Home Real Estate Clients, Consumers, Information: Dialogue on My Inman Column

Clients, Consumers, Information: Dialogue on My Inman Column

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As expected, my latest Inman column brought out only wide agreement and headnodding.  Positively sleepy comments section there.  NOT.  Go read it fast, or better yet, go be a subscriber so Inman can continue to pay me for my ramblings.  (LOOK! A COMMERCIAL PITCH!)

First of all, I owe a word of thanks to everyone who responded over at Inman — especially to those who disagree and are taking my points apart.  I guess I’m a Hegelian in the way I view progress: thesis, antithesis, synthesis.

In any event, I wanted to post a few responses on this blog since I want to carry the conversation beyond just Inman readers, and past the 24-hour paywall deadline.

Information Wants to be Free

There were a number of people who thought that I was simply nuts because I didn’t recognize that “the consumer demands a free flow of information” to quote Larry Whited, Sr.

This claim that “consumer demands a free flow of information” strikes me as a hypothesis at best.  I’d like to see some evidence besides opinion surveys that mean not much at all.

As counter-example, if consumers indeed demand all the information all the time, then why do we still have no free finance website offering true real-time quotes?  Yahoo, Google, CBSMarketWatch — and all of the other free sites — only give you stock information on various delays (15 minutes, 30 mins, etc.).  And the consumer outrage is nowhere to be seen.  If you want real-time data, you gotta sign up (! there’s that word!) and gasp, even pay, folks like E*Trade and Scotttrade.

If information wants to be free all the time, why is it that I have to pay to see my credit report?  No consumer outrage there, and no services springing up offering you free credit reports 24×7.  The existing “free credit report” sites are just marketing come-on’s; you get one per year, but gotta sign up for some subscription to get more, etc.

Carfax.com doesn’t offer information for free to the world; yet no consumer outrage.  If anything, consumers are flocking to use that paid service every day.

Even in music, in the age of filesharing and bit torrent, Apple iTunes continues to churn out hundreds of millions of dollars in profits despite its obnoxious DRM system.

Are we still so sure that consumers “demand” a free flow of information?

If you are so sure, then I don’t understand this, from Larry Whited:

The real issue is that the large, last century, dinosaur, brokerage models want to force the consumer to be dependant on their VOW sites and by doing so force commission back to 7%. They need higher commission to support their inefficient antiquated business models.

They hope to accomplish this by crushing this century value brokerage models (virtual, low cost, full service) by not allowing their property address to display on the value brokers IDX sites. IDX is much less expensive to operate than a VOW and is vital to the growth of the value brokers.

Why would these new, efficient, showing all data brokerage who want to crush the last century, dinosaur brokerage models want so desperately to change the inefficient dopes who don’t get it?  Just crush them then!  If anything, I’d be out there saying, “Yeah, Rob’s right — hide all that data!” knowing that behind the scenes, I’m just killin’ them in competition.

If the consumer truly wants free information, they will show it by voting with their wallets, and what I asked for — actual data on financial impact of showing all of the data on the Internet vs. some of the data on the Internet — should be easily available.  We should be able to see that listings with all of the data freely available sell for more than listings that require registration.

Perhaps the unspoken issue here for a great many realtors is not that “consumer demands a free flow of information” but that “consumer demands a free flow of information… that someone else controls” — that is to say, IDX.  If you’re using someone else’s listings to fish for business, then yeah, I could see why you might feel pretty passionate about having all of the information available.  It occurs to me that those who castigate listing agents for not putting all of the data “out there” are all in non-charity organizations trying to make a dollar.

On Fiduciary Duties

Bruce Hahn (no relation) wrote that non-fiduciary relationships exist in real estate:

There are also non-fiduciary relationships as well. For example I can list my home with a flat fee broker, who will put my home in the local MLS for a mutually agreeable fee, paid in advance. We both clearly understand in advance that this is a ministerial service only. That broker isn’t going to assist me in negotiating with a buyer or a buyers agent and doesn’t owe me any other fiduciary duties.

All I can say is, the state real estate board might beg to differ with said flat fee broker when he says, “Hey, I didn’t owe that dude any duties”.  It’s hard to avoid fiduciary duties simply by saying so.

But if you could do this, just tell the consumer, “Hey, I’m not your fiduciary”, then by all means, every listing agent should tell the seller, “Hey, I’m not your fiduciary; just your selling agent.”  Why face malpractice liability if you don’t have to?

So I suspect that realtors as fiduciaries is sort of the default reality.

Now, in response to Guy Wolcott, I agree that the fiduciary duty is written into the laws and regulations of various states.  But let’s not be blind to the fact that the real estate boards are controlled by realtors. 🙂  If the industry wanted to change the rules, it can and it will.

-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.

16 COMMENTS

  1. The information wants to be free in no small part due to Realtors’ collective misunderstanding of its value.

    If we were to understand that good data is valuable, we would be able to leverage that value.

    Additionally, there will always be a Realtor willing to give the data away for free because that is their one and only value-add to the client relationship, in addition to their lockbock key.

    Good, sound, scrubbed and accurate data is and should be valuable. But where is the incentive for the Realtor to keep said data behind a subscriber or pay wall when hundreds of others in the market are offering it for free?

  2. The information wants to be free in no small part due to Realtors’ collective misunderstanding of its value.

    If we were to understand that good data is valuable, we would be able to leverage that value.

    Additionally, there will always be a Realtor willing to give the data away for free because that is their one and only value-add to the client relationship, in addition to their lockbock key.

    Good, sound, scrubbed and accurate data is and should be valuable. But where is the incentive for the Realtor to keep said data behind a subscriber or pay wall when hundreds of others in the market are offering it for free?

  3. @Jim –

    Hey hey man 🙂

    The incentive depends on the data. If we’re talking market stats or neighborhood information, there is no incentive.

    If we’re talking about info on a listing that can’t be gotten from anywhere else, then there’s plenty of incentive to keep the data behind a Signup requirement.

    Anecdotes (which are not the plural of evidence, I know) suggest that agents and brokers who put up teaser info on a listing, then put the rest behind a signup generate far more leads than those who do not. In fact, one agent I know removed the signup on her website for a month; result was that inquiries dropped precipitously. Her question: “How does it help my client if I make fewer phone calls to possible buyers?”

    She’s got a point; should I believe that views on the Internet are superior to an agent making phone calls in terms of generating genuine buyer interest?

    -rsh

  4. @Jim –

    Hey hey man 🙂

    The incentive depends on the data. If we’re talking market stats or neighborhood information, there is no incentive.

    If we’re talking about info on a listing that can’t be gotten from anywhere else, then there’s plenty of incentive to keep the data behind a Signup requirement.

    Anecdotes (which are not the plural of evidence, I know) suggest that agents and brokers who put up teaser info on a listing, then put the rest behind a signup generate far more leads than those who do not. In fact, one agent I know removed the signup on her website for a month; result was that inquiries dropped precipitously. Her question: “How does it help my client if I make fewer phone calls to possible buyers?”

    She’s got a point; should I believe that views on the Internet are superior to an agent making phone calls in terms of generating genuine buyer interest?

    -rsh

  5. Rob,

    Agency laws (including fiduciary duty) are state laws, enacted by legislatures and signed by governors, not rules drafted by state Real Estate Boards. Such legislatures and governors are not “controlled by Realtors,” and would probably not look kindly on lobbying to reduce (at least perceived) consumer protection by relieving brokers of their fiduciary duty, especially not in the current political climate.

    But forget the laws and regulations for a minute. The only reason brokers and agents have this “valuable data”–that you say they should protect and use to benefit themselves–is because they promised a seller that they would broadcast that exact data as far and wide as possible to market their home. They only get the listing (and hence the “data”) by committing–usually in person and on paper–to marketing the listing in every venue they can, as hard as they can. “Our incentives are aligned,” they say, “my goal is to sell your house for as much as possible.”

    Without that commitment: no listing and no data. If you were honest that you wanted to use their listing as bait for your buyer representation business (putting full information in Trulia, but not in IDX, for example), you would get laughed out of your listing presentation.

    So the only way this works is what’s happening now. Use listings as bait, but either hope seller clients don’t find out, or explain it away (“We get far more inquiries by leaving the address off on other brokers’ sites. But, strangely, Trulia works just the opposite.”)…Guy

  6. Rob,

    Agency laws (including fiduciary duty) are state laws, enacted by legislatures and signed by governors, not rules drafted by state Real Estate Boards. Such legislatures and governors are not “controlled by Realtors,” and would probably not look kindly on lobbying to reduce (at least perceived) consumer protection by relieving brokers of their fiduciary duty, especially not in the current political climate.

    But forget the laws and regulations for a minute. The only reason brokers and agents have this “valuable data”–that you say they should protect and use to benefit themselves–is because they promised a seller that they would broadcast that exact data as far and wide as possible to market their home. They only get the listing (and hence the “data”) by committing–usually in person and on paper–to marketing the listing in every venue they can, as hard as they can. “Our incentives are aligned,” they say, “my goal is to sell your house for as much as possible.”

    Without that commitment: no listing and no data. If you were honest that you wanted to use their listing as bait for your buyer representation business (putting full information in Trulia, but not in IDX, for example), you would get laughed out of your listing presentation.

    So the only way this works is what’s happening now. Use listings as bait, but either hope seller clients don’t find out, or explain it away (“We get far more inquiries by leaving the address off on other brokers’ sites. But, strangely, Trulia works just the opposite.”)…Guy

  7. Rob-

    Interestingly enough, I believe your article on Inman is a good analog for why forcing registration is a bad idea. I’m sure the discussion that happened was fascinating, however, I’m not willing to ‘register’ to see it when an equally interesting conversation is happening here and <a href="http://www.bloodhoundrealty.com/BloodhoundBlog/?p=9601"elsewhere with no barrier.

    Given the financial pressure delineated in your earlier series, it’s tempting to took to ‘forced registration’ or ‘aggressive lead capture’ as a means to drive return on internet marketing investment. My advice is to do so carefully. I see aggressive lead capture, as a classic case of putting short-term financials ahead of long-term business-building fundamentals. I much prefer the approach of presenting lots of options for users to ‘self-select’ as your client. In the meantime, let them see as much information as possible, free of giving up their privacy.

    There are plenty of valid reasons for users to register and give you contact info in exchange for real benefits (that they can’t get without doing so). Saved searches, favorites, hiding listings they don’t want to see, sold data that can’t be shared due to MLS rules without a VOW registration, new listing alerts, etc.

    I would argue that it should be a brokers goal to get as many users as possible to register for these services – and then treat that list like the gold it is. It’s the most under-utilized asset any brokerage has, and far more profitable to work than the list of folks asking “what’s the address?”.

  8. Rob-

    Interestingly enough, I believe your article on Inman is a good analog for why forcing registration is a bad idea. I’m sure the discussion that happened was fascinating, however, I’m not willing to ‘register’ to see it when an equally interesting conversation is happening here and <a href="http://www.bloodhoundrealty.com/BloodhoundBlog/?p=9601"elsewhere with no barrier.

    Given the financial pressure delineated in your earlier series, it’s tempting to took to ‘forced registration’ or ‘aggressive lead capture’ as a means to drive return on internet marketing investment. My advice is to do so carefully. I see aggressive lead capture, as a classic case of putting short-term financials ahead of long-term business-building fundamentals. I much prefer the approach of presenting lots of options for users to ‘self-select’ as your client. In the meantime, let them see as much information as possible, free of giving up their privacy.

    There are plenty of valid reasons for users to register and give you contact info in exchange for real benefits (that they can’t get without doing so). Saved searches, favorites, hiding listings they don’t want to see, sold data that can’t be shared due to MLS rules without a VOW registration, new listing alerts, etc.

    I would argue that it should be a brokers goal to get as many users as possible to register for these services – and then treat that list like the gold it is. It’s the most under-utilized asset any brokerage has, and far more profitable to work than the list of folks asking “what’s the address?”.

  9. Sorry I missed your original article . . . I only have the free subscription to Inman, so I can only view articles for about 3-6 hours before they expire, I must have been working or busy when yours was published. It is hard for me to figure out in this age of free information that Inman is still charging for information. Anyway without reading the original article it is impossible to make an intelligent comment on it. On the bright side – you don’t charge folks to read the commemts, so more people might be reading this than your original article. I know this comment is a bunch of aimless rambeling, but since folk can read it for free, they ought to get the most for their money – don’t you agree?

  10. Sorry I missed your original article . . . I only have the free subscription to Inman, so I can only view articles for about 3-6 hours before they expire, I must have been working or busy when yours was published. It is hard for me to figure out in this age of free information that Inman is still charging for information. Anyway without reading the original article it is impossible to make an intelligent comment on it. On the bright side – you don’t charge folks to read the commemts, so more people might be reading this than your original article. I know this comment is a bunch of aimless rambeling, but since folk can read it for free, they ought to get the most for their money – don’t you agree?

  11. Rob,

    Perhaps the best thing about our real estate system is the cooperation between brokerages via the multiple listing system. Rather than the poor consumer going from brokerage to brokerage they are free to pick and agent to represent them and know that the majority of the listings are on the MLS and public facing sites like Yahoo, Realtor.com, and Google. Why force a consumer to work with an agent before they are ready to?

    I would like to comment on your following quote:

    “If you’re using someone else’s listings to fish for business, then yeah, I could see why you might feel pretty passionate about having all of the information available. It occurs to me that those who castigate listing agents for not putting all of the data “out there” are all in non-charity organizations trying to make a dollar.”

    IDX is NOT about fishing for business with someone else’s listings. It is about the free exchange of listings between cooperating members which best serve there needs. Anyone that has tried to buy real estate in Manhattan should understand how bad that is for the consumer and good for the “gatekeepers.”

    Any listing agent who does not allow listing data out for everyone to view is doing a terrible disservice to the Seller (Client). I have been in this business for too many years to know you will never know where your buyer will come from.

    The other point I want to make is by not sharing the listing information and exposing it to fire, many listing agents are trying to double end (dual agency) which is defiantly not in the interest of the consumer. A cozy dual agent transaction may leave thousands of dollars of profit on the table.

    Rob, I really think you should rethink you statement, you have really missed the mark!

    I don’t have an Inman account and cannot read comments there, so I hope I am not duplicating the rant.

  12. Rob,

    Perhaps the best thing about our real estate system is the cooperation between brokerages via the multiple listing system. Rather than the poor consumer going from brokerage to brokerage they are free to pick and agent to represent them and know that the majority of the listings are on the MLS and public facing sites like Yahoo, Realtor.com, and Google. Why force a consumer to work with an agent before they are ready to?

    I would like to comment on your following quote:

    “If you’re using someone else’s listings to fish for business, then yeah, I could see why you might feel pretty passionate about having all of the information available. It occurs to me that those who castigate listing agents for not putting all of the data “out there” are all in non-charity organizations trying to make a dollar.”

    IDX is NOT about fishing for business with someone else’s listings. It is about the free exchange of listings between cooperating members which best serve there needs. Anyone that has tried to buy real estate in Manhattan should understand how bad that is for the consumer and good for the “gatekeepers.”

    Any listing agent who does not allow listing data out for everyone to view is doing a terrible disservice to the Seller (Client). I have been in this business for too many years to know you will never know where your buyer will come from.

    The other point I want to make is by not sharing the listing information and exposing it to fire, many listing agents are trying to double end (dual agency) which is defiantly not in the interest of the consumer. A cozy dual agent transaction may leave thousands of dollars of profit on the table.

    Rob, I really think you should rethink you statement, you have really missed the mark!

    I don’t have an Inman account and cannot read comments there, so I hope I am not duplicating the rant.

Comments are closed.