Privacy Over Innovation: A Brief History of Real Estate Data(blog.suitey.com)
blog.suitey.com
Privacy Over Innovation: A Brief History of Real Estate Data
http://blog.suitey.com/a-brief-history-of-real-estate-data
3 comments
I don't understand why the Broker/MLS system even needs to exist in the first place. I've noticed more people selling their homes directly through Zillow lately -- shouldn't the internet be the ultimate platform for selling homes without forking over 10's of thousands of dollars to a broker?
Real Estate is strangely one of the last bastions of obviously disruptable inefficiency. Why do brokers deserve 6% for a purchase, or 2 months rent for a rental? It's absolutely crazy.
The best I can tell, they serve two functions: 1) They pre-screen "undesirables" for the landlords, allowing the landlords to avoid legal issues. (I'm not making a moral judgment, just observing behavior)
2) They negotiate higher prices for the seller. (This is just theory, per "Freakonomics" they seem more likely to hold out for a better deal on their own homes.)
So why in practice is it so hard to get rid of MLS? Because of their head start in the information monopoly, it is hard to replicate, and they have no incentive to let others into the game.
What's a good analogy? Look at how hard it is to unseat market data providers in Wall Street. Someone could beat Bloomberg, but only if they convinced all of Wall Street to stop using their feeds. Data providers usually only change when Wall Street says, "Let's create our own rather than give money to someone else."
Net - you would have to convince a meaningful (20%? 50%?) amount of brokers that they're going to get a larger market share of a smaller pie, that will inevitably send their old pie out of business. Or a TON of marketing money to convince a lot of home owners and buyers they're better off on their own.
I hope that someone pulls it off, because a lot of these brokers make investment bankers look like altar boys.
The best I can tell, they serve two functions: 1) They pre-screen "undesirables" for the landlords, allowing the landlords to avoid legal issues. (I'm not making a moral judgment, just observing behavior)
2) They negotiate higher prices for the seller. (This is just theory, per "Freakonomics" they seem more likely to hold out for a better deal on their own homes.)
So why in practice is it so hard to get rid of MLS? Because of their head start in the information monopoly, it is hard to replicate, and they have no incentive to let others into the game.
What's a good analogy? Look at how hard it is to unseat market data providers in Wall Street. Someone could beat Bloomberg, but only if they convinced all of Wall Street to stop using their feeds. Data providers usually only change when Wall Street says, "Let's create our own rather than give money to someone else."
Net - you would have to convince a meaningful (20%? 50%?) amount of brokers that they're going to get a larger market share of a smaller pie, that will inevitably send their old pie out of business. Or a TON of marketing money to convince a lot of home owners and buyers they're better off on their own.
I hope that someone pulls it off, because a lot of these brokers make investment bankers look like altar boys.
yeah whoever figures out how to have brokers not be sleaze balls is gonna make money. My view on the have/have not of a broker is that if you are buying you wanna make sure your property will increase in value so you need someone that really knows the area OR do a truckload of research yourself. Also the seller will probably pay the broker so it is a win-win for the buyer...
I don't see withholding MLS listings from online listing sites helping brokers in the future.
These listings won't get sold because people won't be able to find them online. As a result people will stop listing their homes with brokers.
I recently bought my first home, and the negotiating started with "since you aren't using a broker we can take $10k of the listed price". That was the selling broker's opening negotiation, before I even made my initial offer.
These listings won't get sold because people won't be able to find them online. As a result people will stop listing their homes with brokers.
I recently bought my first home, and the negotiating started with "since you aren't using a broker we can take $10k of the listed price". That was the selling broker's opening negotiation, before I even made my initial offer.
I wonder if Zillow and Trulia would ever consider hiring brokers to grow their revenue...
FWIW, I believe Redfin is itself a brokerage.
Doubt it, why would they when they have made a killing on data alone?
It could be difficult for them to sustain revenue growth once they've sold to a critical mass of brokers...
https://ycharts.com/companies/Z/revenue_growth
https://ycharts.com/companies/Z/revenue_growth