After two more months and some handful of extra days, I will turn 37. That age doesn’t seem so bad to me. It seems youngish. For that sort-of-young-age, I have now spent more than half of it in the real estate industry. That’s the only industry I have ever known. I thought I knew the lawn mowing industry, but who could know an industry when they’re 15? I didn’t know the real estate industry all that well for most of my life, indeed I’d say I have only fully understood the industry for the past few years. Any agent who is newish to the game who claims to know the industry really cannot. It takes some time in these trenches, even though the trenches that I spend my days in are lined with green grass and filled with super clear water. Also, I’m in a boat. But still, the industry.
Changes in this industry have come stubbornly since forever. The very notion of what we now know to be the MLS was foreign to the industry just 40 years ago. For the uninitiated, the MLS is a listing syndicate service that hosts the listings of groups of Realtors. Chicago, they have an MLS. Their MLS is different from the MLS in Austin. The MLS there is different from the one in Lake Geneva, and so on. The MLS has been uniquely important in changing real estate over the past several decades, and now the time has come when it must be said: The MLS must die.
Die it must, but it will not go quietly. The MLS will not simply refuse to eat, and refuse to move, and die in place. The MLS will eat organic and whole grain, it will exercise like mad, and it will take vitamins and medicine and seek out all that conventional medicine can offer and whatever the natural-types have- it’ll take that, too. That’s because the MLS is big business, and though MLS’s are fractured and localized, they provide jobs and revenue and they have been, up until now, very important. They’ve been this way because they implement rules that their Realtor members must follow, and no matter how onerous these rules may be, they are followed and obeyed because without the MLS the Realtors won’t be able to get their listings out to the buying public. The information that the MLS’s cull has been, up until perhaps seven or so years go, closely guarded. Syndication was difficult, frowned upon, and scarce. The MLS’s held the data, the Realtors were forced into paying to both provide and access the data, and the public went to the agents so they could have access to that golden data. Then Zillow came along and blew the whole thing up.
But they didn’t walk in and blow it up. In fact, Zillow reached key partnerships with the National Association of Realtors, and provided a national portal through which all real estate listings might be visible. At first, Zillow was just one of many. In fact, search for a house listing right now and you’ll find two forms of search results. First, you’ll find a billion national style real estate sites like Zillow, Trulia, Homegain, Realtor.com, etc and etc, and then you’ll find those same results on brokerage sites, both national franchise players and small mom and pop shops. That information is accessed for the individual brokers through an IDX system, which is effectively a system that charges brokerages to receive the information that they were charged to provide, which is an outrageous cycle that Realtors have been forced to abide. This listing information is everywhere, relatively loose in format, questionable in accuracy, and in some cases completely and blatantly wrong. But the key to understanding the current evolution is that the information that was once private and accessible only through fee-based membership is now public. The curtain hasn’t just been pulled aside, it’s been torn down, trampled on, and burned to a fine ash.
This, of course, has been good for the consumer. It has been good for the Realtor. It has, however, rendered the middle man- the person who is paid to collect data and then sells that data to Zillow and others- completely and utterly unnecessary. Rather than drone on and on, it might be easiest to explain the current role of the MLS by this snapshot from the movie Office Space:
{Scene Initech. Bob Slydell and Bob Porter are interviewing Tom.}
BOB SLYDELL
So what you do is you take the specifications from the customers and
you bring them down to the software engineers?
TOM
That, that’s right.
BOB PORTER
Well, then I gotta ask, then why can’t the customers just take the
specifications directly to the software people, huh?
TOM
Well, uh, uh, uh, because, uh, engineers are not good at dealing with
customers.
BOB SLYDELL
You physically take the specs from the customer?
TOM
Well, no, my, my secretary does that, or, or the fax.
BOB SLYDELL
Ah.
BOB PORTER
Then you must physically bring them to the software people.
TOM
Well…no. Yeah, I mean, sometimes.
BOB SLYDELL
Well, what would you say… you do here?
TOM
Well, look, I already told you. I deal with the goddamn customers so
the engineers don’t have to!! I have people skills!! I am good at
dealing with people!!! Can’t you understand that?!? WHAT THE HELL IS
WRONG WITH YOU PEOPLE?!!!!!!!
Tom is the MLS. The Bobs are, increasingly, everyone else. The MLS is useless, unimportant, and within three years there will be a national MLS that Zillow will run. Realtors will submit their listings direct to our Zillow Overlords, and consumers will be able to do the same. Zillow will charge the Realtors to take their listing information, and then Zillow will use that information to generate leads which they, in turn, will sell back to the Realtors. Under my prophecy it might be easy to ask, “Gosh, Dave, it sounds like the Realtors aren’t necessary either, so when do we get rid of them, too?” Snappy question, and while I’d easily argue that no algorithm can take the place of hyper-local knowledge, the answer to your question is rather simple. Realtors can’t go away because there’s way too much money to be made off of us.