The War Between Online Real Estate Information and The MLS
Never forget the power of entrenched interests. While the new guys are focused on innovation and extention, the old guys typically spend all their time protecting what they have. Till it is gone.
The battle between the online real estate services (Zillow, Trulia, blogs) and the MLS systems took another turn in Washington state recently. The old dogs found a nifty little loophole to force the new guys to adapt, or get fined thousands of dollars.
If this sticks, expect it to be replicated across the country rather quickly. The MLS systems hate when you take their cheese and are fighting back.
Starting this week (Oct. 1), the Northwest Multiple Listing Service is introducing new real estate blogging guidelines that will let homeowners decide if they don’t want other agents to write about their homes. That means they’re no longer in danger (well, in as much danger) of someone trashing their property online or writing snarky comments about how their lovely abode is much overpriced.
If agents break the rule, they’ll be fined by the NWMLS — perhaps thousands of dollars. (There is a grace period for them to get their blogs in order, though).
Perhaps more interesting is that sellers can also choose not to have an automatic valuation (think Zillow) placed next to their property online, which saves them from the embarrassing situation of having that value differ dramatically from the listing price. Seems like this could really affect Redfin, the Seattle online real estate brokerage that has very active communityforums. via Pudget Sound Business Journal
Here is my question to the folks in Washington State that run Northwest Multiple Listing Services. What is to stop me, a non Realtor and entreprenuer, from coming in and posting all this information and providing links to real estate agents? I may end up so far ahead competitively than you and your defense will have failed.
This is my biggest gripe, the MLS system’s failed to do what agents needed. That is why the market place came up with alternatives. They failed so badly their competitors can give away what they charge thousands of dollars for and still make money.
Yet the MLS folks know that to protect their paychecks and their power they need to erect defensive walls to punish their members. Yes, the folks who elect to join their organization will be the ones to be punished. Because, MLS folks, the market is much quicker than you are and much, much craftier than you ever will be.
You had your chance to protect your monopoly, and you FAILED. Once the fox is in the hen house all you do is fight a rearguard action sacrificing your soldiers (members?) to protect what you already know is lost.
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Comment by Portland Real Estate on 29 September 2009:
NWMLS made a good rule change this year too though. It used to be that you could only have 3 IDX vendors providing service to each office, and no more. Now the vendors are charged to have access to the MLS data, so each office can work with as many vendors as they want to work with.
-Tyler
Comment by Spencer Rascoff on 29 September 2009:
Spencer from Zillow here.
Zillow gets our listings directly from brokerages like Coldwell Banker Bain and Windermere, not from the NWMLS. For this reason, NWMLS rules don’t directly affect Zillow because we don’t have any relationship with them.
That having been said, listing agents and their brokers, along with the sellers can choose to market their homes however they’d like. The point that is critical to remember about Zillow is that the property is already listed on Zillow regardless of whether it’s shown as for sale or not: we have pretty much every home in our database already. So it’s significantly to the seller’s advantage to make sure that it’s listed as For Sale on Zillow because posting it For Sale allows buyers to see the listing price, the photos, the property description and the listing agent contact information. We also re-Zestimate the property based on the new property attributes that the listing information includes. Furthermore, we remove the Zestimate from the Map page and replace it with the For Sale price, and we move the Zestimate down on the listing page to the bottom.
If the seller and his agent/broker don’t put the listing on Zillow, buyers still see information on that property, but they only see the Zestimate and the public facts. In short, sellers are MUCH better off having their listing on Zillow than not.
Comment by Jarrod Skeggs on 29 September 2009:
It never ceases to amaze me and how for MLS has their head up their @$$. Kind of like it used to be with the Record Labels and Digital Rights Management. The business model is broken. Fix it or someone else will. I was super stoked to learn about Zillow about 6 months ago when my wife and I were in the process of purchasing a new home. Real Estate is one industry that I’ve loathed since I bought my first home because everything just seemed to be so inefficient. I hate inefficiency. Thanks for sharing this information. You have a new subscriber in me. I’m not in the RE business but it has always been interesting to me.
Thanks again for sharing.
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Comment by Kevin Schmidtchen on 30 September 2009:
Crazy…this seems to not be the way we should be going. With that said, I have never been a true fan of the Zestimate (Zillow’s estimate on market value). I think it can work in some cities where homes are more cookie cutter and priced on sqft and values are very similar.
But, in towns such as ours in Santa Barbara and Montecito CA., the Zestimate is off most of the time and quite often 10-14% (as even Zillow admits on their site). When homes are selling in the $1-2 million range all the time as they are in Santa Barbara, this translates to being off…you do the math. I could use an extra $150,000 in my pocket.
Comment by easyrent on 30 September 2009:
Looks very reasonable war
Comment by Dominique on 30 September 2009:
I agree, the MLS should be more adaptive to the needs of agents. Especially if they claim to be the authority on real estate listings. I’m an agent and I have an interest to protect the information. I am also directly affeced by the integrity of the information that is available. But I won’t let that cloud my belief in a free market system. If the MLS can’t keep up with the competition they need to get out of the way.
Comment by Tony Longo on 30 September 2009:
Oooh – this is going to be a juicy one. When I started my web-based brokerage I didn’t even want to license the firm (that didn’t go over too well)
Being a licensed broker is starting to feel like I am handcuffing myself and my company from doing ‘what is right’ and ‘what ALL consumers want’.
I understand the above situations dealing with selling a property and of course the Zestimate thing has always been a negative topic (unless it stating a greater value for your own personal home), but come on – its reality today. Every seller is most likely a buyer and as a buyer don’t you want to know everything possible about a unit (opinions and facts).
Bottom line is that todays technology has made the market more transparent therefore safer and more sound, not just pumped with agent and broker FLUFF.
I am sure I am setting myself up with a big red target on our backs now – oh well – at least the consumers (who now control the market) will back me. Keep me posted on this one!!!
Comment by Jhonsan on 5 October 2009:
“In the end, none of this bodes well for an economy whose fortunes are (still) so closely tied to the spendthrit ways of the U.S. consumer. In fact, once the man in the street figures out that, despite the sorry state of his finances, he is the one that is being counted on to rescue the economy, that’s when the real trouble will begin”.
Comment by Steve Holben on 5 October 2009:
I have a 40 year perspective in the building and real estate biz. I will stand on a soapbox and yell to the world that I’ve NEVER, NEVER, NEVER seen such a bunch of totally useless bull*&@! “information” as is on all of the “alternative information” and “valuation” web sites, blogs, and other electronic sources that seem to be floating around out there. Even MLS is starting to confuse the public by including finished basements in area calcs. I rely on MLS because at least some has actually seen the property (Think Case Shiller, Zillow, Trulia, Redfin, etc., etc., etc.) but I have to disclose that finished basement are to be seperated from above grade area and valued separately to give the public an apples to apples comparison. NOW, don’t argue with me on this. I have ANSI and the Appraisal Institute on my side. There’s 34 specific thing that don’t have to be done to finish a basement that are already done when above grade s.f is built.