During another gilded age at the turn into the 20th Century, a Chicago socialite hopelessly sighed, “In the old days, everything was private. There were private houses, private parties, private balls, private yachts, private train cars and private everything. Now everything is public — even everyone’s private life.”
Now more than ever, that notion holds true. Keeping a lid on information is impossible today. Secrets do not last long, everything is exposed. Dubious acts are caught on smart phones and shared freely. Embarrassing and sometimes offensive old pictures go viral, and words from the past suddenly come back to haunt an otherwise obscure figure.
The transparency trend has hit real estate
If you step back and look at the recent debate about pocket listings, it was about transparency. Make listings available for everyone to see instantly. No holding back. No secret houses for sale.
For decades, the epicenter of insider property listings was clubby New York City. The city could never enjoy the fruits of the MLS because shared listing data was the anathema of how property sales worked there. Big brokers controlled the town and they were not sharing their listings with anyone.
Then came scrappy start-up StreetEasy in 2006, which followed in the footsteps of other innovators who tried to crack the cabal of private listings. StreetEasy went after new building developments first, then rentals and finally for-sale listings. As it built its database, StreetEasy captured the consumer. Then, the brokers began begrudgingly paying to have their listings displayed on the local portal that was gobbled up by Zillow in 2013. By the time brokers realized what was happening, it was too late.
NYC’s real estate market is more transparent
But no doubt, a cunning transfer of economic power took place from big brokers to StreetEasy.
In the national debate over making all listings public, the power shift is more muddled. A close knit group of MLS organizations control the listings, but their distribution is more widespread.
The consumer benefits are the same as StreetEasy with the public gaining instant access to almost all of the listings. The National Association of Realtors played its cards right. It moved to regulate pocket listings, thwarting the privatization of data and avoiding the New York City big broker debacle.
But in an interesting twist, the industry’s frenemy Zillow is an unlikely beneficiary who stayed invisible during the recent NAR deliberations.
The MLS data is tricky to aggregate with 700 different local sources. Zillow figured out that game by wining and dining MLS executives for more than 13 years. Today, its listing data base — mostly from local MLS organizations — is one of its competitive advantages.
But the day Zillow no longer needs the MLS, is the day when NAR and MLS organizations will scramble to stay relevant.
New battlegrounds are fraught with problems
Our physical homes represent the most dynamic information that will someday be made public. OpenDoor, Zillow and Redfin are pushing to make our houses more accessible. All day, every day open houses; keyless locks and self-showings, make the most important housing data transparent — the house itself.
AirBnB is the leader in making our “private houses” public. Through an app, you are given the code to a keyless lock. You stay there for four nights using a stranger’s china and sleeping in someone else’s bed, never meeting the owner.
But these open platforms come with risks. A massacre at an AirBnb on Halloween in tony Orinda, California blew up the company’s mantra “it is all about trust.” Trust is lost when private data made public is abused, not protected or used against the unguarded public.
iBuyers like Opendoor face the same danger when allowing people to gain access to listings through its app. They can attract squatters, party kids and druggies who prey on vacant houses. Last month at an OpenDoor listing in Arizona, squatters entered illegally and threw a party that ended with a drive-by shooting.
When everything is public, trouble is inevitable. Bad actors abuse all open platforms including Craigslist, Uber and Facebook.
The Chicago socialite who lamented about the end of privacy feared what was lost for her and her friends. Their secrets would be exposed, their scandals laid bare and their lives turned inside out.
Transparency can be messy. But the tradeoff is secrecy and that does not work very well either.