Inman’s Real Estate Connect SF 2010 has come and gone.
It was perhaps the best Inman show ever, thanks to new Inman CEO Tim Smith and his team. The event has never been produced more thoughtfully.
This was my 13th Connect SF event. This year, more than ever, I enjoyed seeing so many people who have, like me, hung around this industry through boom, bust, success, failure and years of work in a business environment that might charitably be called unique.
All because real estate just really matters.
It was a great week.
Below I’ve shared just a few of the things I took away from the event.
The online real estate category is overdue for realignment
The fact that it’s hard to make an online consumer play work in real estate has been plainly obvious for years. There were only three big Web success stories to come out of the first Internet boom (LendingTree, HomeGain and, for a time, HomeStore). The second wave of online real estate innovation – that which commenced in 2005 – is now overripe. Investors are eyeing the exit doors anxiously. No one’s killing it on revenue. The model of selling ads on top of listings promoted for free isn’t going to support 8-10 large Web properties much longer.
We’re going to see consolidation in the coming year. Some thinning of the herd.
The Zillow/Yahoo! Real Estate partnership is just the beginning. I initially dismissed this deal as a product of Yahoo’s effort to unload non-core properties to partners. It was this, but it’s also more. It begins the climactic battle between Zillow, Trulia, Move.com and a handful of others to write the denouement to online real estate’s Web 2.0 era.
I don’t know who wins this battle, but I think we will see casualties in the coming year.
MLS is where the action is
I realize this is like saying that the future of American fashion can be found at a Rotary luncheon. But here’s the thing: the MLS isn’t sexy, but at this point it’s just about the only thing that matters if you care about the future of real estate.
I have long thought of the MLS as the dorky kid on the schoolyard the cool kids pick on one day then sweet talk the next for help with their homework.
And now, after the internecine discounter battles, after the DOJ, after the RPR freak-out, everything – from the future of online real estate innovation to the real estate compensation model – hinges on the ability of those dorky kids to stay out on the yard.
This really hit home for me during the MLS session I moderated.
Mike Wurzer, an MLS software vendor, rejected the notion that the MLS system is broken, arguing that what we have now is the rational product of a free marketplace.
Joel Singer, the CEO of the California Association of Realtors, who spent the past three years trying to change what he perceives to be a flawed system only to fall short of that goal, made a gutsy and passionate argument that the MLS is inefficient to the point of jeopardizing the long term interests of practitioners.
But it was Simon Baker, an outsider, who crystallized the discussion. As someone familiar with real estate around the world, he pointed out that the American MLS system’s cooperative dynamic holds together a compensation structure anomalous in its plenitude and potential for conflict.
It was a moment that took the discussion just far enough outside the usual lines to make it clear what’s really at stake in the seemingly esoteric debate about the future of MLS.
The brokerage discussion is finally cleansed of political poison
The discussion about innovation and disruption in real estate brokerage reached its nadir on January 10, 2007.
It was on this date that Allan Dalton, who was then President of Realtor.com, “debated” Glenn Kelman of Redfin at Real Estate Connect New York. It was a showcase of real estate’s most regressive, insecure and irrational tendencies.
Dalton won the battle on stage but lost a lot of hearts and minds.
That was a good thing, because when Kelman appeared on stage last week in a discussion with Greg Rand of Better Homes and Gardens Rand Realty, he was able to participate in a useful debate about the brokerage business model.
Kelman and Rand talked about operational performance. Agent productivity. And the core value a brokerage provides. Imagine that!
There were some interesting moments. Rand argued that brokerage companies must purge their offices of unproductive agents while failing to explain the messed up incentives that keep almost all of them, including his own, in place. Kelman talked about customer service and trust while having to acknowledge that he hired a Russian spy.
The next day, Sherry Chris, CEO of Better Homes and Gardens Real Estate, a Realogy brand, stood on stage to highlight a new website she had built to index and explore just the sort of small, innovative brokerages the industry used to demonize.
These were moments of leadership and sanity.
If you want to innovate in search, forget almost everything but mobile
Yes, you and I both know it by now: “Mobile is huge!”
I won’t belabor that point. But I will share one observation: As a tech executive demoed his company’s latest mobile app (it’s fantastic, but still weeks from release) it hit me just how little time it took for the real estate search experience on the handset to become better than that on the desktop Web.
Think about it: How much difference is there, really, between the Realtor.com of 2000 and the Realtor.com of 2010? Aside from map mashups and some data overlays, the experience is basically the same.
But the mobile experience just keeps getting better, faster, than anything we ever saw on the big screen. I don’t think that’s going to change. I think it’s going to keep accelerating.
Mobile is “huge,” but it’s also going to be the platform on which the future of online real estate will be written.
More to come
I took a lot more from last week, but I’m over 1,000 words now and you’re probably fading. I’ll be working through other thoughts from Inman right here in the coming weeks.
If you were at the event, what did you come home thinking about?
Disclosures: I used to be president of Inman News and they are also a 1000watt Consulting client; Better Homes and Gardens Real Estate is a 1000watt Consulting client.
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Thanks for the summary, Brian. I agree that this Connect was one of the best, and congratulate Tim, Madelyn and the rest of the Inman crew. I also congratulate you, for selecting and organizing a great list of topics and speakers. Excellent job.
Regarding my position on whether or not the MLS is broken, I’d rephrase it slightly to say that the MLS isn’t broken as it, like other organizations, responds to market forces. Those responses may be too slow for some, but there is little question that MLSs are responding to market forces regionally and nationally.
While I also agree that the compensation issues Simon mentions are important, the real question is whether cooperation the MLS facilitates in collecting data is independent on the cooperation on compensation. Can you have one without the other? I believe so, and that’s why I believe the MLS (local, regional, and national) has a long-term value proposition in facilitating cooperation in collecting, organizing and sharing listing data.
Lastly, I do believe the MLS is broken in one very important area: The lack of data standards at a national level. Though there are data localization needs, there remain unnecessary disparities that increase costs for consumers, brokers, agents, MLSs, vendors, listing portals, and everyone involved in organized real estate. To that end, I appreciate your arranging the panel on data standards during the MLS track, and I hope we (me, Travis Wright from RESO and Rob Overman from LPS) contributed a bit of clarity to how standards may be achieved.
Michael -
You raise a good question about whether or not offer of compensation is a prerequisite for continued cooperation. I am not sure what the answer is either, but my sense is most MLS execs view it as their “secret sauce,” which I think is risky.
As for standards, why, in your opinion, have we seen so little movement there? What’s the argument against a true standard?
I don’t believe anyone makes an argument against a true standard, the challenge is just moving from having a bunch of data (and people dependent on that data) that is not standardized towards systems that promote standards. It’s just a lot of work, and not very exciting work either. This is a good example of why I argue that market forces do work in the MLS industry. In many parts of the country, there is little near-term economic incentive to doing the work to implement more standards. However, in places like southern California, where the overlap of markets is significant, the economic motive is present and that spurred on the creation of CARETS.
During the data standards panel, we discussed how similar efforts are occurring right now in many other parts of the country as well, which begs the question as to how a national group like RESO could or should step to the plate with a national standard. Either way, there are groups like COVE (about 20 of the largest MLSs in the country) that are working hard on standards and that will result in progress in the coming years.
Which leads me to another point I made during the MLS Re-Boot panel: We’re all often impatient with the rate of change because we lack a proper perspective on the total arc of change. Because I just returned from the chiropractor, I’ll use that as an example. The pain in my lower back is from years of lack of care, and that’s not going to be corrected overnight. It takes time and patience, and, importantly, such patience is a lot better than the alternative of surgery.
Lastly, another potentially useful analogy for the MLS is Facebook. Slashdot just reported on how Facebook’s customer satisfaction is “abysmal”, in part because Facebook changes their terms of use frequently. Similarly, the cooperation in content creation by the MLS is due to a solid understanding of what can and will be done with the content, and so changing the rules needs to happen with care so as not to disrupt the cooperation that created the value in the first instance.
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As for standards, why, in your opinion, have we seen so little movement there? What’s the argument against a true standard?
Any efficiency gained by standard data formats would be efficiency gained by making it easier to consolidate MLSs. If the systems can’t talk to one another, agents who work near borders must belong to more than one. If they can they need only belong to one. What is the compensating factor, from the MLS point of view, of incurring the cost of transitioning their systems to a new standard? How does it gain them fees? It don’t. It might happen if enough MLSs feel threatened by something like a RPR.
I agree with Joel Singer…the system is broken. I’m my mind the only reason people disagree, I that realtors refuse ti see their business through the eyes of consumers. The MLS supplies nothing more than basic industry gobbledygook. Read a few listings and you’ll be scratching your head wondering what the agent was talking about. Realtors want consumers to search for homes the way that they (realtors) want them to, but consumers constantly complain about it an reject that notion…ence the reason that consumers wait longer than ever to contact a realtor. Searching for and finding someones dream home doesn’t have to be such a time consuming and frustrating experience…but realtors make it that way to preserver the usefulness. The MLS is void of valuable information and with anything that resonates with today’s buyers…it’s something only a realtors could love.
As I’ve been saying my while caree…realtors don’t get it. Selling homes isn’t about the realtor and what they think is good…it’s all about what consumers think and ultimately think of us. Consumers are talking, but no one listening.
The MLS model is broken…sort of. It really depends on the MLS. Some get it, some don’t. I belong to an MLS that sort of gets it. They all however forget who the MLS customer really is, the agent. The agents customer is the buyer and seller. We need to do a better job of connecting the dots.
Case in point. A small MLS on the coast of NC is notorious for being very difficult to deal with. Last year, in an effort to force agents to use the MLS’s own solution, they made it economically very difficult for outside vendors to come in and make use of the data. Competition was stymied. This hurt the MLS’s customer, the agent and in turn hurt the agent’s customer, the buyer and seller. It did this by limiting where and how the information got presented.
As far as mobile goes. Yes we are seeing quite a bit of innovation. I think this is because like social media, the technology has moved much faster than the gatekeepers (MLS) have been able to digest. They were carried along by the wave instead of building dams to block the flow much like we have seen on the desktop.
The three big things I have seen that have happened in real-estate these last couple of years are; mobile, list aggregators like ListHub, and Google. I think it will just get better as Google continues to mashup all the data they have into a cohesive platform where you can find anything and see everything.
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I don’t think the MLS is broken, it is only as good as the information that is put into it and how that information is presented and distributed. Work on the presentation and the way the information is distributed and it will be healthier.
What is broken is the commission model. Buyer and Seller commissions should be split. Agents across America should not be asked to represent buyers without compensation for their services. Buyers should not be allowed to take advantage of free services that they perceive to be their right. Make them pay for the services they receive (consultation/education, research, showings, etc…), we will have more serious buyers. Reduce the selling price by the amount of the selling agents commission and roll the buyers commission expense into their loan. End result, even Steven, and the agent is paid for consultative services whether there is a sale or not. Nobody works for free, Realtor’s should not be expected to either.
The problem with the MLS is that it doesn’t know what it is. Is it realtor to realtor “marketing”…in which case its terrible, or do they think it’s a marketing machine for consumers, in which case it really sucks at being. Either way it’s a a terrible product and only has value to those who want to believe that. Having your listing floating around somewhere in cyberspace and hoping that someone finds it, and falls in love with it and calls the agent is nothing less than looking for a miracle. Time to start over.
Its unbelievable that the MLS is the best the industry and all the major brokerages can come up with. The only ones impresses are realtors….not consumers.
It will be interesting to see how websites change for mobile users. The majority of real estate websites don’t work well on mobile devices.