On April 7, the day the feed went dark, Tim Harris sat down with Brad Inman for some straight talk about the ListHub controversy and real estate technology.
If you follow the news, then you know that April 7 was a big day — the day the ListHub syndication feed to Zillow and Trulia went dark, leaving these two major online industry players to fend for themselves. Inman has covered this story since it broke back on January 6, and in case you missed it, we’d urge you to read Andrea V. Brambila’s latest update on Zillow’s progress establishing direct feed agreements to provide them with an alternative source of listing data.
This latest episode in the “portal wars” raises a lot of questions about the role of listing portals and technology companies in real estate, and the value they really bring to the industry.
On April 7, the day the feed went dark, we sat down with Brad Inman for some straight talk about the ListHub controversy and real estate technology for our nationally syndicated radio show, “Real Estate Coaching Radio.” Listen to the entire episode on this page, and don’t miss the question-and-answer highlights of this very special interview below:
Brad Inman, Founder of Inman:
This interview is happening on the very same day that the ListHub agreement with Zillow expires. This seems to be story that everyone is interested in, so at the end of the day, do you think this will blow over as being hype, or is there something there?
Well, what’s really shocking to me is this: back in the mid-1990s, we at Inman were advocating three pieces of a vision — put all listings on the Internet, automate the transaction and make sure we put 3-D walkthroughs and visuals on every listing. The idea was to be transparent, create a marketplace and make it easy for people to buy and sell a home.
Now, here we are in 2015, and we’re still talking about putting listings on Ihe internet with all the same tension, fear and paranoia as before. That’s the big picture for me — I mean, Wow! Why haven’t we gotten over this?
You know, if I’m home-seller, then by gosh, I don’t care about the insider baseball or the politics of all you characters — just put my listing everywhere. We need to get over this insider tension and just get on with it — and that’s the frustrating thing.
We’re probably making a lot of out this ListHub cutoff date — and as a news company, you know, I love it. There’s nothing better for our traffic than hot, controversial news, but we’re just the messenger. These people make their own news, and sometimes it’s ridiculous, silly, and absurd.
Now, I learned the word “disintermediate” from you back in the ’90s, and this fear of agents and brokers being cut out of the sales process is obviously part of the reason there hasn’t been faster technological change in the industry. But I wonder — do you think the lack of change is really because consumers honestly just don’t give a damn? Otherwise demand would drive technological change forward, despite these fears of disintermediation.
We first used that word at the very first Inman Connect retreat up in the Sonoma woods — there was a Stanford professor named Will Hansen who gave a lecture on disintermediation in different industries, and how technology could do that to real estate.
You know, every day there’s a young entrepreneur who has a bad experience buying or selling a house, or renting an apartment — and they see some chucklehead in the business who’s not handling their transaction very well, and they just think an app can be invented that will change the industry and disintermediate all these people.
We encourage them all — because at the end of the day, what we represent in the news is helping to change the industry and “raising the real estate IQ” so that the industry creates a better consumer experience.
We have no ideology — we’re not here to protect franchises, brokers or agents — nor are we here to protect Zillow, Trulia, or anybody else. We’re asking what we can all do together to create a better consumer experience.
In thinking about it that way, there have been some surprises for me since those early days of disintermediation: the everyday agent has not been at all unlocked from the value chain. I don’t see any threat today or in the future with the average buyer or seller, because I think that all buyers and sellers want is to close their transaction, and they need a coach and a mentor — it’s just like having an accountant or a lawyer.
Now, the bigger question is, are there other pieces in the value chain that are being challenged? Those are franchises and brokers for sure, and some technology companies that are offering old-school software. Those people are threatened in the new value chain.
Now, even though all the technology companies entered into the space with these “grand ideas” about how to change the consumer experience, it seems like almost all of them pivot towards trying to monetize agent revenue — such as selling leads to agents and such. But it doesn’t seem like there’s a lot being done on the listing side of the business — it seems like that is where the untapped potential is in this market.
I agree completely. Back in the Homegain days, my vision was to go after the sellers — we invented the online home valuation, long before Zillow. Our tagline was, “you can get real-time stock quotes: it’s about time you got real-time home valuation,” and it was very popular — we signed-up millions of people for that service.
Our idea then was to convert those homeowners who have homes and wanted to know their valuation into home sellers at some point. So we offered a “reverse service auction,” based on a pretty simple idea. We started by asking, “what is the consumer problem?” Well, when people go to sell their home, most pick the first agent that comes along, whether or not that agent is any good. It’s almost like an accidental relationship formed — so let’s give them a better process.
Let’s give the consumer a way to stack, rank and compare agents, not just on commission, but also by qualifications, on ratings, on whether or not they even have a license! So we put all that data in there, and the consumer remained anonymous except for the street they lived on, and then agents bid on their business. This was all pre-Zillow, and it was very successful: the average consumer got seven to 8 bids, then they picked an agent, and then we got a referral fee.
We had some very happy agents working that program, and we had a lot of consumers, but guess what? What we realized was that there was a certain group of very analytical homesellers who wanted to go through this homegain reverse service auction, but the average homeowner was not. Their DNA was different — they were going back to the agent they first started with, going to a friend down the street, they were going to open houses, and they were doing no shopping on the Internet to find an agent.
So that, to me, as you’ve said, is the “Holy Grail,” but it’s still untapped, it still hasn’t been leveraged, it still hasn’t been figured out, and I don’t see anyone figuring it out right now. It looks like that’s still the problem — but is it a problem for the home seller, or is it a problem for the industry? Technology just isn’t serving that market very well at all.
So what have you seen technologically that would cause this equation to change?
I think that there’s a whole set of services and experiences that you need to create and replicate that’s aimed at the home-seller, and today everything’s aimed at the buyer. If I was to invent this technology, I would start on a whiteboard with some really smart people in the room, and say, “what’s the one problem that all sellers have?”
Well, you could arguably say that it’s getting the most money for their house, or reducing their transaction costs, or the speed with which the house sells. So with these three problems, what could technology do to make sure that people got the most for their house, reduced their transaction costs, and expedited the sale. I think that’s the point where it gets dynamic and complicated. So that’s how I would approach it, but I don’t have any magic solution — I haven’t spent any time looking at it from that perspective, but those would be the three problems that technology could potentially help solve….
Tim and Julie Harris have over 20 years’ experience in real estate. Learn more about their real estate coaching and training programs at timandjulieharris.com, or tune in to Real Estate Coaching Radio every weekday at realestatecoachingradio.com.