Editor’s note: The following is a guest essay by Saul Klein, CEO for Point2 Technologies Inc. and president of InternetCrusade, an online real estate community and tech company.


There have been many industry changes discussed over the last 15 years, many of which have materialized and some that have yet to materialize. Don’t become complacent and believe that because it hasn’t happened yet, that it will not happen. Ignore them at your peril.

If it has been discussed for years, why hasn’t it happened yet?

Because the buying and selling of a home is an infrequent event for most people, there is no compelling consumer drive for technology innovation in the real estate industry. The drive instead comes from entrepreneurs who look at technology as either a way to enter into what they believe is a highly lucrative field with lots of waste to trim, or from existing brokers and agents who see the use of technology as a differentiator.

For this reason, it takes years for major change, and yet there is much incremental change. Today, change is beginning to accelerate in real estate, based partially on generational expectations. Here are some of those things that have been discussed for years and will begin to manifest over the next few years.

An MLS data standard

In 1995 the industry was working on a "data dictionary" to standardize multiple listing service data fields (known as the "Data Exchange Method," or "DXM"). For many reasons, a true standard has never been achieved.

Today, with technology such as open APIs (application programming interfaces, or tools to aid developers), we are edging closer to what will truly be a game-changer.

This could lead to a single-point-of-entry listing inventory system, requiring only one vendor with degrees of permission to access the data, based upon license jurisdiction and fees paid for access.

It is time for major industry players to focus and differentiate between MLS governance, rules enforcement procedures and policies, MLS data and non-MLS data, MLS vendors’ options, and MLS access, including public MLS sites that could help bring down the cost of the MLS for subscribers and participants.

A new era of awareness

There is a new awareness by consumers and by real estate practitioners that the value proposition has changed, resulting in changes to the current and inefficient pricing and compensation structure.

There was a time when a major component of the value proposition offered by a real estate practitioner was the knowledge of available inventory. Today, consumers no longer need a real estate licensee to fulfill that aspect of the value proposition offered by brokers and agents, and yet compensation has not changed all that much.

What will replace that portion of the value proposition? Will sales compensation adjust to this change? It is not a question of if, but when … and what.

The current compensation structure is a "contingency based" structure, and by its very nature it is inefficient and unfair. It can be described (from a licensee’s perspective) as "work for free, work for free, work for free, work for free … close a deal."

Who ends up paying for all of the free work? The party whose deal closes. The paying party pays for the inefficiency of the system and for all of the free work performed for others.

This will change in an era of transparency and ever more informed consumers, and entrepreneurs who are willing to challenge the status quo.

Fee-for-service brokerage

As Internet search continues to improve, the house hunting is less and less important as a major component of the value a real estate professional brings to the table.

In addition, much of the work done to fill out contracts can be facilitated through software — and maybe even a form of "artificial intelligence" software that could result in lower error rates and superior service than that offered by many licensees.

For this to occur, brokerage firms will need to take risks and try new methods of pricing, offering consumers a choice. The biggest obstacle to this fairly common-sense idea is the capital required to change the current paradigm of real estate service and employment.

It hasn’t happened yet, but there are a few enterprises making the attempt, and some have been at it for awhile. Capital and perseverance (coupled with good service) could make menu-based services mainstream, and sooner rather than later.

If you are not one offering this choice to consumers, how do you compete? I don’t mean, "What meaningless adjectives do you have to describe what you do?" but rather, "What are your solid, concrete differentiators?" Without them, the old methods will pass on as the younger generations become more affluent.

This movement could also be accelerated because of decreased equity based on the economic forecasts over the next few years.

Virtual Office Websites (VOWs)

What real estate professional would not want to give consumers access to information about what is available for sale and what has sold? Consumers, whether they are in the market to buy or sell real estate, are always interested in what their neighbors received for the sale of their homes.

This can be done under the rules set forth in the National Association of Realtors settlement with the U.S. Department of Justice.

Because there is still fear and misunderstanding about this settlement, because of old industry paradigms about "who owns the data," and because technology solutions to give real estate professionals the ability to provide this kind of access to information are not yet commonly available at reasonable prices, we see very few "VOWs." This will change over the next few years.

All serious real estate professionals will provide consumer access to information: active as well as sold property information. To what degree should brokers use the MLS data they have access to through the MLS? To the maximum benefit for themselves, over their competition … within the law, MLS rules, and Realtor Code of Ethics.

What can you do to benefit from these changes? Embrace them early and determine how they will impact your business and your career.

Saul Klein is CEO of Point2 Technologies Inc., a licensed real estate broker in California for the past 32 years, and 1993 President of the San Diego Association of Realtors. Saul has been providing strategic planning and leadership programs for the industry since 1994.

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