In today’s digital transformation economy, individuals everywhere can download and access data and upload and publish their own digital content. The real estate industry needs a concerted effort to protect the traditional model from being corruption by non-brokers and others seeking to profit from our regulated industry.
Until now, the real estate industry has been regulated in an analog fashion. In a digital world, protection and regulation is non-existent.
Perhaps a data management protection collaborative for the real estate industry should be formed. I propose NORED: The National Organization for Real Estate Digitalization. Why? The organization could monitor scrubbing of multiple listing service data from unscrupulous businesses stealing brokers’ listings, which costs MLSs money. It could approve devices for real estate usage so Realtors don’t end up using products for digital transfer that could cause them harm or unnecessary loss. (Think of the Blackberry fiasco due to Research in Motion’s wireless technology patent lawsuit that almost eradicated the use of such devices).
The NORED also can help the National Association of Realtors membership stay in place so they can continue to lobby for the industry as they’ve always done. Real estate industry professionals today fear changing commission structures and the eradication of the middleman or agent who facilitates housing transactions.
Just as the Society of Automotive Experts regulates products for the automotive industry, and Underwriters Laboratories approves electronics for consumer use, NORED can work with NAR to protect the industry from digital piracy and possible faulty or harmful product offerings, which could have an enormous impact on the current U.S. business model in place for more than a century.
What could happen? All those non-brokerage companies that would love access to all the property listings data could work with a foreign company to combine all the data on offshore servers to form an open-source MLS, display it for consumer education of available inventory, set up an online blind e-mail or Dutch-auction system, thus, the pairing of buyers and sellers. This new-age business model could collect a 1 percent finder’s fee and have title attorneys finalize the transaction, or incorporate any number of proven paperless transaction management systems to automate the process.
Why, I’ll just go list my house on some imaginary site right now for 1 percent since it’s well known as the place to buy and sell homes. It didn’t take long for eBay, Google, and more recently, FaceBook and MySpace to take off. GlobalHomes4U may be the big hit next year using listing data from brokers and MLSs — and there is no effective manner or precedent in place today to stop this from happening.
If technology can use the mass proliferation of data made available to consumers to eliminate the travel agent from the travel industry and the negotiating power from the car salesman, then technology can certainly eliminate the agent or Realtor as a middleperson by grabbing all the digital data that is readily available and creating a new model. Such a creation of an offshore open source, consumer-driven MLS would do just that, and it can be done right now and will be unregulated if something isn’t done to control it.
As Thomas Friedman states in his recent best-seller, “The World Is Flat”:
“The wiring of the world with fiber-optic cable, the Internet, and work flow software has blown down many of the walls that prevented collaboration. This same platform has also blown away our ceilings. Individuals who never dreamt they could upload — upload their opinions on blogs, or upload a new piece of software — suddenly found they can have a global impact on the world, as individuals.”
Today, these individuals are empowering themselves, streamlining not only retail industries, but service industries as well, and they are fully capable of uploading and downloading their own digital content.
The recent increase in for-sale-by-owner Web sites and business models, combined with the activity and discussion surrounding discount-service practices, shows that America is ripe for change and consumers are driving it. However, just as a person sells him/herself on a number of dating and matchmaking Web sites, consumers can sell their homes as an asset online as well. Consumers already sell small assets everyday on world-renowned auction sites such as eBay. With blind e-mails to safeguard the process, and licensed customer service representatives to facilitate questions and answers, the model would be the first place all home buyers would list their homes.
For those who don’t believe the mechanics of a 1 percent model could blossom on a global scale, it is conceivable that even a pay-to-participate model such as Match.com could suffice. Simply charge a monthly fee to list and peruse the available inventory and let the blind transactions happen at will. Either of these scenarios will put a serious dent in the real estate compensation structure as it stands today.
I am in favor of preserving personalization for transactions of this magnitude. How magnificent it would be if the livelihood of millions of hard-working professionals in real estate, mortgage and title could remain intact. However, history and technology, combined with the human spirit to obtain solutions more quickly in today’s “I want it now!” age, make me think otherwise. Perhaps I’ll search out several forward-thinking individuals to join in creating a global home buyer and seller online marketplace. Or, should we move to form a pro-active preventive organization now? Perhaps now is the time for NORED (No-Red), and we can keep the MLS, industry professionals and the NAR in the black.
Wait. If some foreign programmers from India, China or Russia aren’t building the software from open source Apache code now to tear into real estate, then certainly the non-brokers with their venture capital are scheming such a plan to enter the $100 billion market. First, get industry-related eyeballs to a Web site with freebies, such as Zillow, then add on the whammy of all applications — a collaborative communication portal that eradicates the traditional 6 percent! I give it two years, three years tops. I’d better get moving on this.
Gary K. Fisher is an online marketing and management executive in Las Vegas.