This week I wrote an article on the Real Estate Revolution circa 2005-2007. In this time, traditional real estate was attacked at virtually every level, and the MLS was target #1. The launch of Zillow.com signaled that radical change was eminent, but no one was really clear of what the change might look like as Zillow head Rich Barton was tight lipped in those days, allowing curiosity to drive buzz behind the funded giant.
It is what it is
“I think that people go into a first meeting with a realtor right now in a very disadvantaged position”- Rich Barton
What we knew of Mr. Barton at the time was that he headed Expedia.com which did revolutionary things
within the travel industry, and he suddenly dropped big bucks into real estate behind the brand Zillow. Zillow in the beginning went with valuation models in the form of Zestimates attempting to level the playing field for consumers when dealing with Realtors and the MLS. In an interview with NPR’s Michele Norris, Barton was asked, “do you think you’ll have a similar effect on the real estate industry?” Barton responded, “well, I think our effect will be different but the inspiration is the same. Expedia was a travel agent and Zillow is not a realtor. It’s up to the consumer as to what they do. I think that the industry is at kind of a cross roads…” Barton went on to say, “you know, I think that people go into a first meeting with a realtor right now in a very disadvantaged position. They don’t know too much about actually what’s going on other than scuttlebutt and what they’ve heard. And I just can’t think it’s a bad thing for people to educate themselves and get smart and to have their own information source so they can sit down with that realtor and have an educated conversation.”
There is nothing wrong with the intent of this model as on the surface it is consumer advocacy, however, what Mr. Barton appears to be alluding to is a new MLS not in the hands of the Realtor brand, and instead monetized and now open to the public via Zillow.
What Mr. Barton also implied was that Realtors were no longer to be trusted as the consumer advocates they had proclaimed themselves to be.
They really don’t need you
There has never been a retraction of this sentiment because it’s stated fact- the only difference is that Zillow supposedly needs Realtors to populate listings and fill out their Zillow Forums and Mortgage Marketplace. But do they really need agents for that? Their model says they don’t- they’ve populated the consumer’s data for them. What Realtors fail to realize is that their participation is expediting the creation of an alternative to themselves.
Thousands Points of Light, or Thousand Tiny Shackles Spin
From 2005 through 2008 the housing bubble and the ensuing mortgage meltdown were the masked ploy to wedge consumers against real estate professionals wearing the Realtor brand, when all the while the MLS was the target. Data being the target, Glenn Kelman of Redfin says that the MLS is “a thousand tiny shackles on innovation,” according to a September 2006 New York Times article “The Last Stand of the 6-Percenters?” in relation to its limited use or display. Columnist Damon Darlin opines:
The Internet has radically changed the way consumers buy books and airline tickets, trade stock and learn news. But the real estate industry has resisted change — and protected its commission structure — by controlling the information on its Multiple Listing Service database of properties for sale.
The drum beat of the message by venture based companies like Zillow and Redfin were captivating, even to big media (evidenced by the image shown above from the New York Times article), as the bubble in Seattle, California and other places were at their peak. Home prices had skyrocketed, and commissions sored, creating the perfect storm for a mass media campaign to discredit and breakup the broker relationship model known as the MLS.
A new Realtor like brand? No Thanks!
Zillow’s Rich Barton has clearly stated they have no intent to begin an agent model, and why would they? Their sole goal is to provide an alternative means to information not controlled by brokers, and how Realtors continue to practice real estate is not their concern as their model is clear- open information for consumers, supported by ads. Barton in this February 2006 New York Times article said, “people want Realtors. But is it rational to pay Realtors what they are paid?” Reporter Damon Darlin added, “he [Rich Barton] says he thinks they are overpaid because customers are doing more of the work themselves.”
You’re an accessory
Today, Realtors continue to feed Zillow’s forums, and brokers continue to feed Zillow’s listing data, but we’re not really sure to what end because in 2006, the industry was focused on hypothetical situations whereas now, all intentions are clear. The National Association of Realtors and its one million plus members have acted as an accessory to their own demise in that Zillow never needed agents to populate listings or its forums, as they’re counting on the reality that consumers will do it for themselves (and they are). Zillow has become integrated into your IDX and is found on almost every alternative real estate webpage out there and continues to brand itself as the consumer’s “edge in real estate” but I have to ask- whose throat is the “edge” against?