Category Archives: Technology

Notorious POD: Episode 11 — Kathy Dryden of Allre.com

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Wow, it’s been a long time, eh? I apologize for the lapse, but as I sort of explain in the podcast itself, I’ve been busy, and there hasn’t been that much going on that makes me want to record one of these.

But… that’s changed with the introduction of Allre.com, a new startup based in San Diego, CA, that really, actually wants to disrupt the industry. Here’s the video presentation from TechCrunch Disrupt:

 


The initial reaction from real estate folks has been… as expected. Just check out the comments to that TechCrunch post above.

I figured, rather than slinging mud, maybe we should get to know the company a bit better, so I asked Kathy Dryden, the Founder & CEO, for an interview. And she granted it. So this episode is about Allre, about disruption, and about my thoughts and opinions based on our conversation.

Many thanks to Kathy for the interview, and for agreeing to reschedule them a couple of times, despite the thousands of emails in her inbox, and a zillion things to do after the TechCrunch debut.

Thanks!

-rsh

Listhub Acquires Point2; I Think of TS Eliot

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[EDIT: Please see the clarification posted below.]

I’ve been hearing rumblings about a big game-changing deal for a couple of days, and this morning, it’s been confirmed. Listhub, a Move entity, has acquired Point2 from Yardi, bringing all listings syndication in the United States under one roof.

From Celeste Starchild, General Manager of Listhub:

Move has acquired the Point2 U.S.-based syndication business to further our shared vision of delivering a single listing aggregation, storage and distribution service.  As one of our key partners, we wanted to make sure that you were among the first to hear this good news.

Point2 realized the benefits to the industry of having a single platform, and ultimately worked with ListHub to help bring it to fruition.  The ListHub vision is to provide the industry with a single platform to improve data synchronization between systems, organize appropriate data licensing provisions for participants, and solve for the fragmentation and duplication of efforts that occurs throughout our industry today. Combining the Point2 and ListHub technologies into a single platform is a giant leap forward in reaching these goals.

Benefits to the industry of the single platform include:

  • Better access to listing data for thousands of brokers and franchises who operate across multiple MLSs
  • Increased accuracy for online listings, as agent-entered listings will be transitioned to MLS-connected solutions wherever possible
  • Enhanced customer service to the industry through a single help desk
  • Ability to better measure the results of online marketing across sites and across MLS markets 
  • Leading data protections for all brokerages through ListHub’s comprehensive publisher agreements
  • Ability for software and website technology companies to focus efforts on innovation for REALTORS®, not managing data from multiple sources

How will the acquisition work?

  • The ListHub platform technology will be provided to all of Point2’s previous MLS customers (in the U.S.)
  • ListHub and Point2 will work collaboratively with each MLS to cutover all of Point2’s U.S. based MLS customers to ListHub over the next six months.
  • The MLS-connected Point2 syndication service will operate unchanged for each MLS market during the period prior to their ListHub cutover date to ensure no disruption in service.
  • Once an MLS market is transitioned, the Point2 syndication service will cease operations.

NOTE: While it’s nice of Celeste to say I am a “key partner”, I assume this was a blast email that went out to their actual key partners. :) As the main thing I partner with Listhub on is karaoke with their people, I doubt the phrase applies to me.

In any event… a couple of thoughts.

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Dear Realogy: What’s Stopping You?

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This is a brief note that I would have put on Facebook or something, except that such things get lost in the tides of time and Facebook’s rapidly scrolling updates. I want to be able to refer back to this at some later point.

At the recent NAR Leadership Summit, there was a panel of major brokerages and franchises. All of the panelists apparently expressed dismay at the number of MLS’s there are in the United States. Then Alex Perriello (my old boss, back in my CBC days) suggested that consolidation happen through acquisition.

From the Realtor.org story on the event:

Talk of a common platform quickly segued into a discussion of how many MLSs each of the large brokers had to join—and each of the panelists, at some point in the discussion, expressed support for MLS consolidation.

“It certainly makes sense for MLSs to start consolidating,” Peltier said. He suggested several smaller MLSs from the same region could partner to create “a consumer site that does not pick winners and losers,” referring potential clients back to the listing broker’s site.

Perriello caused a stir in the audience when he suggested that MLS consolidation should happen “through acquisition,” with larger MLSs taking over smaller ones that aren’t able to adapt.

“It is an exit strategy for some of them,” he said. “People won’t voluntarily say, ‘Well I think we’ll just close up shop.’”

Perriello reminded brokers that they can leverage a history of cooperation that real estate professionals in other countries can only dream of.

“The majority of brokers around the world do not have the benefits of MLS,” he said. “Competitors don’t even talk to each other much less cooperate with each other.”

Well, as someone who has actually spent time and energy and taken major professional risks to drive MLS consolidation via acquisition, only to run into the brick wall that is MLS governance in the 21st century, I have a suggestion in the form of a question.

What’s stopping Realogy from making offers to MLS systems today?

In Q2/2014, Realogy posted $1.5 billion in net revenues, with $269 million in EBITDA and $68 million in net income. Realogy also posted $198 million in free cash flow in the three months from April through June. It’s also a public company, who can offer stock in any acquisition.

I’ve heard Alex and others from Realogy complain about the MLS, about how many there are, about the need to consolidate, etc. etc. for a few years now. So here’s my suggestion.

Start buying the MLS yourself.

You have the cash. You have stock to offer in any deal, so the seller (usually an Association) has upside to look forward to. You’re part of the industry. You have deep talent in managing businesses. Go make an offer, especially in those large metropolitan areas where the NRT is active.

Start with MRIS in the DC area, which is a for-profit entity owned by twenty-some Associations. Offer them $150 million in cash and another $150 million in restricted Realogy stock so that those shareholder Associations can enjoy the upside of Realogy’s stock price rising.

Why not? What’s stopping you?

To those who say that the MLS can’t be owned by a brokerage, since its competitors would flee… there are three major MLS systems I know of (and others likely exist) that are broker-owned: MLS PIN in the Northeast, FMLS in Atlanta, GA, and NWMLS in the Seattle area. All are broker-owned, and the competitors have not fled the system. But if competition is going to be an issue, that’s easy to solve as well.

Offer to sell to brokerages in the affected MLS area shares in a new company that owns the MLS. So Realogy invests $300 million (in the hypo above), forms RealogyMLS to own MRIS, then sells $200 million worth of shares in RealogyMLS to other brokerages. Done.

If you need someone with actual experience in trying to do such a thing, I’ll be waiting by the phone. Or not, as the likelihood of actual action is probably in the neighborhood of the Jets winning the Superbowl this season with Geno Smith at quarterback.

The fact that this seems fanciful should alert us all to just why MLS consolidation remains a favorite talking point, but not an actual action point. We might all wonder why that is.

-rsh

Special Guest Post: James Dwiggins on Zillow/Trulia

The following was posted on Facebook by a friend, James Dwiggins, earlier today. James is not only a very smart guy — also one of the tallest guys in the industry — he’s also the CEO of Nexthome in San Francisco. Because this is long, detailed, and worthy of saving past what Facebook thinks it ought to be, I repost it as a special Guest Blog, with his full permission.

The original thread may be found here. I’ve taken the liberty of minor formatting for legibility but have not otherwise edited this. The image/photo to which the comments were attached is at the top.

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I’ve been traveling the past week so I haven’t been able to comment on the Zillow/Trulia buyout and I know many of you have asked for my thoughts.

Let’s set the stage first: Trulia was founded May 1st, 2004 and according to CrunchBase, they received 32.8M in venture funding before going public. Zillow was founded in January 2005 and according to CrunchBase, they received 92.5M in venture funding before going public. Both companies set out to change the way consumers search for real estate online and make money off the advertising revenue.

According to NAR, in 2001, homebuyers used Realtors 69% of the time when purchasing homes. In 2013, that number is now 88% of the time. While homebuyers continue to search more and more on non-real estate company sites, ironically they are also using Realtors more as well. My take: finding a home online is the easy part and constitutes about 5% of the entire home buying process.

The hard part begins once you want to make an offer and actually purchase it, which consumers understand to some degree. If they didn’t, those numbers would not be increasing like they have and lots of alternative models that past several years that tried connecting buyers and sellers online would have succeeded. In fact, almost all of those companies have failed. I’ve attached the actual chart showing the increase in Realtor usage from the 2013 NAR Profile of Home Buyers and Sellers.

With regards to everyone worrying about Trulia and Zillow becoming a real estate company or franchise. We all need to understand that this is not their model whatsoever or for their shareholders sake, shouldn’t be.

At the end of Q1 2014, Zillow had 52,968 premier agent subscribers. At the end of Q1 2014, Trulia had 66,700 premier agent subscribers. As everyone knows, their business model depends highly on having real-time listing data on their sites which is provided by brokerages and agents who in many cases are paying for premier placement.

If they became a real estate company, you could almost guarantee two things: 1.) 52,968 & 66,700 premier agents subscribers would likely stop advertising on these sites, destroying their revenue, and eventually the companies as well… and 2.) If Zillow and Trulia were real estate companies, they wouldn’t want competing agents advertising on their sites either. That would be allowing competitors to take away buyers and sellers from their own agents which makes no sense. It’s exactly why every real estate company and franchise doesn’t allow its competitors to advertise on their sites now. That would be counter productive to making money.

In other words, I can’t possibly see how Zillow and Trulia becoming a real estate company would make any sense whatsoever so we should stop worrying about this. If we as an industry are scared of this idea, then we should be paying closer attention to Redfin who is trying to make this kind of model work to some degree. They are not the first and they certainly won’t be the last.

Are Zillow and Trulia dominating the online real estate space and will they continue to grow? The short answer is yes… until either “organized real estate” starts listening to consumer needs and builds something they actually want and will use, or another outside entity creates it. Lots of companies create game-changers and then lose the throne. Think AOL, Netscape, Internet Explorer, IBM. It can be done and it will happen again including our space.

In closing, this is just two major online portals consolidating their businesses in a market that is fast becoming oversaturated as it is. They have just over 110,000 combined subscribers in an industry that has 200,000 potential subscribers at best. They’ll combine resources, streamline operations – (job consolidation) and hopefully become profitable. Please feel free to chime in if you see something different. RobKeith,ImranNobuAaron, I would love to get your take on this as well.

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I will add my thoughts in the comments.

-rsh

As the Real Estate World Turns

There is something about Zillow that brings out the melodramatic in the real estate commentariat, both of the professional variety and often more hilariously, of the amateur variety. The big bombshell from yesterday, of Zillow acquiring Trulia, has brought out some of the finest performances in a drama and in a comedy.

It’s an odd thing to see both massive over-reaction and huge under-reaction. But such is life in the funhouse that is the American real estate industry.

I’d like to look at a few and just… well… comment, I guess. I don’t know if I have much useful stuff to add, except snarky maybe. Though to be honest, sometimes, snark can be useful!

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