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Why Can’t The Industry Response Effectively to Zillow? For the Same Reason Your Local PTA Ain’t Gonna Be Fielding a World-class Baseball Team Any Time Soon!

Kevin Boer, Broker Owner, 3 Oceans Real Estate, Inc. ()

April 8th, 2007 · 7 Comments

Michael Wurzer, the author of the well-written, provocative, up-and-coming FlexMLS blog, offers an MLS software provider's perspective on the recent Zillow developments, which from his point of view are yawn-inducing. Given that he first heard the news in the middle of the night after having been woken up by a puppy, he's probably grateful.

Michael raises the following challenge: Now is the time for brokers, agents, and MLS organizations to realize and increase the value of the MLS data repository.

I couldn't agree more. The unfortunate thing is…it simply ain't gonna happen. Why?  There are many reasons, not the least of which is organizational:  Realtor and MLS boards are designed with certain goals in mind, none of which have anything to do with technological innovation.

That's not necessarily a bad thing, mind you, since excelling in technological innovation is not a prerequisite for excelling in the real raison d’être for Realtor and MLS boards, namely fostering cooperation amongst otherwise fiercely competing brokerages and Realtors.  It really is coopetition in its purest form.

Think about it.  In our local market, the three biggest brokerages are Alain Pinel, Coldwell Banker, and Intero Real Estate.  The rivalry between these three companies, and between their respective agents, is fierce and unrelenting.  A new listing for Alain Pinel often takes place at the expense of the other two, since anybody interviewing multiple agents is likely to pick one from each company.  And yet, despite this intense competition, agents from any company — not just the big three — regularly and gladly show all the listings on the market, without regard to the listing broker.  Similarly, listing agents regularly and gladly listen to all the offers that other agents bring in, no matter which brokerage they come from.

It really is quite impressive, and the structures behind this are the much-maligned Realtor and MLS boards.  They create and enforce rules that enhance cooperation amongst competitors.  They have arbitration committees for settling disputes.  They have codes of conduct that prohibit poaching another Realtor's clients.  They require all members to upload new listings within 48 hours.

The big price they pay for enabling this coopetition, however, is that these boards tend to be consensus-driven (or nearly so), slow-moving, plodding, and methodical.  While this is the only way to get sworn business enemies to agree on anything, it's a terrible way of fostering  innovation.

Want to put sold listings up on the MLS?  Hell, no!  If one key player puts his foot down, perhaps threatening to remove his listings from the MLS, then that ain't gonna happen.

Let's talk about uploading the listings to Trulia, Google, or Zillow?  Absolutely not!  (Unless you're the Houston MLS.)  All it takes is one big broker to feel threatened by this move and it simply won't happen until there's absolutely no choice.

Ok, then, let's discuss creating a snazzy state-wide MLS to compete with these interlopers!  Sure, we'll discuss it, but what we really mean is "let's set up a feasibility steering committee to investigate this and report back to the board in the Spring of 2009."

Zillow and the other 2.0 players have no such restrictions.  Quite the opposite:  they're designed to turn on a dime, to be responsive to competitive pressures, to be creative, to be laser-beam focussed on consumers.  That's why they're so good at constantly turning out great products:  they're designed from the ground up to do precisely that.

Think of the Realtor and MLS boards as being akin to your local PTA.  The PTA is set up to do  extremely well at certain things:  raising money for a school, getting parents to volunteer in the classrooms, fostering interaction between parents and teachers.

But would you choose a PTA-type organizational structure to field a team of world-class baseball players?  No way!  To do that, you'd need to be much more business-oriented.  You'd have to be willing to take chances, to fire players that weren't doing well, and to be a hard-nosed negotiator.  That's now how PTA's are set up.

The next time you get frustrated at our industry's seeming inability to respond to these competitive threats, remember that that's simply the price we pay for having an organizational structure that otherwise suits our needs quite well.  Your local Realtor or MLS board ain't gonna be beating Zillow or Trulia at the technology game any time soon.

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Tags: Alain Pinel Realtors · Coldwell Banker · Intero Real Estate · Real estate · Trulia · Zillow

7 responses so far ↓

  • 1 Michael Wurzer // Apr 9, 2007 at 4:11 am

    Kevin, thanks for you compliments about the FBS Blog! I agree that coopetition is a complex beast and the success of what local MLSs have achieved is often overlooked in these days of idealized state technology wonders. I hope your prediction that the MLS community won’t respond turns out not to be true. In fact, I believe the MLS community is already responding and will continue to do so. Sold information is being published by several MLSs, data standards (boring at first blush but critical) are being developed, and regionals are forming rapidly. Without a doubt, the game is changing (and that’s a good thing) but the MLS community has responded effectively to technological shifts over many decades and I’m confident the community will continue to do so.

  • 2 Kevin Boer, Realtor, 3 Oceans Real Estate // Apr 9, 2007 at 8:51 am

    Hi Michael,

    Your blog has made it to many already crowded feedreaders, so you’re definitely on the right track!

    I agree that the MLS community has responded to technological changes in the past, but have done so quite slowly. That lack of speed may have worked formerly, but I think technological change happens so quickly these days that what may have been a good enough speed a few years ago is longer so.

    Let’s say, for instance, that our local MLS (REIL) here in Silicon Valley want to out-Zillow Zillow. Some forward thinking folks there maybe have some great ideas around social communities, wikis, blogs, everthing Web 2.0 you can think of. Let’s say they could partner with vendors such as yourself and roll out these great ideas in 3 months.

    So far, so good.

    Now…we bring the proposal to the MLS board. I can guarantee you it will die a slow and agonizing death in committee, and if it survives complete asphyxiation, it will be on life support by the time it gets rolled out.

    Even “quick” isn’t fast enough these days.

  • 3 Michael Wurzer // Apr 9, 2007 at 5:49 pm

    Change does seem to be accelerating, that’s for sure. I’ve seen the “death by committee” phenomenon in MLSs (and elsewhere), too. That’s another reason I started the FBS Blog — to keep these issues out in the open for MLSs to consider. I was thinking that the MLS leadership wasn’t engaging in these conversations because so few of the blogs came from the MLS (or vendor) perspective, and so I thought I might be able to provide that platform. Though I’m very excited by the readership so far, I was hopeful I’d get more participation from MLS executives and leadership, but that hasn’t happened yet, which may well be a sign that you are right. We engage with our clients a great deal privately, too, and these topics are all top of mind for them, but I think there is value to engaging the issues publicly. Anyway, thanks for your feedback. These are good times to be involved in real estate.

  • 4 Danilo Bogdanovic // Apr 10, 2007 at 9:45 am

    Well written post about an ongoing issue with MLS’s and the real estate industry as a whole. The issue may also be that some brokers and agents believe that the release of information to the public is a threat to their livelihoods perhaps, that they will no longer be the “gatekeepers” of information. Whether they like it or not, it is what it is and they can go with it and prosper or get left in the dust.

  • 5 Greg Tracy // Apr 15, 2007 at 10:35 pm

    Prudential California is not one of the top three brokerages anymore? When I lived there (1998-2001) Pru Cal was by far the top brokerage in the Bay area (I managed their top office in Castro Valley). Hard to believe that they could not be in the top three anymore- has something happened in the marketplace or with the Pru brokerage?

  • 6 Kevin Boer, Realtor, 3 Oceans Real Estate // Apr 16, 2007 at 9:14 am

    Hi Greg,

    Pru is not a big player here in the mid-Peninsula. Across the Bay they’re much bigger.

  • 7 FBS Blog » Blog Archive » MLS Innovation (Revisited) // May 12, 2007 at 7:31 am

    [...] In my post yesterday on MLS innovation (or lack thereof), I should have linked to Kevin Boer’s excellent analysis from a month or so ago.  For those who haven’t read it, please do. [...]

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