With federal regulators breathing down the real estate industry’s neck, questions regarding who gets access to listing data have taken on new urgency.

How should the real estate industry make its data more open and accessible? With federal regulators breathing down the neck of the industry, this — and other questions regarding who gets access to listing data, under what circumstances, and whether there are anti-competitive practices afoot — have taken on new urgency.

At Inman Connect San Francisco last week, panelists Daniel Castro, vice president of the Information Technology & Innovation Foundation (ITIF), and Scott Petronis, chief product and technology officer at eXp Realty, hashed out what “open data” means in real estate and what effect it could have on the industry.

ITIF — a nonprofit, nonpartisan Washington, D.C., think tank which has received money from Zillow in the past — has pushed for more open and unrestricted access to data that is now commonly controlled by multiple listing services.

Marilyn Wilson

Marilyn Wilson

Panel moderator Marilyn Wilson, founding partner of real estate consulting firm WAV Group, noted that in terms of how consumers define open data — “Can I get what I want?” — the industry seems to  be “OK.”

But Castro defined open data as data used “by anyone, anywhere, for any purpose.” It drills down to four factors, he said: “Open access — can you get to it? Open standards  — [are] there any kind of proprietary requirements specific to it? An open license. And is the data actually machine-readable?”

He doesn’t believe the U.S. Department of Justice and the Federal Trade Commission — who held a joint workshop on real estate competition last month — are looking into the question of whether consumers can go online and find information about a particular home.

“They’re really asking: Are there instances where industry or particular actors in the industry are holding back data in ways that are preventing the use of technology-driven innovation to make consumers better off, whether it’s the ability to buy and sell homes efficiently, get better rates on a commission … or holding back a particular business model,” Castro said.

‘Data hoarders’

Petronis agreed with Castro’s definition of open data and said the real estate industry does have “some challenges” to overcome.

“We’ve had, for years, data hoarders across the board: brokers, MLSs, you name it. There is plenty of data hoarding going on. In the past five years alone there has been a massive difference in that, I think thankfully,” Petronis said, joking that some attendees might “throw things” at him for saying so.

Scott Petronis

Scott Petronis

“When folks like Zillow and Trulia came on the scene and started to say, ‘Hey, there’s all of this stuff out there [and] we can create an experience around it,’ it let the cat out of the bag. You can no longer sit there and hoard all of this stuff and just say, ‘I hope nobody can see it.'”

That increased data accessibility has given consumers more power than ever, which Petronis said he likes because it made consumers realize they can “control the tempo” of a transaction, see things they couldn’t before and drive more of the conversation than they have before, he said.

“That’s not to say that the agent doesn’t have value in that. They have a ridiculous amount of value because access to data isn’t the same as being able to interpret it and turn it into something that helps somebody find their ideal place,” Petronis said.

Making data useful takes work

Petronis noted that data has never been more accessible than it is now, but accessibility is not enough.

“There’s also never been a more frustrating time because when you see all the data … you realize what needs to go into it in order to turn it into something accurate, palatable and usable to create a user experience around it,” Petronis said.

He continued: “I would rather be more open than not, but I’m also extraordinarily cautious about what does it actually get us to? Because it could create a hell of a lot more trouble in terms of the validity of that data.”

Wilson asked: Is the industry open enough? And if not, where should it be more open?

“The question is going to be who controls the data. Who’s going to be able to make those decisions? Sometimes it’s very centralized, and that’s very bad or good depending on who’s in control.

“Sometimes it’s very decentralized and then you have different problems, organizational challenges. The important thing in every situation is to identify: What are the barriers to better flow of data?” Castro said, citing complaints regarding MLSs not returning paperwork that would give third parties data access.

Daniel Castro

“There’s also issues about different types of data feeds. IDX and VOW data feeds  — are those the same or not and, if not, why are they different, and what are the policies around that?

“I think the main thing for the industry is going to be when we see disruptive players coming in, the ones that are upsetting those traditional commission levels, do they have access at the same level as everyone else? That’s the central question I think the FTC and DOJ are going to be looking at, and that’s [where], from the things I’ve heard, people run into trouble.”

Petronis agreed that that disparate treatment happens.

“Some of it might be intentional and some of it might be unintentional,” he said.

For instance, some states require brokerages to have physical offices. “It flies in the face of the new business models. And I don’t even just mean our industry. If Uber were forced to purchase cars, they wouldn’t be what they are. They probably wouldn’t be,” he said.

‘Crazy’ rules

For real estate technologists, the technical aspects about data access are “the easy part,” Petronis said, but noted that the variance in regulations across states and MLSs made it challenging to operate as a national brand.

He pointed to how difficult it is to get a license to access copyrighted transaction forms in certain states without paying “hundreds of thousands of dollars to somebody who simply wants to pocket that to keep the status quo.”

“That’s the crap that we have to deal with,” Petronis added. “There are these artificial walls that have been created in this industry that have forced us to find technical solutions and spend ridiculous amounts of money to circumvent some of these things that have nothing to do with the true accessibility of data.”

“We’re in 340 MLSs and growing. By and large, we can get that data without much challenge in terms of the technical aspect of it. It’s the different fee structures, it’s the different license agreements, it’s the different rules and regs, it’s the what you can display, it’s the craziness of ‘well, it has to be in this font and it has to be prominent.’ What the hell does ‘prominent mean’?

“It’s all of that crazy stuff that we have to find technical solutions to because now you have to build all of these rules into a presentation engine and that’s the mind-blowing part of this stuff. That’s where it gets crazy and tricky,” he said.

If there’s one thing the industry can do to be more open, it’s to come up with ways to make those rules more uniform, according to Petronis. He pushed attendees to get behind the efforts of the Real Estate Standards Organization (RESO) to standardize rules.

“There’s meetings every stinking week about every one of these aspects. We’re trying to solve these problems for ourselves before somebody does come in and crack us over the head and say you’ve got to solve these problems the way we say it’s gotta be solved,” Petronis said.

It’s time to talk about commissions

The industry should also come up with a way to give consumers more access to commission data, according to Petronis.

“There’s a lot of mystification of that data, which I think is the next wave of what people want access to,” he said.

“It scares the hell out of everybody because it shines a light on the reality of the industry, but those are some of the scary conversations we’re going to have to have because either we come up with a solution from within or we’re forced … to have a solution thrust on us. Either we solve it, or [the DOJ is] going to solve it for us.”

Industries that are behind in regards to data are the ones that say, “‘This is my data, and I’m competing based on the fact that I have data and you don’t have data’ as opposed to saying, ‘I’m competing based on what I’m doing with data that’s unique, and I’m better at doing than anyone else,'” Castro said.

Even the pharmaceutical industry has realized that investing tons of money in research and never sharing the resulting information is “incredibly wasteful in terms of innovation,” he said.

Players in that industry have realized that sharing data will make everyone better off, he said. “We’re reaching these tipping points in certain industries. We’re better off with open data because what we create after that benefits everyone.”

Petronis said he was shocked pharmaceutical companies would go that route. “We’ve got to get that level of behavior. The BS of us glomming on to this stuff and pretending that the cat’s not out of the bag — it’s over. Forget that. The ship has sailed.”

Data quality doesn’t go out the window

Wilson asked, “How open is the real estate industry relative to other industries?”

Castro said, “C-minus, D-plus.”

“Ooooh, not good,” Wilson responded. “My daughter would be in trouble if she got that.”

Castro stressed that making information readily available to any individual or third party or business doesn’t mean that there would be no quality control of the data.

One way to maintain that quality would be to have rules or laws dictating the input of the data to make sure it’s accurate, he said — similar to how tax filings are filled out by users, but they still have to be filled out correctly, or users risk a fine from the IRS.

The data could also be licensed on the condition that any modifications to the data must be noted, he added. That would be a “very different model than what we see in the industry right now,” which is focused on “restricting the flow of data,” Castro said.

Petronis said he was less concerned about the quality of the data because that’s “a huge part” of what a multiple listing service does. He doesn’t buy that consumers would police data quality.

“What I think has to happen is more of what is happening. MLSs have done a great job individually of saying, ‘Here’s what I say is quality in this market,'” Petronis said.

While data quality can be standardized nationally, Petronis is not advocating for something like a national MLS, however.

“It scares the bejeezus out of me to have any one central point for every last piece of data, that just frightens me,” he said, echoing similar comments he made earlier in the week about broker data platform Upstream.

What would get the industry to at least a B-minus when it comes to data? Wilson asked.

“I’d encourage everyone in the industry to think about how they can make the free flow of data in the industry better,” and how to make it so businesses compete not on having the data but what they do with it, Castro said.

He agreed with Petronis regarding decentralization. “Maybe we’ll get that with blockchain, that’s what blockchain’s all about,” Castro said.

Email Andrea V. Brambila.

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