There is a special category of news that no one will actually pay attention to, and yet is incredibly important. For example, most people will not pay attention to the bankruptcy of CIT, which likely means that thousands of small retailers and mid-sized clothing manufacturers will not be around come 2010.
Nor will the vast majority of people even care that Boeing is opening a new 787 plant in South Carolina, instead of Washington, even though the reason why Boeing left its traditional home might be important to think about.
Within the real estate world, the recent unveiling of the new Web site for @Properties, among the largest residential brokerage companies in Chicago, should be filed under "critical but ignored" news items.
It’ll be ignored because brokerages pop new Web sites pretty much every other day, and most are ho-hum affairs whose launching is impressive only to the people who worked on the Web site.
It’s critical because this site, more than any other in recent memory, points to a very interesting trend in the world of real estate technology.
The last five years in a capsule
In 2004, Paul Rademacher was fooling around on his spare time with some data from Craigslist and the newly released Google Maps, creating one of the first mashups ever: HousingMaps.com. I remember seeing it for the first time at Realogy, and running over to my boss and saying, "We must hire this man and do this; this is the future of the real estate Web we’re looking at."
Shortly thereafter Trulia.com launched, ushering in the Era of Real Estate Tech. Zillow, Redfin, Roost and others followed shortly thereafter. (Of course, this version of history tends to make some of the earlier real estate tech players go batty … but it’s my take on the conventional history!)
The coming of consumer-friendly Web sites — featuring powerful, user-friendly search, gorgeous designs, and loads of data on neighborhoods, market trends, and the like — has turned the real estate world upside down.
In the beginning, the entrenched powers largely resisted these newcomers. Multiple listing services and franchises and big brokerages were talking about suing tech companies for alleged copyright violations, or enlisting anti-scraping measures, and so on. …CONTINUED
As time passed (and these newcomers started garnering millions upon millions of visitors), the formerly resistant organizations started to join the newcomers. Direct data feeds started to happen, then became commonplace.
Today, these real estate sites are taken entirely for granted as syndication by companies like ListHub and Point2 are both common and an accepted part of the real estate technology landscape.
Underlying the cooperation and collaboration, however, was the sense on the part of brokerages — at least the large major brokerages — that they could not compete with the techies and software engineers out of Silicon Valley.
"We sell real estate; we don’t program computers" was the common if rarely spoken opinion of some brokerage executives. The partnership, then, would be that the tech people would focus on tech over there in the land of techie people doing techie things, while the real estate people would focus on real estate in the local markets.
Something funny happened on the way to that happy nirvana, however: techie people have been less innovative, and the real estate people have caught up.
Where the Web is ‘@’
The significance of the new @Properties Web site is that it rivals the best of what Big Technology has to offer. This column isn’t the place to do a review of a corporate Web site, so you can go check it out yourself, and go see this guided video tour by Matt Dollinger.
But by leveraging companies like 1000watt Consulting, Terabitz and others, a single brokerage (a large successful one to be sure, but still one single local brokerage company) managed to create a Web site that is the equal of, if not superior to, the mega-national Web sites of technology companies that have raised tens of millions of dollars.
To be fair, Terabitz is a technology company filled, presumably, with techie people doing techie things. And the guys at 1000watt are probably two of the best Web design/user interface people in the business. Nonetheless, I can safely assume that however much it cost @Properties to hire those two organizations — and other partners and vendors — it probably didn’t cost $32.8 million.
If the cost of cutting edge technology is now low enough that local brokerages can create Web sites that rival Big Technology in terms of usability, design, and data … the only reason why a local brokerage would cooperate with Big Technology is because the Big Tech sites ostensibly draw more traffic.
Well, the trouble with that theory is that at the local level, Big Tech competes with local brokerage for traffic, and may beat out many major firms in search-engine rankings and traffic.
If local brokerages are now at par with Big Technology in terms of Web sites, functionality, and data, the implications are interesting and far-reaching.
First, as Big Tech loses appeal with dominant local brokerages, it gains appeal with small independents and individual agents. Maybe @Properties and Baird Warner can hire consultants and techie-tech vendors to create beautiful Web sites that rival Trulia and Zillow. …CONTINUED
The five-man shop down the street cannot. They have a lot of incentive to use the Big Tech sites for their marketing needs, because their competition isn’t Trulia or Zillow; it’s Baird Warner and @Properties.
The battle between feisty Independents and Big Brokerage transforms into a battle between Big Technology and Big Brokerage. That is not a battle that Big Technology can win.
Second, the local brokerage’s (and by extension, the local MLS’s) incentive to cooperate with Big Technology will erode swiftly. It’s one thing to send data to a company offering a superior customer experience; it’s another thing altogether to send data to a company offering the same thing you are so that you can have the privilege of paying for advertising on a site that competes with yours for local traffic.
The rarely spoken secret, of course, is that big brokerages (and the MLSs on whose board the big brokers sit) largely control the accuracy of Big Tech Web sites. Stop feeding them data and suddenly Big Tech is looking at 50 percent of the listings in a local market.
We might be heading back to 2005 all over again.
The next wave of innovation
There is a major BUT in the above scenarios: Big Technology could start innovating again.
If there is a key takeaway to all this rambling, it is that Big Technology that doesn’t remain cutting edge is small potatoes indeed. AtProperties should be a wakeup call to Big Technology as much as it is to others in our industry. For all of its technological expertise, for all of its sophistication and prowess, the Big Tech players now have to come up with continual innovation that the local brokerages cannot.
Maybe that’s augmented reality (as Trulia has taken steps toward); maybe it’s a true lifestyle listings search; maybe it’s a sophisticated matching algorithm for consumers and professionals a la eHarmony. Maybe it’s some tool that none of us can even imagine until we see it unveiled by one of the geniuses in the Silicon Valley-Seattle Tech Corridor.
Whatever the next wave of innovation is, Big Technology has to be actively pursuing it and creating tools, sites, and functionality that the real estate companies can only dream of, and that consumers will delight in having.
Otherwise, it’s the end of Big Technology as we know it, and the real estate industry will feel fine.