Editor’s note: This column is the first in a recurring series highlighting issues surrounding data and the real estate industry. Tech and real estate industry strategists Gahlord Dewald and Rob Hahn will host the first-ever Inman Data Summit, scheduled on July 25-26 in San Francisco, leading up to the Real Estate Connect conference.
CORRECTION: This column has been updated with a correction. NAR directors approved a broker opt-in related to the franchisor IDX policy, and NAR’s MLS policy committee will revisit the issue during the group’s annual meeting in November.
Recently, in a note to tech vendors working in the real estate space, I mentioned how an understanding of industry policies is required to have any success. The technology and the data are often the simplest parts. The "human factors" in getting buy-in to unlock the value in data is the hard part.
The latest kerfuffle at the National Association of Realtors Midyear Meetings between the NAR Executive Committee and the group’s multiple listing service committee, regarding the ability of real estate franchise companies to display Internet Data Exchange (IDX) data on their websites, is about as perfect an example of this as any.
In this column I’m going to briefly outline the issue and then present some thoughts about why this issue matters, from a data perspective.
Back in November, NAR passed policy that allows franchisors to display IDX data on their websites. Based on this policy, some franchisors began to deploy websites that allow for national coverage of MLS search.
At the recent meeting, the MLS committee recommended that this policy be rolled back — which would force the franchisors to roll back their websites. The Executive Committee disagreed with this approach, and instead wanted to hold off on this decision until the annual meeting.
In the end, NAR’s board of directors decided that for now, real estate brokers will be required to "opt-in" if they want their listings to be displayed on the national websites of real estate franchisors. After further study by a work group, the MLS committee will revisit the topic in November when it reconvenes at NAR’s annual meeting.
There are others who discuss the human factors behind this decision-making process more thoroughly and elegantly than I can.
Here’s an examination of this issue from a data-focused perspective.
Real estate data: property, customer, market
There are many data sets in any industry — many bits of information that can be compiled together to create meaning.
Sometimes that meaning results in people making more money. Sometimes that meaning results in making life generally better. For an industry to prosper, a little bit of both of those outcomes is necessary.
Three data sets that are present in almost any conversation about real estate are:
- Property: data about a specific piece of real estate, such as address or price, and so on.
- Customer: data about what people want, need and do.
- Market: data about how money is flowing through a geography or industry.
At first glance, the franchisor IDX issue is focused on the property data set. Franchise companies want the ability to aggregate all of the property data available to their members on one site to improve the real estate search process for consumers.
At the same time, the value of the property data is becoming known throughout the industry in terms of the cost of creating and maintaining the integrity of that data.
These two aspects of the franchise IDX conversation — wanting to display property data and a recognition of the cost of "making" that data — are only one piece of what makes the conversation volatile.
There weren’t credible threats to leave NAR when various MLSs started syndicating real estate data to real estate search aggregators such as Trulia or Zillow, for example. So something else must be at play.
Viewing the franchisor IDX issue as more than a property data-set issue
The "something else" is the other two data sets that make up the real estate industry: customer data and market data.
We’ve heard for years that customers begin their search for a house online. Different people have different numbers, but it’s been said enough that this bit of data is accepted: Someone looking for a house will typically start the search online.
As a result, anything involving gaining an advantage in presenting real estate data online gets a lot of attention.
Aggregating a lot of real estate listings onto one site has been an effective technique for Trulia and Yahoo Real Estate, as examples, to get on the search engine results pages of Google — a fact that irks some of the real estate practitioners who have contributed their data to those websites.
Adding in the third data set — market data — is where this issue gets much hotter. The flow of money through existing sites that aggregate property data is more like traditional media advertising.
The existing aggregators aren’t involved in making money through listing property or helping people buy property.
The members of franchises that display property data, however, are directly involved in real estate transactions. As a result of being a direct participant in the market data, the franchisor IDX display issue raises more worries for some members than syndication of property data to search aggregators.
This concern around the way the three data sets of real estate — property, customer and market — intersect on the issue of franchise IDX is likely to require a lot of interesting conversation for all parties to feel OK about the outcome.
Which is why there is so much policy-jockeying around it.
For observers and participants, understanding where the real value of each data set lies and how each data set can interact with the others can be a source of ideas, solutions and strategic foresight.