The cost of free real estate information
Letter to the Editor
By Inman News, Tuesday, January 13, 2009.Re: 'Experts predict major change for MLSs' (Jan. 9)
Having licenses in two states currently, and having been in the business for 20 some years, I have the same question regarding this issue as I always have had.
I don't disagree that information to the public is key and important.
What I do take issue with is that as practitioners, we provide the data used in multiple listing services and then we pay to have that data disseminated.
Why, if we are paying to collect the information and provide it to the public, is there no charge to the public to use that information? (In some cases this information is used) to go around the listing agent who provided the original information and the selling agent who provided substantial portions of the secondary information.
Real estate has become an increasingly expensive business to be in -- nearly prohibitive if you are not one of the top producers.
The 80-20 reality (that 80 percent of the business is handled by 20 percent of the practitioners) has never been more true than today. But it still costs every agent the same amount to provide the information in order to send it out in a manner that is readable and comprehensive, and not only to fellow agents who may sell our listings but to the uninformed, uneducated public, too.
What's more, we are required to take expensive classes on our own time in order to maintain the latest expertise in order to provide that information correctly.
Since 1990 I have seen the cost of doing business as an agent or associate broker move increasingly higher relative to the broker's cost of doing business.
Is any thought being given to the worker at the bottom line who provides the information?
Georgia Hollinger
HomeWay Realty
Tucson, Ariz.
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Submitted by Gary Crabtree on January 13, 2009 - 9:30am.
Welcome to the club. Appraisers have been submitting data for years only to have it stolen by AMC's, Database companies and appraisal delivery systems and then sold to others and back to the appraisers. Take FNC for example, they raided CMDC (California Market Data Cooperative) and stole every piece of data that I had submitted since 1964. It now appears on numerous databases including Zillow etc.
A more important question is why are real estate agents preparing appraisals under the guise of BPO's thus driving the real estate appraiser out of business. How does an agent charge $50 for an appraisal (BPO) and make a living? Lenders are using the stupid agents to obtain appraisals who think they are going to obtain the listing. Fat chance.
Submitted by Mike Sparr on January 13, 2009 - 9:35am.
Georgia,
Indeed the costs of doing business increase over time, but you will see a trend emerging where the MLS will be looked at more as a technology partner who is able to negotiate deep discounts for its members as a value add (like Costco - what 'else' do you get for your membership).
If you look at the relationship, aside from desk fees and association dues, effectively what you're paying for is marketing. Your publishing of listings in the MLS enables other professionals to know of them and jointly market your properties to speed up sales (ignoring market intelligence, monetization and transaction mgmt for simplicity). The publishing of information to consumers is another extension of that marketing given this "self serve" era of instant gratification. The old adage "give them what they want or someone else will" has rung true and why sites like Realtor.com, Trulia and Zillow have emerged.
We joke with our clients as we work closely with them to design new features for our technology. Sometimes they're attracted to things that would not appease or reach consumers so we often have to "coach" them on what will and will not work to help grow their business. I hope you like this 2 minute video clip and the underlying meaning (last 5 seconds). ;-)
http://www.youtube.com/watch?v=jw7ajsKmbd4
--
Mike Sparr
Goomzee.com
"Connecting buyers and sellers"
Submitted by Dan Gobis on January 13, 2009 - 9:41am.
To continue to be successful in Real Estate we must participate in the evolution of the transaction as well as the revolution in our industry. The statement "...but to the uninformed, uneducated public, too.", is incorrect. The public is no longer uninformed nor uneducated.
Dan Gobis
RE/MAX Preferred
Racine, Wi
Submitted by Mike Sparr on January 13, 2009 - 9:58am.
On the topic of increasing fees, I wanted to add one tidbit that should make sense:
One thing to think of is who you are marketing to and that explains the increase in costs. You are now marketing to potentially millions versus the few thousand in years past (other local real estate professionals). It costs much less to target a small, select group. Thankfully, Internet technology, search engines and portals reduce the cost significantly. In years past, the only way to reach millions of consumers was to place Super Bowl ads (consider that expense vs. today's).
Early days you marketed directly to other agents. In a single community, this is very cost effective because you may only have a few thousand to market to and get them to show and hopefully advise clients to make an offer on your listing. The MLS kept your costs down by providing this member "portal" and giving you a direct conduit to other agents. They now realize the importance of helping you in the age of consumer-focused marketing and are teaming up to provide you millions of eyeballs at a fraction of what they would cost you as an individual. The more brokers embrace the MLS initiatives, the better it is for the members because it's far cheaper to have a regional portal as a "value add" than pay thousands to appear in a national search as you do today.
Now, as real estate professionals look to promote their properties to consumers directly, they will face the same challenges any company does and that is finding the most efficient distribution channels to sell your goods/services. This involves identifying your target market, determining the budget and costs associated with reaching them, and then executing your plan while measuring results. I stress the latter part which is why technology like ours is so beneficial, beyond helping win listings or capture new leads.
I hope this puts things into perspective or at least adds another viewpoint many often neglect.
--
Mike Sparr
Goomzee.com
"Connecting buyers and sellers"
Submitted by Bill Byrd on January 13, 2009 - 10:07am.
All great points...if you look at the consumer movement that has been changing the music industry for the last few years it's easy to see similarities in Real Estate. Where it ends up will be anyones guess but the wave has been building for a long time. I think we need to fiqure out a way to ride it!
It is expensive to gather this information...check out this post on my Active Rain Blog (The True Cost of an Expired Listing...http://tinyurl.com/8jau23) Will we ever be compensated for being the "hunter gather's" for these information machines...I don't think so...but wouldn't it be great!
As a 22 year veteran of this business I personally am embracing the changes because I'm not going away anytime soon!
Riding the wave!
Bill Byrd
www.ByrdRealtyGroup.com
Submitted by Bruno Skopinich on January 13, 2009 - 8:13pm.
Real estate agents have to operate like a Real Business... not a social gathering. Most agents waste hours being unproductive.
As a real estate agent you are in business for yourself! In the world of business someone is always looking to eat your hunch.
My marketing changes very 6-12 months to adjust to new market conditions. I watch for trends and cycles... this puts me 2-3 steps ahead of my competitors. I move fast and adopt to new conditions.
I am constantly sharping my skills and knowledge ... especially about marketing and sales.
So lead... follow or get out of the WAY!
For agents that do not like constant change, you need to get a regular salary job!
Isn't this FUN?
Submitted by Adrian Sherwood on January 14, 2009 - 1:54am.
A new class of media will lower transaction costs for agents and build new ways of being compensated. You heard it hear first.
Submitted by Bill Fooks on January 21, 2009 - 4:18am.
Bill Fooks
TFT realty Marketing Service
Warwick, RI http://www.fooksteam.com
It is interesting that cost is going up. In many of these posts they talked about the commissions being to high. Well, lets make some good "Cents" out of this. Increase your fees if your service is so good.This will compensate for the higher cost.It really is a free market, is it not? Then we can have all the "side dwellers" (those who are not in the active business of listing and selling property), tell us what we should be paid. God bless them. But ask these "side dwellers" to reduce the cost of there subscriptions' or fees they charge, and they go screaming that its not fair.
I will say it again, it is a free market. This is the best market to be in.