Editor’s note: Inman News founder and Publisher Brad Inman invites you to join the discussion around his recent piece, “Real estate disruption may not be what you think it is.” See responses by Joseph Rand, Norm Werner and Galen Ward, and submit your own guest opinion piece to [email protected]
A few weeks ago, Brad Inman argued that Zillow and Trulia are on a course to make multiple listing services and brokerages obsolete. Brad challenged brokers to “completely reorient their business and value proposition around the reality of the portals.”
Brad didn’t explore what that “complete reorientation” meant, and many brokers have glumly begun to cede the future to the portals. Resistance to the portals, some feel, is futile. But coexistence is necessary.
In almost every industry, consumers start online with an Internet portal. Kayak has more traffic than Delta Airlines. AutoTrader.com has more traffic than CarMax. Google has more traffic than Amazon.
Yet plenty of folks find their way from Kayak to Delta, from AutoTrader to CarMax, from Google to Amazon. Relatively few come from Zillow to Century21.com.
Fortunately, the goal for a broker isn’t to get more traffic than a national portal, just to get more traffic than the broker had before. It’s hard to imagine how brokers will meaningfully support our agents or serve our customers without our own growth strategy on the Internet. With American Internet usage doubling every five years, there’s plenty of traffic to go around.
Rather than the brokers “completely reorienting” to the reality of the portals as they are today, the two parties have to work together to give real estate consumers a cohesive online experience. We don’t have a sustainable partnership today because we haven’t imagined for ourselves an online role that complements the portals.
Where the portals are national and broad, our role is local and deep: for the serious homebuyer, no portal has the information we do about the homes we’re selling, with hundreds of locale-specific fields that national portals aren’t designed to handle. Over time, brokerage sites can also become a rich repository of local insights from our agents about the neighborhoods we live in, the homes we’ve seen or the offers we’ve made.
A model of Internet coexistence
A model of Internet coexistence based on national breadth and local depth will give the consumer the most complete real estate experience, but we need to make a few simple changes through our MLSs to create a balanced Internet ecosystem.
Brokerage sites, including Redfin, should drive more traffic to listing brokers
In the Internet Data Exchange (IDX) feeds shared with other brokerage websites, MLSs should include Google-friendly links to source listings. Requiring every MLS subscriber to link to the source listing will ensure that brokers with more listings get much more traffic, from other brokerage sites like Redfin, and from Google.
Support the portals as a directory, not a destination, for brokers’ listings
The portals insist that they are advertisers, not rival sites, for the brokers, but our postings on their sites don’t have the basic attributes of an ad. The MLS can make it easy to syndicate a posting for every listing to every portal, but these postings should be just that — a posted ad, with a few photos, a price, basic details — not the entire listing.
The portals need to identify the listing broker prominently, with a link that appears on desktop and mobile browsers wherever the address is displayed, so consumers can easily find the full listing on the local broker’s site.
Google does not display Amazon’s entire Web page about a TV or a book in a Google search result. Facebook shows a snippet of a New York Times article with a linked photo and headline to read the rest on nytimes.com. Any Trulia, Zillow or realtor.com visitor with a serious interest in a broker’s listings should end up on that broker’s site to evaluate the full listing.
Advertise listings on portals only while the listings are for sale
We walk through our clients’ homes, photographing and describing each for the purposes of selling it, sharing that information with other websites as part of our fiduciary duty to promote the property, while it’s for sale, to the broadest audience. But the portals often keep these property details on their sites in perpetuity, without regard for local privacy customs, removing only the attribution to the broker who provided the data.
Imagine if a roadside billboard promoted a concert but only on the condition that the billboard be allowed to display the promotion indefinitely, even a decade after the concert had passed, in order to lure its audience to attend concerts from competing bands. This is what the portals are doing with listings.
Ask the MLSs to represent us on syndication
The deals now being struck between brokers and the portals are often on terms that benefit the portals, not the brokers. The brokers Redfin talks to do not fully understand the contracts they signed, and have no one working in compliance to see that those terms are enforced as the Web changes. We created and funded MLSs to hire lawyers, engineers and compliance managers who could share listing our data with the world in a thoughtful, even-handed way.
Given the asymmetry in negotiating power and expertise between the portals and a local broker, the brokers need the MLSs to negotiate and monitor compliance on our behalf, but more aggressively than the MLSs have in the past.
Why is Redfin taking this position now? The brokers are now permanently licensing data to the portals, gaining leads today at the cost of our long-term Internet presence, and ultimately our ability to meet customers on our own. The portals offering such deals are asking us to trade in fishing poles — the unique data that powers our own website — for fish — contacts for our agents.
The risk if we forget how to fish is that we may all have to rely on one fisherman to feed us. If one portal rapidly takes a dominant position over the other portals, what standing will we as brokers have to resist price increases or other changes in terms over time? There are few precedents in Internet history where businesses have turned over a near-complete copy of their databases in an exclusive deal with a company, and none where a consumer company has abandoned its own channel for meeting consumers.
Redfin’s only qualification to create a more balanced partnership is that we finally took the time to understand data licensing, we don’t currently depend on the portals for much of our business, and we are ourselves a brokerage.
Some brokers won’t listen to us because of our history of rabble-rousing. That was seven years ago. Since then, Redfin’s 1,000-plus agents have taken our customers on tours of more than 500,000 listings, and closed 30,000 Redfin sales, all working across the table from agents at other brokerages. Redfin’s agents will list more than 4,000 homes for sale in 2014.
The brokerage community still has major differences, depending on our size and capital to invest in technology, but we all have far more in common with one another than with a portal, and we have a framework in the MLSs for making sure no broker exploits another. Outside that framework, we can’t blame the portals for pursuing their best interests at the expense of ours.
Our role as brokers in a fragmented marketplace requires us to imagine a future in which we share data and traffic with the portals so that consumers can see all the information available about a home for sale, across the Internet. If we strike the right balance, we can support the portals and still maintain our own relationship with Internet consumers. We just have to work together, based on a simple, shared vision of the portals’ role in the future, and our own.
For the first time in our history, Redfin wants to be a part of the conversation about how we work together. We’re going to the National Association of Realtors’ midyear conference in Washington, D.C., this week, and look forward to talking in person with our peers about how we as brokers share data. We hope to talk to more of you soon.
Glenn Kelman is the CEO of Redfin, a real estate brokerage. Follow him on Twitter or email him at glenn (at) redfin (dot) com.