IDX I think. Agents who commit to observing and understanding that these guys aren’t the enemies will spend more time obsessing over who controls the inventory (noone and everyone) and more time helping their clients wade through transactions.

    • Hey Ryan –

      Thanks for the comment! 🙂

      See, I left Trulia & Zillow out of my equation simply because they are not the #1 go-to place for information: that would be Google. I’ve done consumer focus group studies where people immediately went to Google to start any search no matter what topic.

      The thing to keep your eye on is “who controls the info”? It’s too easy to say something like “crowdsourced info” but that isn’t true: someone somewhere goes, takes photos of a house, stages it, writes it up, and enters that data into some system somewhere. Today, that system is the MLS, and the listing agent/broker is who owns that copyrighted information.

      It’ll be an interesting Brave New World in real estate in the next few years.

      -rsh

  9. I have always suspected that if Realogy ever wakes up, IDX and possible the MLS could be obsolete. The scenario: Realogy branded brokers have a third of the listings. Why not just recommend a system wide pullout from all the MLS’s? Cooperation could be retained and reaffirmed by email. That would give franchise sales a big value proposition to pitch to independents. It would also put a leak in that pesky Re/Max balloon.

  10. I have always suspected that if Realogy ever wakes up, IDX and possible the MLS could be obsolete. The scenario: Realogy branded brokers have a third of the listings. Why not just recommend a system wide pullout from all the MLS’s? Cooperation could be retained and reaffirmed by email. That would give franchise sales a big value proposition to pitch to independents. It would also put a leak in that pesky Re/Max balloon.

  11. I’m sort of in your boat Jeffry Douglass. Here in Tucson, Market forces have not been easy on the big brokers. I think that VOWs are part of the wave of the future . . .but only part.

  12. I’m sort of in your boat Jeffry Douglass. Here in Tucson, Market forces have not been easy on the big brokers. I think that VOWs are part of the wave of the future . . .but only part.

  13. I do not see MLS’s becoming obsolete. Vendors like Google and Trulia do not want to be rules and regulations enforcers or to police the data in any way. They just want the listings. MLS’s are still the gateway for the most accurate information and to ensure that cooperation and compensation is being offered for its members.

  14. I do not see MLS’s becoming obsolete. Vendors like Google and Trulia do not want to be rules and regulations enforcers or to police the data in any way. They just want the listings. MLS’s are still the gateway for the most accurate information and to ensure that cooperation and compensation is being offered for its members.

  15. It may be interesting to consider commercial real estate here as well. A great example of commercial professionals taking control of their data and marketplace can also be found on the HAR site. If you visit Rob’s link above you can click on Commercial Properties to see a sample of a CIE – Commercial Information Exchange. For another example and to see the largest Commercial MLS in the country Commercial Brokers Association – CBA go to http://www.commercialmls.com

    CBA is a commercial MLS with commission sharing arrangements, rules, regs etc. Their membership includes Realtor members and non Realtor members.

    I was thrilled to see mention of HAR and was just excited that our company is a part of their success! There is not better time than now to protect our industry.

  16. It may be interesting to consider commercial real estate here as well. A great example of commercial professionals taking control of their data and marketplace can also be found on the HAR site. If you visit Rob’s link above you can click on Commercial Properties to see a sample of a CIE – Commercial Information Exchange. For another example and to see the largest Commercial MLS in the country Commercial Brokers Association – CBA go to http://www.commercialmls.com

    CBA is a commercial MLS with commission sharing arrangements, rules, regs etc. Their membership includes Realtor members and non Realtor members.

    I was thrilled to see mention of HAR and was just excited that our company is a part of their success! There is not better time than now to protect our industry.

  17. Rob:
    Thanks for the kind words, first of all.

    But I need time to frame up my thoughts about what you have said. (I don’t know if you have noticed, but I can’t seem to say anything very quickly. For Tolkein fans, I’m a bit of an Ent.)

    -Brian

  18. Rob:
    Thanks for the kind words, first of all.

    But I need time to frame up my thoughts about what you have said. (I don’t know if you have noticed, but I can’t seem to say anything very quickly. For Tolkein fans, I’m a bit of an Ent.)

    -Brian

  19. Rob,

    Just for fun, anticipating that brave new world…

    What if the property owner, soon discovers it is cheaper to reclaim his rightful ownership of the information? What if listing and selling most properties becomes as easy as loading up the property info into an (indexable) google wave template, and what if the aggregate (indexable) collection of waves becomes a crowdsourced national real estate database shaped only by those (the property owners) who provide the info?

    If placement in the mls has been the biggest reason why most sellers use a real estate agent anyway, what will happen when the same benefit can be derived for free by filling out a simple web based form.

    Competent buyers agents who can interpret the info will still be needed to guide, interpret, counsel… all that good stuff.

    But who will really need the help of a listing agent? Sure, someone’s gotta negotiate the contract (yay lawyers), and marketing companies that specialize in real estate will be brought in at the seller’s discretion, but for most unexceptional property, what will be the need for that “listing” agent when “listing” your property becomes as easy as updating your facebook profile.

    I’m thinking IDX (and maybe MLS) is almost dead because, well, the fact that brokers and mls’s that created the data exchange don’t need to “own” the data anymore is becoming more and more obvious. Sure, they’ve been permitted by property owners to pseudo-own the data for lack of a better alternative, but better alternatives are fast approaching if not already here in their infancy?

  20. Rob,

    Just for fun, anticipating that brave new world…

    What if the property owner, soon discovers it is cheaper to reclaim his rightful ownership of the information? What if listing and selling most properties becomes as easy as loading up the property info into an (indexable) google wave template, and what if the aggregate (indexable) collection of waves becomes a crowdsourced national real estate database shaped only by those (the property owners) who provide the info?

    If placement in the mls has been the biggest reason why most sellers use a real estate agent anyway, what will happen when the same benefit can be derived for free by filling out a simple web based form.

    Competent buyers agents who can interpret the info will still be needed to guide, interpret, counsel… all that good stuff.

    But who will really need the help of a listing agent? Sure, someone’s gotta negotiate the contract (yay lawyers), and marketing companies that specialize in real estate will be brought in at the seller’s discretion, but for most unexceptional property, what will be the need for that “listing” agent when “listing” your property becomes as easy as updating your facebook profile.

    I’m thinking IDX (and maybe MLS) is almost dead because, well, the fact that brokers and mls’s that created the data exchange don’t need to “own” the data anymore is becoming more and more obvious. Sure, they’ve been permitted by property owners to pseudo-own the data for lack of a better alternative, but better alternatives are fast approaching if not already here in their infancy?

  21. In February I dumped my paid IDX site because our MLS (MRIS in Virginia) put out a very nice, free, consumer friendly site known as homesdatabase.com and started advertising it all over the DC metro area. It didn’t have ads… was fast… did I mention that it was free?

    When I spoke with the marketing manager, he told me that the brokers had really pushed for this site… I think to compete with all the IDX sites.

  22. In February I dumped my paid IDX site because our MLS (MRIS in Virginia) put out a very nice, free, consumer friendly site known as homesdatabase.com and started advertising it all over the DC metro area. It didn’t have ads… was fast… did I mention that it was free?

    When I spoke with the marketing manager, he told me that the brokers had really pushed for this site… I think to compete with all the IDX sites.

  23. Rob:
    Nice post; I’ve been saying this for some time now. I particularly dislike the idea that IDX is usually “all or nothing” which means that in many implementations, I have to accept “every” broker’s data even if I just wanted a few of them – especially those broker’s sites that are filled with junk data, no photos and other awful content that just makes one’s site look terrible. See my post Why IDX is a Really Bad Idea at http://www.matthewferrara.com/marketing/idxbad from November 2008; it earned me lots of scorn from the IDX Angels out there, so I followed it up with 10 Reasons MLS is Dead Already http://www.matthewferrara.com/rssfeed/10deadmls a few months later (odd, they coincide with the NAR meeting… hmmm!)

    With peer-to-peer XML/RSS these days, it makes no sense to be trapped with IDX solutions. Brokers should cut expenses and bad ties, and just go direct to each other as they wish. IDX is just trying to extend the life of the zombie known as MLS, neither of which are Next Generation Real Estate ideas…

    Keep up the good work, Rob!

    Matthew Ferrara

    • @Matthew: I read both of your posts. They were interesting, and I’m inclined to agree with some of your comments, though not all.

      But I don’t know what you are talking about when you describe IDX as “all-or-nothing”. NAR’s IDX policy includes language that appears in every MLS’s IDX rules (at least the couple hundred I’ve seen), that permits the displaying broker to display less than the whole IDX database. That means the displaying broker could show only million-dollar-plus listings, only her own listings, only listings with photos, only listings with remarks written in English, etc.

      So brokers CAN display only their own listings on their web sites. But brokers who have invested a lot of money in their web sites, and have thought a lot about web marketing, and have built sites that are very popular, still think it’s worthwhile showig their competitor’s listings.
      -Brian

  24. Rob:
    Nice post; I’ve been saying this for some time now. I particularly dislike the idea that IDX is usually “all or nothing” which means that in many implementations, I have to accept “every” broker’s data even if I just wanted a few of them – especially those broker’s sites that are filled with junk data, no photos and other awful content that just makes one’s site look terrible. See my post Why IDX is a Really Bad Idea at http://www.matthewferrara.com/marketing/idxbad from November 2008; it earned me lots of scorn from the IDX Angels out there, so I followed it up with 10 Reasons MLS is Dead Already http://www.matthewferrara.com/rssfeed/10deadmls a few months later (odd, they coincide with the NAR meeting… hmmm!)

    With peer-to-peer XML/RSS these days, it makes no sense to be trapped with IDX solutions. Brokers should cut expenses and bad ties, and just go direct to each other as they wish. IDX is just trying to extend the life of the zombie known as MLS, neither of which are Next Generation Real Estate ideas…

    Keep up the good work, Rob!

    Matthew Ferrara

    • @Matthew: I read both of your posts. They were interesting, and I’m inclined to agree with some of your comments, though not all.

      But I don’t know what you are talking about when you describe IDX as “all-or-nothing”. NAR’s IDX policy includes language that appears in every MLS’s IDX rules (at least the couple hundred I’ve seen), that permits the displaying broker to display less than the whole IDX database. That means the displaying broker could show only million-dollar-plus listings, only her own listings, only listings with photos, only listings with remarks written in English, etc.

      So brokers CAN display only their own listings on their web sites. But brokers who have invested a lot of money in their web sites, and have thought a lot about web marketing, and have built sites that are very popular, still think it’s worthwhile showig their competitor’s listings.
      -Brian

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