For 15 years, you’ve heard about how the Internet was going to change everything in the real estate industry. Not too much has happened yet, right? Just wait — it will.

Never before have there been such huge companies and innovators wanting to take control of the real estate industry. Until recently, the standard top five franchises were engaged in yearly posturing, trying to get you excited about the latest advertising campaign and slogan, using the same old hyperbole about how important they are to the marketplace.

You now have News Corp. tossing a billion dollars into its strategy for dominance. Zillow has done a pretty good job of kicking the franchises in the teeth at capturing eyes and hearts of buyers and sellers on the Internet. The five largest franchise sites combined get about 2 percent of real estate search traffic; “Zulia” gets about 28 percent — a 1,400 percent difference. And now, some of the franchisor companies and largest brokerages are beginning to perceive what is happening within the market and desperately trying to catch up; some are even talking about creating their own portals. Your own local MLS is even trying to be the go-to real estate portal and take out Zillow. Everyone is throwing money at the real estate industry.

How does this affect you? Your life hasn’t changed much beyond having a shiny new smartphone or tablet. Otherwise, it’s working with emotionally charged buyers and sellers trying to get you to attain some unreachable goal on their behalf.

But the changes are coming, and you need to know what is happening within your macro-environment, how it will affect you and what you can do at your local level to prepare for and even take advantage of those changes. Let’s start right now by performing a “SWOT” (strengths, weaknesses, opportunities and threats) analysis on the major players’ positions.

The National Association of Realtors

NAR’s strengths lie in the facts that it is still massive and politically connected, it runs the MLS system, and it keeps most brokers afraid of breaking away — mostly because NAR controls the MLS systems.

NAR has weaknesses, though. Buyers and sellers don’t care about NAR; buyers and sellers care only about their needs and what happens for them at the transaction level. NAR is large and lethargic. Its goal is to protect its monopoly status and avoid radical change. NAR isn’t innovative — otherwise it would own realtor.com, it would have offered consumers the shifts they really desire, and Zillow would never have been born.

NAR could create massive innovation based on market desires and diffuse it using MLSs and broker members. This strategy would keep everybody as members, would battle back against Zulia, but all brokers would stay at the same level — no differentiation between them.

As for threats? Extinction. A home does not need to be listed in the MLS, and this takes out NAR’s biggest stick in the marketplace (43 percent of buyers found the home they actually purchased on the Internet all by themselves, according to NAR’s 2013 survey). Brokers and home sellers could go directly to Zulia and the other non-NAR-controlled portals. Zulia and News Corp. and others want all homes on their sites, perhaps replacing the MLS system. Buyers don’t care about any of it — they just want access to homes.

Franchises

Franchises still have some cash to spend on innovation, which is an important strength. They also have a current pool of brokers to pull cash from to spend on innovation.

Buyers, however, don’t care about franchise names (only 3 percent noted that company affiliation was important to them, NAR survey 2013). Buyers and sellers don’t use franchise websites; the top five franchises combined receive only about 2 percent of real estate portal traffic searches. They are scared to take a huge leap in innovation as it requires walking away from their crumbling empires.

The opportunities for franchises are the same as NAR’s, with the exception that a real innovative offering based on market desires could quickly differentiate one franchise from all of the other franchises.

And franchises face the same threats as NAR, with the exception that the brokers on the streets meeting the needs of buyers and sellers mean more to the marketplace than NAR’s Realtor logo.

Portals: “Zulia”

Zillow and Trulia have market momentum — they currently control the eyes and hearts of the marketplace on the Internet and have the old guard panicked. Portals also have cash investors, and therefore money for innovation (and people expecting a high return pushing them every second). Zulia is the “black hole” of portals with its gravitational pull sucking in nearly everyone: brokers, MLS companies, sellers and buyers.

But Zulia’s done nothing truly innovative since the AVM (automated valuation model) hit 10 years ago. Portals are falling into the NAR-franchise trap of blowing a lot of money on television commercials and less on innovation.

Still, the portals’ momentum and Internet control leveraged with radical, market-driven innovation could kill NAR, the MLS system and the large franchises within five years.

As for threats, small outside innovators could run around the portals — but Zulia will just buy those and assimilate that innovation. News Corp. could offer a radical change and has stronger channels of distribution — plus the ability to bias people through various news mediums.

We’re not finished yet. Tomorrow, we’ll analyze realtor.com and your own SWOT standing, and then we’ll look at action steps.

Creed Smith is living the creation and implementation of innovation via REalMARKABLE.com, QValue.net, DemonOfMarketing.com and DenverInvestor.com (coming soon).

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