Editor’s note: This is the fourth of a five-part series.
A major conflict from 2001 that is just as controversial today involves who owns the listing data, who has the rights to publish it, and how that data should be displayed.
The battle over whether multiple listing services should have the right to display listings online or whether that right should be limited to brokers was raging with equal intensity back in 2001.
Should Realtors post their listings on Realtor.com? In fact, in 2007, I had the CEO of a major franchise organization tell me before a speaking gig, "Under no circumstances do I want you recommending that our agents send any of their listings data to Realtor.com."
The industry was also very concerned about there being a national MLS. That fear still exists today, even though Realtor.com and just about every major real estate company has a website where you can search listings on a national basis. In some cases, the online property links take the consumer directly to the local MLS feed of property listings.
Zillow storms the real estate industry
The real estate industry has a love-hate relationship with new technology, especially anything that disturbs the status quo. On March 1, 2006, I wrote a column with the following lead-in: "A hurricane on the magnitude of Katrina has just hit the real estate industry. Did you notice?"
When Trulia and Zillow first launched, they struck fear into just about every aspect of the real estate industry. Was their business model to become a brokerage? What were these things called "Zestimates"? What would happen now that consumers could access the value of their property online? Would these new sites put Realtors and MLS systems out of business?
In early 2006, Trulia was still in beta, and I wrote:
"Trulia’s goal is to become the Google for the real estate industry by working with brokers directly. This so-called vertical search engine will direct visitors to specific agent sites based upon the user’s search. This produces a better-qualified lead as compared to leads generated by Google, MSN or Yahoo.
"The Trulia search engine also provides comparable sales, links to listings, as well as a mapping feature. Since (the company) launched in July (2005), their beta search engine contains a fair amount of data from California and New York, but is still unavailable in many places."
While Trulia reached out to the brokerage community, Zillow generated more distrust than almost any other new technology launch. The threat from Zillow was that Realtors and MLSs alike would be forced to redefine their value proposition.
"Ever since its inception," I wrote, "multiple listing services have provided important sales documentation that was not available to the general public. Consumers who visit Zillow can access comparable sales data, market statistics that show whether prices in a given area are increasing or decreasing, as well as a property’s Zestimate (Zillow’s automated evaluation of what the property is worth).
"The market data is particularly useful for Realtors since it can help them persuade sellers to set more accurate list prices. It can also assist buyers in identifying how much they should pay."
More than five years later, the same issue still plagues Zillow; its Zestimates rely on a computer evaluation and that process can sometimes be more fraught with error than relying on an agent’s or appraiser’s judgment.
Whenever you use statistics to estimate the value of the property, you introduce a wealth of "error" into the process. There is no way the computer running the Zestimate program can know that one house has great privacy and another house with an identical floor plan is on a busy street with lots of noise.
As a result, Zestimates are accurate 95 percent of the time, within an error range of plus or minus 7.5 percent. On a house that should sell for $200,000, that translates into a price ranging from $185,000 to $216,125, for example.
As Zillow has continued to gather and expand its data, its Zestimates have become more accurate.
And the battle wages on …
The battle about who owns the listings data is still being waged today. At the Inman Data Summit, it was clear that there still is tremendous disagreement about who has the right to what: Does it belong to the brokerage or to the MLS?
In the meantime, Zillow and Trulia have become massively successful sites with 12-15 million unique visitors every month. Maybe by 2021 the industry will finally figure it out.
Would you like more timeless tips? If so, don’t miss Part 5 of this series Monday.