Maybe it’s the frustrated business school professor in me, or the memories of sitting in Professor Barry Nalebuff’s classes during business school, but what has fascinated me the most about the ongoing debate about Trulia’s no-follow outbound listings links (started here by Galen Ward, then continued here, here, here, and here) is not the arcana of the no-follow tag, not the dissection of SEO intricacies, and not really even the question of what is or is not appropriate to do with listings online.

No, what really fascinates me about this debate is how it accentuates co-opetition in the real estate industry.  Co-opetition is simply the notion that companies compete and co-operate simultaneously.  Arch-rivals Northrup Grumman and Boeing go mano-a-mano to get a lucrative government contract … and the winner often subcontracts part of the project to its rival.  Microsoft and Oracle have competing database platforms but often sell eachother’s products.

In our industry, co-opetition reaches nearly incestuous levels.  For instance:

• Brokers John and Betty compete for the listing at 123 Main Street.  Betty wins and puts the property on the MLS.  The very next week John brings potential buyer clients to the property.  Sure, he would rather have won the listing, but that’s in the past.  Now he’s working with Betty to consummate the transaction.  No hard feelings.
• Realtor Bob hangs his license with ABC Realty.  He puts an ABC Realty sign on the front lawn of all his listings, and the ABC Realty logo is prominent in all his media ads.  He’s co-operating with his real estate brokerage to promote their brand, and he in turn benefits from that brand awareness.  Co-operation.  A phone call from a prospective buyer of one of Bob’s listings, however, may well go through to the agent on “floor duty.”  That agent turns this phone call into a client, who goes on to buy a different listing, not Bob’s.  That’s competition — Bob would have loved to get that phone call and turn it into another client, but his competitor — the other agent, and to some extent his own broker — snagged that client.  Co-operation plus competition = co-opetition.
• A thousand local brokers — each fierce competitors — co-operate to run a local MLS.  They put their competing listings up on the MLS, and they compete to bring buyers to each of the listings.  At the close of each transaction, we again have co-opetition — competing parties co-operating for the sake of the deal.
• Broker Tom snags a listing and puts it on the MLS.  Via the wonders of IDX, that listing spreads its tentacles onto a thousand other sites, including that of arch-rival Broker Sarah.  As long as Broker Sarah indicates that Tom is the broker of record, it’s all good.  Her site is much better than Tom’s, so she gets more traffic and hence more clients online.  The fodder that draws in those visitors?  Listings … not only her own, but also Tom’s.
• Broker Rachel gets the listing at 789 Elm Street and puts it on the MLS.  She also puts it on Trulia, which, like the MLS itself, exposes the listing to a much broader audience than she could reach on her own.  She benefits from the increased exposure, and Trulia gets more inventory to display.  It’s a win-win — co-operation at its finest.  The next day, a prospective homebuyer passes 789 Elm Street and Googles the address to find out more.  Who’s on the top page?  Trulia and Broker Rachel’s listing site.  Now they’re competing — for web traffic.

There really is nothing new under the sun.   This business has always been a co-opetitive one, and we’ve always simultaneously co-operated with and competed against not only every other broker, but many of the third-party advertisers, aggregators, and media companies.

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Insomniac Dustin Luther couldn’t quite stay up late enough last night to witness the launch of the US version of Dothomes.com. But here it is, yet another real estate search site: dothomes.com, already live in South Africa and the UK.

I commented yesterday that recent property search entrant Roost.com’s business model is clever, unique, and possibly illegal non-MLS-complaint.  [1/30/08 update:  I’ve been thinking about my choice of words, and “illegal” is definitely not the word I should have used.  “Illegal” is mugging somebody, or stealing something.  What Roost is doing is 100% legal and above-board.  It may — and I emphasize may — be viewed by some as being non-MLS-compliant.]

A first glance at Dothomes suggests a similar, though unfortunately more damning verdict: extremely clever, very unique, and definitely illegal non-MLS complaint.  [1/30/08 update:  What Dothomes is doing is absolutely 100% legal, but again may be interpreted by some as being non-MLS compliant.]

The clever and unique part is easy to see: they’ve managed to pull off what Google Base real estate could have been, and may well still become: a Google-ish type search experience — with a whimsical “I’m feeling wealthy” instead of “I’m feeling lucky” button — where instead of choosing your criteria from input boxes or sliders, you simply type in what you’re looking for.

Right-oh then, let’s give it a try, shall we?

And, as the Brits would say, “Bob’s your uncle!”

A quick glance at the 99 results confirmed that they all had 3 bedrooms and were under $850K. Pretty slick! (As a sidenote, many of the results were in South San Francisco, an entirely different city. But I’ll cut them some slack on what is, after all, a pretty new product.)

So that’s the clever and unique part. Here’s the (tragically) illegal non-compliant part: per their own FAQ/blog, they get their data from either a feed that a broker sets up or by crawling the broker’s site.

From a feed the broker sets up: So far, so good…as long as it’s only that broker’s listings.

By crawling that broker’s site: At most MLS’s this is strictly verboten.

Most of the first few pages contained only listings from Realogy brands Coldwell Banker and Century 21. Since Realogy has been fairly open of late with distributing their inventory online — e.g. with Trulia — it is possible that Dothomes has an agreement with Realogy, though I have not heard such news.

A few pages later I see a few listings from my ex-Broker Alain Pinel Realtors. Now the warning bells sound. Unless things have changed dramatically since I left a few months ago, Alain Pinel would never ever distribute its listings to a non-IDX site — Trulia being the exception (probably because Sami is such a sweet talker!)

My prediction: tragically, Dothomes will be forced fairly quickly to adopt an alternate and legal listings acquisition strategy: either MLS-by-MLS, or broker-by-broker.

Further commentary:

• Future of Real Estate Marketing weighs in.
• Mashable wonders if Dothomes will be able to compete against Trulia et. al.
• SearchEngineLand notes that in real estate search, just like travel search, there is no one comprehensive site with all listings. (Realtor.com could lay claim to the title of “most listings” by virtue of having most broker-listed homes, but it does not include FSBO’s…plus the site just, well…sucks)
• Todd Carpenter, in what I believe is a quote from Dothomes founder Douglas De Jager, says:
  

  Because DotHomes does not serve up those details pages, they do not need permission from the listing agents.
  

  I hope this isn’t Dothomes’ understanding of what most American MLS’s allow, because if it is, he’s in for a nasty surprise.

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Trulia! Zillow! … and now Roost! Where do they come up with these names?

Roost, a new startup in the increasingly crowded real estate search space, launched last week to a cacophony of commentary from the re.net. Joel Burslem covered its feature set, its performance, and noted that Roost has the complete MLS inventory because it gets its listings from MLS’s, albeit indirectly. Greg Swann fawned over its business model and complete inventory.

If I understand Roost’s business model correctly, it intends to make money in a way that’s clever, unique, and possibly illegal non-MLS-compliant.  [1/30/08 update:  I've been thinking about my choice of words, and "illegal" is definitely not the word I should have used.  "Illegal" is mugging somebody, or stealing something.  What Roost is doing is 100% legal and above-board.  It may -- and I emphasize may -- be viewed by some as being non-MLS-compliant.]

The unique aspect of its business plan: it offers brokerages the opportunity to sponsor search results and get the resulting click-throughs to their own site. A search in Sacramento, for instance, reveals that the current sponsor is Sacramento heavyweight Lyon Real Estate.

The first three listings I see are from VM Group, Gold Financial Services, and Prudential CA Realty, all clearly identified in compliance with Sacramento’s Metrolist MLS services.

Here’s the tricky bit…if you want more information, you click on “View Details on Featured Broker’s Site.” When you do that for, say, the Prudential listing, you get information about the Prudential listing on the Lyon Real Estate site:

This sleight-of-hand is accomplished through a too-clever-by-half url manipulation, much to subtle to be noticed by the average consumer, but apparently kosher enough to pass muster from the Sacramento MLS — at least for now. What if Prudential gets upset that the click-through on one of their listings on a public MLS-ish site goes through to one of its competitors?

Here’s how (I believe) Roost and Lyon defend themselves: Look at the url. When you search in Sacramento, you’re not actually using the Roost site at all; you’re actually using the Lyon site (GoLyon.com). For as long as Lyon is the sponsoring broker, the search is being conducted at golyon.roost.com — a (sub)domain under the control of Lyon Real Estate — and hence in compliance with those silly old arcane MLS rules.

Watch what happens when you go back to the site. In my case, I ran another search, and this one was sponsored by Intero. Same results, same look and feel, but the search is now running at InteroRealEstateIDX.com…and sure enough, the click-through goes to Intero’s own site.

Very, very clever. I really like this part of their business model, for reasons I’ve explained before: The current real estate business model heavily favors the listing side of the equation, and I’ve been clamoring to the likes of Zillow and Trulia to think about buy-side advertising offerings. If I’m a small brokerage in Sacramento, and I currently only have, say, 5 listings, I could decide to spend, say, $5000 sponsoring X number of real estate searches in that market. The number one bait that still seems to draw eyeballs in real estate is listings, listings, listings, and if I don’t have many of my own, why not leverage those of my competitors?

Now for the questions of MLS legality compliance …without going into all the details, I tried something like this trick about 2 years ago. It involved subtle manipulation of a url so that searches on a heavily-trafficked site were done — technically — using a url that was under my control. A good lawyer could easily have argued that this was in strict compliance with all the MLS rules. No dice. Within hours I got slapped down — not just by the MLS, but by my own broker!

I certainly wish Roost all the best, but I’m afraid they’d better put a sign on their front door that says, “Couriers please deliver cease and desist letters here.” Any business model that requires MLS compliance involves by definition an order of magnitude more headache. Why do you think Trulia and Zillow decided to get their listing feeds straight from the brokers?

Further commentary:

• TechCrunch, predictably, gets a few facts wrong. It’s not clear they understand the difference between a broker (e.g. Redfin) and a listings site (e.g. Roost.) Also, if I understand this bit of fine print on Roost’s site, they don’t get their data directly from the MLS, but by piggybacking on broker IDX sites. Subtle but important difference.
• Dustin notes that piggybacking off IDX feeds is a great way to scale your listings database quickly, but it puts some pretty onerous restrictions on what you can do with the data.
• Michael Price explains the url sleight-of-hand.
• Jay Thompson notes that, once again, the business model is about brokers providing listings, then paying for traffic.
• Sellsius praises Roost’s comprehensive and accurate results.

And still more commentary:

• Brian Boero* notes the irony that Roost is built on fairly antiquated technology — IDX — but provides a pretty rich user experience.

* At the last Inman, Brian and I finally answered that great conundrum: Did his ancestors add on “o” or did mine drop an “o” at Ellis Island? The answer: neither. His ancestors are Italian, and mine Dutch. So no, we’re not related — except of course, through Lucy.

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Hot on the heels of Redfin’s controversial news that analysis of the MLS data conclusively shows that Redfin agents are better negotiators, 3 Oceans is pleased to announce the results of a study showing, again conclusively, that agents who take lots of property pictures are better negotiators.

After downloading all transactions in 2006 in the REIL MLS, the results are striking: properties in which the listing agent only took 1-3 pictures sold on average for just under $900K, while properties with 4-6 pictures sold on average for nearly $930K. But the really trigger happy agents did the best: their properties with 7-9 pictures sold for a whopping $1,077,933 on average.

Here’s my only question: What happens when a 9-picture-taking listing agent goes head to head with a Redfin negotiating agent?

P.S. List with me. I’ll take 9 pictures of your property. It’ll sell for more.

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I doubt I caused this, but I’m shocked nonetheless.REIL, our local MLS, has just announced a rule change to its long-standing prohibition against displaying “sold” listings on a web site:

Over the past year, REIL’s Board of Directors, its Data Use Policy Committee, and REIL staff have researched data policy issues. From this research and following in the groundbreaking footsteps of Northwest MLS’ sold-data policies, RE InfoLink’s Board of Directors has adopted a new data use policy that addresses these trends. The policy:

• Allows more types of information on IDX websites such as:
• Search and display of SOLD listings
• Automated valuations
• Statistical analyses (only allowed when data is obtained through a datafeed and custom analyzed – does not include reprinting statistics published on REIL.com)

What does this mean, and why should you care?

If you’re a Realtor, there’s bad news and good news. First, the bad: prospective clients will no longer need to call you to get information about properties that have recently sold. The good news: prospective clients weren’t actually calling you anyways, since they could get this information from various online sources (e.g. Zillow et. al) Now you finally get to compete with Zillow as an information source for sold properties. (Hint: If this rule had been changed, say, 3 years ago, Zillow probably wouldn’t exist today.)
If you’re a member of the public, it means the old contemptuous way our industry used to treat you — “we’re the guardians of the information, and you must come through us to get it” — is continuing to change. As an industry, we’re finally acknowledging that our value-add isn’t and shouldn’t be access to information.

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My previous post about Realtor.com displaying sold listings led to a stimulating converation with a reader named “Endtable20″, who challenged me on my assertion that Realtor.com is going against our local MLS rules in doing so. I’ll be the first to admit I could be wrong, but here’s more evidence. You decide!

The “Internet Display Guidelines” document starts as follows:

I know from personal experience that “Guidelines” is not the right word. I tried to bend the rules myself once and got roundly called to task within a few hours.

Further in the document we get this: [yellow shading mine]

“Authorized User” refers to someone with whom the MLS has an agreement, be it a broker or a 3rd party like Realtor.com. “Electronic Clients” are people who view this information online.

It’s pretty clear that displaying “sold listings” is prohibited.

The final shaded text says that the Authorized User may “augment” the MLS data with “additional data not otherwise prohibited from display so long as the source of such data is clearly identified.”

Realtor.com follows the rule about identifying the source of the other data…

…but that’s a moot point because the data being displayed (sold listings) is clearly prohibited.

Therre are only two ways I can see that would make this ok:

1. The agreement that REIL has with Realtor.com is a different agreement than REIL has with every other “Authorized User.”
2. Creative legal reasoning that says the data being displayed is not “sold listings” but “sold homes.”

By a similar argument, I could get around the prohibition on displaying “sellers’ or occupants’ names, phone numbers or email addresses” by

1. identifying the non-MLS source from which I got that data and
2. referring to “sellers’ or occupants’ names, phone numbers or email addresses” as “owners’ or renters’ personal information“? Something like this, perhaps:

Seems pretty clear to me. Am I missing something?

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Late Friday afternoon, I heard back from our local MLS about realtor.com’s displaying of sold data on their web site. Their interpretation is that Realtor.com is not breaking any rules after all because…their sold data comes from a 3rd party aggregator, not the MLS.

So let’s follow a home’s journey on realtor.com from when it’s first listed to after it’s sold. The following simple diagram will help:

1. The listing agent uploads the property into the local MLS, which in turn feeds the property into Realtor.com.
2. The property sells. Poof! The listing disappears (temporarily) from Realtor.com because it’s not allowed to display sold listings if the source is the MLS.
3. When the property closes escrow, the escrow officer submits the paperwork to the county.
4. A county employee enters the data into its system.
5. Onboard, a real estate services provider, sucks the data in from the county records.
6. Realtor.com sucks the data in from Onboard. Voila! The property appears again.

Hmm…let’s look at the rules again. Our local MLS has the following regulation [sic]:

[I assume the first line is supposed to say, "No one may display the following...]

So if the data on a sold listing comes from some place other than the MLS, then it’s no longer considered a sold listing? Seems kind of shady to me…

Again, don’t get me wrong. I think the prohibition on displaying sold data is a silly anachronism, and I certainly don’t begrudge Realtor.com a little bit of enterpreneurialism. I just think it should be a level playing field for everyone. Based on my past experience, if I were to bend the rules like that, I suspect I’d be called to task pretty quickly.

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Typically, a new home listing gets a flurry of activity as real estate agents and the general public swarm in to take a look. If that home is still on the market after too long a time, it becomes “stale” and the market loses interest in it. There are several reasons why that home may not have sold yet, but often it boils down to being priced too high: no matter what “defects” a home may have — typically poor location and/or condition — it will sell if the price is right. The problem is, once a home becomes stale, it acquires a stigma, and even agents who haven’t seen it assume there must be something fundamentally wrong with it — $35,000 in termite damage, perhaps? Awkward layout? Dead skunk in the living room? The standard solution in our area involves three steps:

• First, an awkward conversation between the seller and the agent that starts with, “I think the market may be telling us we’re overpriced” (a message no seller likes to hear).
• Then, if needed, a quick property facelift — a new paint job, maybe some improved staging, maybe taking that dead skunk out.
• Finally, a bit of “relisting” magic…the property disappears from the MLS for a few days, then is reincarnated a few days later with a new price and a new MLS number.

While this little trick sometimes works wonders for getting the property sold, it can be confusing for the agent community and the general public. Is this really a new listing? Do I recall having seen it before? Has anything changed about it? It also skews one of the key metrics the industry uses to track activity — “Days on Market” or “DOM.”

Our local MLS service, REIL (Real Estate Infolink) is soon going to ban relisting. (Full article here.) In order to get a new MLS number (and hence appear like a fresh listing and get a fresh DOM count), the property will have to be off the market for 30 days, and the seller will have to sign a new listing contract.

I think this will policy will have several effects:

• For agents and the general public, it will reduce the confusion about whether a property is newly on the market or not.
• For the seller and the listing agent, it’s going to be more important than ever to come on the market at the right price. There’s going to be no hiding the fact that a particular property has been on the market for, say 8 months.

My opinion? I think it’s the right move. Anything that provides more clarity to the market and enforces better pricing discipline on sellers and listing agents is a good thing.

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