For most consumers, real estate is about houses. For the real estate industry, it’s about data.
Specifically, who controls that data, where it is displayed and who has the rights to use it.
Although it may sound very “dry” and technical, the fight over who owns and controls listing data is huge. Let me start by giving you a brief history.
Up until about a decade ago, the evolution of real estate data was slow and gradual. Back in the 1980s, properties that were submitted to the local multiple listing service were displayed in actual books that were distributed to real estate offices on a weekly basis. MLS 1.0.
In the 1990s, MLS systems moved online, thanks to this little breakthrough called the Internet. Agents became subscribers of their local MLS systems, viewed listings online, and the MLS 2.0 was born.
About this time, the National Association of Realtors (NAR) made a colossal and stupid mistake… the organization signed an “evergreen” (perpetual) agreement with a company called Homestore to share all listing data from all MLS systems with a site called Realtor.com. Short of criminal fraud or selling the company, Homestore (now known as Move, Inc) had indefinite, open-ended data rights to all MLS information.
Homestore then went to work on slapping together Realtor.com, a clunky, stupid, confusing site that was littered with advertising, technical glitches and careless inaccuracies. Consumers (and most Realtors) hated it.
So in 2005, along came Zillow. Privately financed, with clarity about what the consumer (not NAR or Homestore) wanted. The only problem Zillow had… no access to MLS data.
So Zillow built a site that initially worked off of nothing but public records. County assessor sites, tax rolls, public trustee’s offices… anywhere it could go to find basic real estate data, it went.
From that string of patched-together data, the dreaded “Zestimate” was born.
And over time, Zillow built a pretty powerful consumer-centric site with lots and lots of data… but not the ONE THING it needed to become complete, which was MLS listing data.
From 2008 to 2011, based on the strength of its platform and significant infusions of private capital, Zillow got traction and the site grew rapidly even without real-time MLS listings. During this stretch it surpassed Realtor.com as the number one most heavily trafficked real estate website in the world, a stunning (but predictable) blow to the arrogant leadership at NAR and Realtor.com, who continued to focus on advertising and its data monopoly over the consumer experience.
Finally, as more and more sellers and agents began clamoring to have their listed homes displayed on the most popular real estate website in the world, one-by-one local MLS systems began cutting deals to share their data with Zillow, which quickly leveraged that data into even more eyeballs, more traffic and more growth.
Zillow’s ability to sell “premier agent” and “featured agent” packages boomed, scores of telemarketing sales agents were hired, and real estate agents like myself began getting calls (which continue to this day) two to five times a week by Zillow’s tenacious agent-harassment specialists, offering “incredible opportunities” to buy sponsorship of local ZIP codes with online display ads that cost $1,800 to $5,400 per month.
Zillow’s revenue boomed ($323 million in reported income last year), Realtor.com tanked even worse, and agents were left to wonder who in the online world they could trust.
All to say, it’s gotten nasty and chaotic in the arena of online real estate. Agents and brokers are upset that listing data is being sold by local MLS systems (which are created and supported through agent subscription fees) to outsiders, mostly because of the ongoing failure of Realtor.com to deliver a consumer-centric product.
From all of this disorder… a significant opportunity for change has materialized, almost out of nowhere.
Enter “Upstream”, a new initiative from NAR that would create a single MLS portal for agents to use when uploading property data online. As it is being described, it will allow individual agents – not brokerages, not MLS systems, not Zillow – to decide which sites can display those listings online. That is a huge potential game changer, and a serious blow to Zillow, which continues to have to fight for access to MLS data that the public now demands and expects.
If agents control where the data is displayed, Zillow (the great disruptor) is suddenly disrupted. It’s an intriguing and ironic possibility, and one that could seriously and quickly damage Zillow’s $6 billion market cap on Wall Street.
The stakes are high and the consequences are real.
Now the question… how long will it take to create NAR to create the Upstream platform? Will it work the way it is intended? Or will the whole initiative crash, like so many other things NAR touches?
I get it. Consumers just want to buy and sell houses, and have access to data online. But in the world of agents, brokers, tech firms and yes, even Wall Street, real estate data is a gold mine, and battles will be fought for control of it.
The winners will get rich, the losers will go broke and agents will continue to question NAR’s relevance, wondering how the data genie got out of the bottle so easily in the first place.