My Dearest Real Estate Broker,
NAR’s monopoly is up; it’s in its last gasping days—1,666 to be precise. They’ll still feed you and the press the same old propaganda of their prominence, as they have for decades. They’ll deny anything could ever replace the good old realtor monopoly and the MLS companies it controls. And they’ll hog tie you with ever more controlling rules and regulations to ensure you can’t break from the pack and innovate your way to success through creating edgy tools and services the market really desires. Instead those outside of the real estate industry will bleed them out, replacing them and controlling your destiny and your industry. This is unless you show a little initiative and intelligence as you realize your time is also at end if you sit complacent, and take it upon yourself to create radical changes before it’s too late.
Today You Are NAR’s Serf
Today (the first of 1,666 remaining) you have no control over your industry. The national association of realtors, NAR, tells your local MLS what to do and how to run their business. The local MLS tells you what to do and how to run your business (or they will kick you out, thus putting you out of business). You are locked down with NAR and MLS and IDX rules and everything you offer the marketplace looks just like everything every other broker does. NAR designed the system this way. You are just one of 1.3 million real estate marionettes and NAR pulls everyone’s strings. Things have worked like this for decades.
Then a few years back an industry outsider, Zillow and other corporations like them went directly against NAR type rules, offering the market innovative websites and now proceed to tell you to give them your listings. It’s a war of kings, each wanting control of the puppets—the serfs. They take your money through advertising, and again tell you what to do and how to run your business. Zulia is well on its way to replacing the MLS system; they will become your new king as they drain the life from your old one.
Zillow states that they do not want to be the national MLS, and the Demon believes them. Being merely an MLS would never satisfy their desires. They want to be the national (international?) MLS of homes, rentals, and all stuff coming soon to market. They want to be the database of all listing agents for sellers to choose from. They want to be the database of all buyer agents for buyers to choose from. They want to be the database of all loan options. Well, you see my point. Zillow is honest when they say “we don’t want to be [just] the MLS.”
NAR knows there is only one thing allowing them to survive and keep their monopoly status: national control of the MLS systems. NAR has controlled the database of home information since well before the phone-book-thick, inky, messy MLS books. (Who uses phone books anymore? Remember when the “yellow pages” was the controller of information for millions of businesses and everyone had to advertise there? What a great monopoly that was—pay up or no one will see you.)
NAR will do anything within its power to control the MLS information and protect their monopoly status. Fair enough, that’s their job—what is yours? (You probably have seen ever greater rules and regulations of information control with each new issuance of your MLS IDX agreement. You did read the details before you signed it, didn’t you?)
Your local MLS, being under servitude to NAR, will additionally do everything within its power to control housing data. Your MLS also knows that their survival is wholly dependent on keeping their monopoly status for housing data within their own market and not having NAR throw them out of the party. Yet even a few MLS systems are breaking away from NAR and directly feeding to Zillow. I can offer little reasoning for this—other than those MLS systems bit on the disinformation that Zillow does not want to be the national MLS system.
Yet both NAR and your local MLS will destroy you if you attempt to do anything giving you a competitive advantage outside of their rules—the rules designed to protect their monopoly status. Brokers come and go; the NAR is forever. Their goal is to keep all brokers operating under their rules, thus giving no one a competitive advantage, and most importantly ensuring their continued monopoly status, or so they think.
All of this leaves you being pulled apart by your two kings—each dragging you in opposite directions. Who will eventually win? Zillow or the “outsiders” like them. They are the ones offering the marketplace what they want. But Zillow has weaknesses that could give you dominance in your own marketplace—if you take advantage of them.
Such Control, Yet realtor.com Isn’t #1,–or #2
Since NAR and its MLS minions have monopoly status and control over all the housing information, why is the number one real estate website from an industry outsider: Zillow? Shouldn’t realtor.com, with vastly more information and a complete lock on housing data fed by nearly all MLS systems decimate a company coming in from outside the monopoly controlled real estate industry? Zillow and Trulia do not get the majority of their information directly from the MLS systems, yet they dominate the internet—combined doing three times the business of realtor.com. How?
The concise answer is that Zillow “broke the rules”—(well the realtor rules—the ones you have to live by), when they gave automated valuations (Automated Valuation Models, AVMs) and lots of information about homes to the public. NAR and your MLS would never have allowed such a competitive advantage to a broker back then.
The marketplace (buyers and sellers) loves innovation—the type that gives them what they desire. What fun Zillow offers: an automated valuation of your home within seconds. And even more fun, you can spy on your neighbor’s house and see what it is worth. And the most fun of all: getting all of this without having to talk with you.
What was the market’s alternative when Zillow first offered automated valuations? Call some random broker (perhaps you) handcuffed by the NAR/MLS rules. The potential seller leaves you a message, perhaps on a piece of paper written down by the office receptionist. You call them back. You agree to meet at their house two days later after their dinner for a walk through. You spend two hours there, until 8PM. You say you’ll get back with them after researching the MLS data. You crank that out the next day and call them back. Their kids have soccer that night, and there’s a school concert the following night. The night after all of that you were supposed to take your own family out for dinner and a movie—I mean it’s Friday. But you are too scared another broker will swoop in, so you trash your plans and meet with the home owners when they are available. You meet with them Friday after their dinner, explaining your comps and values until 8PM. At least you scored dessert while there.
So it took five days to come up with a possible value for their home through you. Zillow punched it out in 5 seconds. Zillow gave the market what they desired; you did not. Why then does realtor.com to this day (April 2014) still demand home owners suffer through this very same process? They want to protect their monopoly. Zillow gives the market what they want; they do it instantly; they don’t make them register, thus preventing some sales person they don’t want to hear from the means to bother them.
Directly above is what you see when you type in your address requesting a valuation at realtor.com—it’s not what the market wants. Sure, NAR says it’s to protect you. But your only protection is to perpetually innovate and offer the marketplace (your real boss) the stuff they desire the most. (Here’s a book you really need to read: Purple Cow by Seth Godin—get it). What did the market tell you they desire based on Zillow being the number one real estate site on the internet?
Now think about what NAR and your local MLS would have done if it was you, instead of Zillow, who offered the first automated home valuation on the internet some nine years ago. Can you spell guillotine? But imagine how different your business would be today if it was indeed you who had offered that first AVM instead of Zillow. (What, the market value of Zillow is upward beyond $5 billion.) Now realize there are thousands of very innovative people who want to destroy the current NAR system and completely change the real estate industry forever.
On the other hand, NAR and realtor.com and your IDX have offered the same old stuff to the marketplace for years. And don’t think this recent purchase of realtor.com by News Corp is going to save them. Yes, more people will see some kind of realtor.com fed data. But it’s the same old tired data the market has been migrating away from for years. The market receiving the same old stuff in greater abundance they are bored with already will not improve realtor.com’s usefulness to them. Somebody else will drop the kind innovation bomb the market truly desires and open the real estate market wide open, and realtor.com will continue to flounder after a short surge of exposure.
The Demon once read somewhere “sure, everybody knows K-Mart’s name, but still nobody shops there.” Sorry, I forget the source. The point being, everybody could find realtor.com on the internet before News Corp bought them, but they chose not to. Forcing the marketplace to stare at the same data they chose not to seek out just because of increased distribution channels does not equate to innovation based on market desires. Increased exposure does not equate to market innovation. So NAR and Move had better do their short-lived celebration by drinking champagne they buy at K-Mart.