My friend Eric Stegemann, whom many of you already know as a frikkin’ brilliant dude who runs Tribus, posted something on Facebook today and in our banter, got my thinking going.
Here’s his post:
And obviously, you can see my comments too.
I thought the similarities between car dealers and how they feel about automotive third party websites (like TrueCar) and real estate brokerages and how they feel about real estate third party websites (like Zillow) were superficial at best, because of vast differences in the business model of car dealerships and real estate brokerages.
But that got me wondering… what would it look like if real estate brokerages actually functioned like a car dealership did?
Without question, the big topics coming out of NAR Midyear Legislative Meetings were about RPR-AMP, Upstream, and the future of the MLS. I’ve already written a few posts about them, and expect to write more in the future. But lost in all of that was a big rebrand and relaunch by Move of Realtor.com. For what it’s worth, I really like the new logo and the rebrand. As Ryan O’Hara says in the Inman article:
“Everything’s about real — real knowledge, real data, real insight,” said Move CEO Ryan O’Hara.
We shall see whether Move can live up to that brand promise, given that it does not control the one million plus local touchpoints of their Realtor brand, many of whom are only distantly acquainted with concepts like “real knowledge” and “real insight”.
But this post isn’t about the rebrand. It’s about the ideas that appear in Realtor.com’s Open Letter to the Industry that was distributed at the MLS sessions. Here’s a PDF of the letter, courtesy of BayEast. The three bullet points are:
Respecting the economic interests of the industry by not commingling FSBO listings with brokerage firm listings;
Not displaying value estimates on “for-sale” properties because the local real estate professional is the best person to determine the value of a listed property; and
Displaying the online reputation of brokers and agents in a way that both meets consumers’ needs to find the “right” professional while also being done in a fair way for the industry.
I wonder if these goals are even achievable. Can this balance between consumer interests and the industry’s interests really be struck?
Reader, thinker, and frequent commenter Sam DeBord has written a rebuttal over at GeekEstate to my declaration of vindication re: IDX = Syndication:
IDX creates efficiency for brokers, which increases financial profitability for the group as a whole. Syndication is a less-efficient platform in terms of overall brokerage profits. Real estate is, on an annual basis, similar to a zero-sum game. There are only so many transactions, and commissions, that will occur based on the market. Financial profitability is dependent on earning as large a portion of that commission pool as possible.
Read the whole thing.
I think Sam’s written a thoughtful rejoinder, and introduced a hitherto unexamined argument: that IDX increases financial profitability for brokerages. I’d like to delve into that a bit.
I suppose you have to be a real geek about real estate industry stuff, but I do think this is an important topic for brokers, MLS, and even agents. You may be on the receiving end of some letter from a “copyright enforcement company” demanding thousands of dollars for unauthorized usage of photographs.
I’d listen, then read Brian’s post, and think about a strategy for dealing with this important issue.
This is one of those posts I write from time to time to figure out what I think about an issue. For now, that issue is trying to discern the possible direction of the residential real estate industry in the U.S. If you’re an agent and only care about something that will have a direct, immediate impact on your day to day business, I’d skip this post and go read this and this instead.
Basically, what I’m wondering is if the bull case for Zillow — that it will someday be worth $50 billion, as its largest investor has suggested — has any basis in logic. There are a whole lot of very smart Wall Street folks who think that Caledonia and others are simply out of their minds. A lot of brokers, agents, and industry folks would agree. If I had a nickel for every time I read or was told, “Zillow is worthless without our data”, I could retire now and buy that ranch I’ve been wanting ever since moving to Texas.
So for this post, I’m going to look at what has to happen in order for Zillow to be worth $50 billion at some point in the future. This doesn’t necessarily mean that I am bullish on Zillow. (And I own zero shares of Zillow or any of its competitors, unless one of my funds owns it without my knowing about it.) I’m doing this because trying to make the bullish case for Zillow results in some really interesting thoughts/observations about the industry as a whole.