Although I’ve sworn off writing more about syndication, like Michael Corleone, just when I thought I was out, it pulls me right back in.
So for my return column for Inman News, I thought I’d take you on a merry tour of the River Nile Denial that plagues the real estate industry.
We start our excursion at the Port of Redfin, where we find the local harbormaster crowing that the portal sites have bad data.
Windermere and Redfin just published a study showing that across 11 major U.S. cities, local broker sites such as Windermere.com, Redfin.com and LongandFoster.com have about 20 percent more agent-listed properties than two national portals, Zillow and Trulia.
The study found that broker sites display new listings seven to nine days faster, and that broker sites record sales faster too — almost two out of the five listings on Zillow and Trulia are actually no longer for sale, a problem with only 1 in 1,000 of the active listings on Redfin.
Redfin points out that an "independent real estate technology consulting firm" conducted the study. By that it means The WAVGroup, and "independent" here is the same way that Karl Rove’s American Crossroads is an "independent political action committee."
After all, WAVGroup’s Victor Lund was the first to raise the problem of the "three-headed monster" and is one of the deans of the anti-syndication movement in real estate.
Nonetheless, the point to be made here is that Zillow and Trulia have crappy data. Ignore the strange silence about Realtor.com for the moment, as that gets in the way of a good narrative.
Our next stop is the wonderful beachfront town of NAREP, the National Association of Real Estate Professionals. This is a new village apparently dedicated to stomping out the scourge of syndication. We can stroll through the wonderfully designed website and marvel at the curios for sale at the bazaar. Here’s one:
"When real estate professionals create a new home listing in MLS, we often authorize the sharing of that listing with third parties. This process is known as listing syndication. Due to the poor standards currently in place, the listing then enters the proverbial ‘WILD WEST.‘"
NAREP’s entire mission, it appears, is to end listing syndication. Apparently, in the early days of the 21st century, being a "real estate professional" is synonymous with ending syndication. All that ethics and book learnin’ and customer service-type stuff don’t mean squat, but by golly, ending syndication abuse is the core of professionalism.
The tragicomedy of l’Affaire de Syndication is that the assumed solutions are so bereft of both imagination and simplicity, and filled with enormous holes in logic.
Consider the cri de coeur from Redfin. Although Redfin doesn’t come out and say what the solution to crappy data on Trulia and Zillow ought to be, it appears from the post that the solution they would like to see is one where consumers abandon the inaccurate portals in favor of brokerage websites, like Redfin’s.
Two problems with that.
First, it appears that consumers do go to Redfin, and do like the accurate data there. They just don’t use Redfin for the transaction.
I have heard time and again from Realtors, particularly in Southern California, that they would send their clients to Redfin.com to do property searches, to use the wonderful tools that Redfin provides, research neighborhoods, etc., because they know that those same clients would just call them to buy the homes found on Redfin.
Redfin’s problem — and by extension, the brokerage’s problem — isn’t that consumers are going to the portals with their inaccurate data, but that consumers are refusing to do business with their agents after having used their accurate data-boasting websites. How having more accurate data helps that problem is as yet undiscovered by real estate scientists.
Second, if the problem of inaccurate data is so serious and so deleterious to consumers, wouldn’t the simple solution be to provide the portals with accurate data from the MLS? Oh, heavens good golly, no! That simply cannot happen. It’s against the laws of physics or something!
The other "solution" — the one advocated by NAREP — is to stop sending listings to the aggregators in the hopes that consumer behavior would change in the face of such concerted action by the industry. Even assuming for the moment that there is absolutely no antitrust problem with such concerted action … when was the last time you saw consumer behavior changed significantly because of an industry’s actions? Record companies going after Napster? Airlines and Travelocity?
Then consider this consumer-centric argument from NAREP:
"Unless we pay syndication sites not to remove our contact details from our listings, prospective homebuyers are directed to agents who are UNFAMILIAR with the home, but who have paid for the lead. These agents are then free to promote other homes or areas that they do know well. The result is an epic fail. Buyers miss out on the best INFORMATION, and sellers miss out on valuable showing OPPORTUNITIES."
I agree with NAREP that sending potential buyers to agents who don’t know jack about the property or the neighborhood is bad juju. What I have never understood, however, is why syndication is taken to the woodshed here, while IDX is lauded with praise and blessings.
The Syndication Bill of Rights by Clareity Consulting literally starts with this:
When we talk about syndication, let’s use Brian Larson’s definition: "Listing syndication is the distribution in bulk of active real estate listings (listings currently available for sale), by or on behalf of the listing agent or listing broker, to sites that will advertise them on the Web to consumers, excluding IDX sites and VOWs operated by MLS participants/subscribers."
How … convenient. Yet, every single day buyers miss out on the best information, and sellers miss out on valuable showing opportunities, because the prospective buyer landed on an IDX website operated by a MLS participant who didn’t know jack diddly squat about the property or the neighborhood, and decided to steer the customer towards one of her own listings, or an area she does know.
Here’s the thing: When you dig deeper into the root cause of the syndication kerfuffle, what you run into is the inherent problem of contemporary real estate. And it isn’t lack of mentorship. It is buyer agency, in the information age.
The reason why so many are so up in arms about portals, about syndication, about accurate data, and so on and so forth is because buyer agency is … what’s the NAREP term? Oh yes, "an epic fail."
Keep in mind that buyer agency wasn’t created to serve consumers; it was created to minimize litigation risk for listing brokers who were getting burned by subagency. Add the Internet, and buyer representation went from bringing a client with whom one is already working to a listing, to using listings to get buyer clients in the first place. The whole topic is long and detailed, but as pertains to syndication brouhaha, problem of buyer agency is at the heart of it.
But get rid of buyer agency and you undermine the entire system of American residential real estate: cooperation, compensation and MLS membership which enforces them.
So, rhetorical question: Do we want to solve the underlying problem of the broken thing that is buyer agency? Or should we, like Cher, wish we could turn back time? Or .. third possibility … should we leave the whole mess alone, fix data accuracy issues by *gasp* cooperating with the hated portals, and focus on things like … oh, I don’t know … superior customer service?
I know which path I would recommend. But denial ain’t just a river in Egypt, and far too many folks seem determined to take the scenic tour of that particular non-river. I must warn you, though. The Nile flows into the sea where dolphins play catch with sunlight on the waves, but Denial flows into the desert, where stands a broken statue amidst the swirling sands, inscribed with these words:
My name is Ozymandias, King of Kings
Look on my Works, ye Mighty, and despair.