Real estate has long been a quasi-monopolistic industry. Real estate brokers have long controlled access to listing information – via the Multiple Listing Service (MLS) – and have effectively shut out non-brokers from sharing in this information, which has been one of their biggest weapons in the trade. This is rapidly changing. (The Department of Justice was one of the first hammers to this wall).
The current internet revolution, especially web 2.0, has created a channel for sharing and combining all types of data that has been previously locked in seperate databases or unavailable in any significant form to the average user. Zillow was the first major disruptor that gained traction with the public because it allowed anyone to see historical real estate data overlaid on a map – this mashup gave access to everyone, and while the data was not always accurate, it’s was a good first step. Zillow, while being a disruptor, still aimed to connect buyers and sellers with realtors (and make money with contextual advertising in the process).
Redfin is another animal altogether. The company is creating an open marketplace that strives to remove the realtor from the equation of buying and selling real estate entirely. Their first strides have been made on the buyer side by offering buyer-side rebates, but they are currently testing a seller-side model as well. This is a very radical approach, one that has made them plenty of enemies in the realtor community.
While I agree that the internet can bridge the gap between buyers and sellers much better by offering more accessible information, I don’t believe the role of realtors will ever be erased – only shifted. The same way E-trade demolished the inefficiencies that existed in stock trading by challenging the old-school brokereages, these new websites will open up access to real estate listings and general home values to anyone who cares to look. And while these new services will take away much of the existing broker power of controlling the MLS information, realtors, especially ones that buy and sell high end homes will still have a significant role to play in the buying and selling of properties.
Why? Because homes are complex and emotional investments and can never be effectively commoditized. The real professionals in the industry know this and have many competitive advantages that reach way past conventional spreadsheet data.
Realtors must position themselves not as the primary sources of home listing information, but as experts in the field that cannot be defined by quantiative measures. If you’re renting a desk at ReMax and are relying on the MLS to give you the edge, your days are numbered. If you know the ins and outs of zoning, have many contacts with private sellers, know all the reasons waterfront homes on Longboat Key are selling better than those on Siesta Key, and have first hand experience in high-end deals, your future is safe, as long as you understand how this new technology will help both you and your clients.