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.
