The holiday spirit has ebbed away, and the outdoor lights are down (well, except at my neighbor’s house). Its time to take a look forward at the year to come. For the record, I do believe that the housing market will begin to recover this year — but there are even greater issues in play that will affect the home buyer and home seller for years to come. One of those is a brewing controversy over data mining and the internet.
The world wide web revolutionized real estate over the last decade. Lots of people, even those not interested in purchasing a home, love to surf home listing sites to see what their neighbor is asking for their home, or find evidence for appealing their tax assessment, or just to spend a spring afternoon visiting a few open houses. We take it for granted now that many websites will have home listings, virtual tours, value estimates, etc. That may not last much longer.
Here’s why: when the real estate business started, each broker controlled their own listings. If you were searching for a home, you would have to either rely on the yard signs you saw, or visit all your neighborhood real estate offices and ask to see their listing book. This meant you would sit down with a real estate salesperson and literally page through a book to become educated on what properties were available for purchase.
The Multiple Listing Services (MLS) in communities around the nation developed as a way to make it easier for home buyers and home sellers to get together. Each real estate broker who joined the MLS agreed to cooperate with other brokers in the region to show and sell each others’ listings. In exchange, they also agreed to split their commissions on cooperative sales. While this agreement made it easier to become educated on what was available, the public still did not have easy access to MLS listings. You would still have to go to one broker’s office and sit down with a Realtor, but that salesperson could show you 99% of what was for sale in the area. So, you saved time and trouble.
This is essentially what buyers had to do at the dawn of the internet age, although the listing book had been computerized. You and the Realtor would sit down at the computer or go over listing printouts from the MLS. This control over listing data reflected the fact that it is the essential business resource for our industry. Our listing information is the only “product” we make. We then provide the “service” of assisting home buyers and home sellers to negotiate and create a transaction that transfers property from one owner to another.
With the growth of the Web, MLS organizations and individual brokers took this business asset — the listing information — and put it online to make it easier still for buyers and sellers to become educated on what property was for sale. Through agreements with the MLS, other websites bought the right to display this information, too, and so you had the birth of Trulia, Zillow, and dozens of other sites that simply re-posted listing information. They were not brokers and did not create any new listings, so they added other services and trinkets to lure you to their site over their competition’s website. Like many other internet-based businesses, these websites were constantly looking for that special method to earn money: to draw traffic that advertisers would pay for, or to become so influential that the real estate industry itself would have to pay attention.
Here’s where the problems begin. More and more of these websites have found interesting ways to manipulate the listing data, and some have begun displaying this information in ways that makes it unclear who the original listing broker is. Others have begun enrolling potential buyers and selling those names back to Realtors, or gotten broker’s licenses and started asking for a percentage of the commissions from successful transactions where they referred the buyer. Brokers began to wake up to the fact that they have, to a great degree, lost control of their most basic business resource.
There is a growing movement among some brokers to reclaim this control, by once again restricting access to their listing data. If this trend continues and gains momentum, many of these third-party websites will disappear, and others may not be able to display all the properties available for sale in a particular region. Instead of visiting several broker offices, as buyers in the past needed to do, in the future they might have to visit a couple of different websites to be able to find all of the homes for sale. The problem of inaccurate listing data will grow, which can be very frustrating to potential buyers.
As always, a professional Realtor is your best guide as this marketplace changes and evolves.
