Photo: A. McLin
Photo: A. McLin

The U.S. real estate industry trembled earlier this week when Zillow announced its intentions to buy Trulia for $3.5 billion in stock. The deal, if approved, would create a colossus in the industry with more than 130 million monthly visitors and over 2,000 employees.

For years, many real estate organizations have viewed Zillow with a wary eye, concerned that the company would move onto their turf by getting involved in the real estate transaction. Zillow has long battled against this theory, with CEO Spencer Rascoff earlier this year declaring to the real estate industry that “we come in peace.” In multiple interviews, Rascoff also has noted the importance that tech-savvy real estate agents will play in brokering deals in the future.

Obviously, the message hasn’t completely resonated. At least not with the National Association of Realtors.

In a 930-word manifesto, NAR’s Steve Brown and Dale Stinton write about the challenges real estate professionals face, speaking about the power of technology to provide “instant access” and an “insatiable demand for more and more meaningful information.” They also write that “data does not define us.”

Steve Brown
Steve Brown

The essay does not mention Zillow or Trulia by name. But the undercurrent is clear, especially given the timing of the message.

Things are changing. And they are changing fast. And real estate professionals better keep up or they are going to get run over.

The message is especially interesting given that the National Association of Realtors is allied with Realtor.com, a division of Zillow rival Move Inc. That competitive angle is apparent in the essay, which notes that businesses always emerge to fill a vacuum. (Obviously one that Zillow and Trulia have filled with their consumer-friendly mobile apps and Web sites).

“We need to embrace competitive forces, learn from them and adapt,” Brown and Stinton write. “Competition should strengthen us because of the healthy tension it can create but we must also strengthen our resolve and stand up for ourselves.”

Dale Stinton
Dale Stinton

In addition, Stinton and Brown write that real estate professionals themselves must change.

“Your future lies in upgrading and elevating our profession to make you absolutely indispensable to the real estate transaction,” they write. “Do not fall in the trap of thinking if we just regain control of the data that everything will go back to the way it was. It won’t.”

Here’s the full essay:

Much has been made of how technology has and will affect our lives and chosen vocations. Technology speeds things up. Technology provides instant access. Technology feeds the insatiable demand for more and more meaningful information. Information wants to be free. Technology and ‘change’ are often used interchangeably to remind us that our world tomorrow will be very different than it was yesterday. Then you throw in a healthy dose of ‘who moved my cheese’ and all those other consultant driven mantras about adapting to the new world order and quickly your head is spinning and you just want it all to stop. But it doesn’t and it’s not going to!

The legendary Steve Jobs was described as mercurial, a little crazy, and passionately driven. But one of his favorite quotes tells us everything we need to know about him: “You can’t connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

So what’s all this got to do with you and your participation in organized real estate? Let’s go back and connect the dots. An industry that’s come together for over one hundred years. Inventors of cooperation and compensation. Inventors of self policing through a strict code of ethics and professional standards. Inventors of MLS. Inventors of RPAC, the countries strongest political force. Inventors of yes, Realtor.com®, the first viable real estate portal, the traffic leader in the space for the first 15 years.

Here are a few Realtor.com dots. The business case for Realtor.com®, now 18 years ago, was summarized in the popular “lions coming over the hill” speech which has been repeated many many times. In its’ rawest form it said – if others harness the ability to aggregate data from your listings, and capture the consumer upstream, you will be disintermediated. Therefore, in exchange for using your listing data to make commerce, we will cause to be created a Realtor®-friendly, accurate, time sensitive, site with explicit guarantees not to threaten your commission or disintermediate you. To this day, Realtor.com® has kept its promise and it will continue to do so.

But as in any business, where there is a vacuum, the market will move to fill it. This is a good thing. We need to embrace competitive forces, learn from them and adapt. Competition should strengthen us because of the healthy tension it can create but we must also strengthen our resolve and stand up for ourselves.

As Realtors®, data does not define us; our insights, experience and expertise run much deeper than that. So as the industry moves forward, we have to look at ourselves – and better define our value proposition.

NAR believes that a highly skilled and professional Realtor® is and will always be integral to the process of buying and selling real estate. The association and its leadership is committed to promoting and supporting the Realtor® brand and Realtor® value proposition to consumers. In the internet age, consumers are going to go online for real estate information, but they will continue to rely on local experts when they buy and sell property. NAR is committed to ensuring that Realtors® are those local experts.

So just as data does not define us, nor should we allow service providers to become too comfortable in defining how you conduct your business. In practical, actionable terms – this is what you can do:

Demand the brokers and the listing agents identity be prominently displayed
Demand timely, ‘fresh’ listing display
Do not allow your listings to be modified
Do not allow co-mingling of your listings with FSBO’s
Demand preservation of copyright notices on your listings
Understand the terms of use you agree to for your listings
Demand that your provider highlight and promote the term Realtor®
AND – NEVER, EVER let any provider threaten your commission!

This advice is provided as a way to emphasize that your listings, your data were acquired by you through tremendous work and effort, and a heck of a lot of money is being moved around in the marketplace predicated on you continuing to provide it. It’s seed corn – don’t squander it.

Now comes the hard part – we must be brutally honest – you must change and quickly. Your value proposition is not data – it’s YOU! You must be the best and you must be the most professional and ethical. For too long we’ve allowed the term Realtor® to be bandied about as a low ranking career choice. Your future lies in upgrading and elevating our profession to make you absolutely indispensable to the real estate transaction. Do not fall in the trap of thinking if we just regain control of the data that everything will go back to the way it was. It won’t. A quote from the NAR Strategic Plan says it all – “We need to be totally consumer centric – not what we want but what they want – and be able to adapt quickly.”

With over 1 million members it’s time, as Steve Jobs said, to trust in something, and that something is a history and a future of which we all can be proud. Connecting a million plus dots is never easy, change can be excruciating – but if not now, when?

Sincerely,

Steve Brown
2014 NAR President

Dale Stinton
NAR Chief Executive Officer

Comments

  • jettcity

    Another industry of middle men trying to protect their turf so they can continue to leech the consumer by providing a low value-added service for a high return.

    • Jony Monkeyseed

      Pardon me for reading your comment, But I want to point out that for millions of people, this is called a job, which pays a reasonable living salary. Many realtors have 20+ failures before closing a single sale. It’s hard work.

      Home Ownership is for many people their single most expensive purchase, and very serious. Federal grants are also very often made available for first-time buyers. Wouldn’t you prefer to get valuable advice worth paying for? It’s not like renting an apartment where if you make a bad decision, you can complain to a landlord.

      I’d take a licensed professional’s advice any day. But if you prefer to talk down the profession, likely your also in the demographic that buys electronics from the back of someone’s parked van. Eventually you’ll be burned.

      • RunTheNumbers

        Aside from the snarky ending, these are valid comments. That said, consider that “your mileage may vary”. Regarding a couple of comments:

        > for millions of people, this is called a job, which pays a reasonable living salary.
        This is true, but the world is a competitive place. If a transaction can be automated, it likely will be. Not because we want everything electronic, but because we want things to cost less. When online stock brokerages came about in the nineties, many stock brokers said the exact same thing about “valuable advice”. It’s the nature of the beast: adapt….or don’t.

        > Wouldn’t you prefer to get valuable advice worth paying for?
        The real question is whether the advice is worth the cost. With increasing home prices, realtors continue to charge a percentage commission, but the advice remains the same. It’s the cost of the advice that has created the market for Zillow, Redfin, etc.

        • Kary

          I’d be really interesting in what advice you think those sites provide. They provide some neighborhood information, but they really don’t teach people anything all that useful about buying or selling houses.

          To use an analogy, it would be like getting corporate financial data on-line. Yes that provides a lot of information, but it doesn’t give you any advice at all about where to invest your money. Consumers need both information and advice. This sort of thing is not advice (and it is not particularly insightful either):

          http://www.zillow.com/home-buying-guide/

          • RunTheNumbers

            Good point, Kary. I haven’t relied on Zillow or Redfin for advice in home-buying, so I can’t speak to the effectiveness of their sites in that regard. I have my own experience with realtors in home purchases and sales (bought 3, sold 2), and I call those results ‘mixed’.

            I’ve not found advice from my agents to be effective, or valuable at a premium level. It’s only my personal experience, but I’ve received little advice from realtors that made a difference in our transactions. Not a reflection on the agents; just the nature of those transactions. Because of that, it makes that percentage commission a consideration in future transactions because I question the value of it.

          • Kary

            It could be the agent. If you’re the buyer and they’re pressuring you to like every house they show you, that is not offering advice. That is trying to generate a commission.

  • Susabellah

    So far, at least, Zillow cannot take you on a tour of houses you are interested in seeing. Still need a realtor for that, and then who gets the commission? Not Zillow.

  • Guest

    Laugh. I bet horse and buggy drivers were similarly cocksure when Ford and Chrysler started ruining their business.

  • Kevin Foreman

    Seattle is very much on the vanguard of real estate change with leading edge Portals (e.g. Zillow), leading edge Brokerages (e.g. Redfin), leading edge platform providers (e.g. MarketLeader, Reliance Networks, Windermere Solutions / TouchCMA) and lead edge real estate data providers (e.g. INRIX Drive Time *). So the Puget Sound region is bound to win, no matter how this marketplace plays out.

    Given that it takes between 125 to 180 million actual showings (depending on which estimates you believe) to sell ~5 million homes in the US each year, most would agree their is still much room for transaction optimization. This search and purchase optimization looms large without even speaking about the room for optimization during the mysterious and outdated closing process.

    Regardless, the next year years will be very exciting as home buyer and sellers become more educated, real estate professionals will need be become more consultative.

    Kevin

    * Disclosure – I am employed by INRIX

  • Uber Hoo

    Steve Jobs would roll over in his grave if he could be made aware of this
    malappropriated use of his insight. The article convinced me to avoid a classic (overpaid) realtor and try one of the online services when I sell my home next year. Never sold one yet, but have purchased two over the years – bought the first one I saw, after having done my own research anyway. But I guess it’s the sellers who are stuck over-paying; as the article says, never-never-never

  • Dave

    Houses are different than cars. Each home is a unique asset, ages differently, is decorated differently, etc. plus schools and neighborhoods are very personal choices. it is also the largest purchase, by far, most people make but also one people generally only do a few times. Seems unlikely the transaction will ever be a purely online transaction. But the inefficiencies and lack of technological enablement is startling.

    My money is on highly technology enabled brokers like Redfin, perhaps also on the most technology savvy of the existing brokers. Huge room for improvement and in providing the data relevant to a sale, plus streamlining the process. I agree with Kevin, seems like Seattle wins here regardless.

  • http://www.extendedresults.com/ Patrick Husting

    This is a really simple discussion. The realtors gets the listing and put their data into the local realtor association database which is the MLS. Now, if the MLS sells that data to Zillow, then the realtors have nothing to complain about. I’m sure Zillow is paying fees to the MLS for that data.

    Maybe the MLS should be kicking back to the realtors? Not sure what the MLS does with those data fees. But if you give up the data per the terms of the MLS and Zillow and other like companies pay the fees, no big deal.

    • Kary

      It varies by area, but in Seattle the NWMLS does not feed to these sites. It is up to the agent or firm to do so, and those that do so do it without compensation because it benefits their seller clients.

      Because it’s up to the agent or firm to set up the feeds, Zillow, Trulia and Realtor.com are horrible places to look for listings if you’re a buyer, because the listings are incomplete and stale. Local buyers are much better off using one of the several broker sites which are just as good or better at searching for listings. There has been talk for years of the NWMLS automatically generating the feeds, but I’ve not seen any action on it. In fact the last action I recall is the NWMLS quitting sending its listings automatically to Realtor.com. That happened in about 2009 or so.

  • George Wedding

    I know ethical realtors and understand why they’ve long sought to tightly control their listings data. Those days are ending. Unfortunately, I’ve encountered more than a few unethical realtors too, who haven’t hesitated to steal my professional photographs for use on their commercial Web sites. The first thing I’d like to see the NAR do is drop the holier-than-though crap and police their members from pilfering photos from professional photographers and then sanction them when they do. This practice is rampant and it’s disappointing in people who claim to be professionals.

  • Lowell Peabody

    There is certainly more to realtors than data. NAR has been able to provide realtors in many was from listing service to education being a central advocate for the industry and establishing a recognition of professionalism. This article seems to put the pressure on Realtors to figure out why they are not defined by data and suggests that to fight back Realtors still need to be united in their cause. I’d like to politely say “Bunk!” As more and more services become available via the internet for both Realtors and consumers there begins to be less and less reason for NAR. NAR should be embracing the changing environment. Once a leader in centralizing information, NAR is quickly losing its edge (Trulia and Zillow by example). The planks that make NAR viable are being to be not nibbled away ay but lost to other outside accessible systems.

    I look at this article as a cry for help from NAR. Its response to moving the industry forward is to make the brokers stand up for themselves and define brokerage in other terms for adding value to the transaction process. Somehow this is telling Realtors that NAR is still relevant and is a central rallying point for the industry, yet there is little offered to date on the value NAR adds in this changing marketplace for more than data and control of transactions. The power of lobbying efforts also may soon get eroded. Then what?

    The issue is redefinition. No, data is not the definition of Realtors OR NAR. Outside providers are making headway and each step they make removes a bit of the value NAR has added in the past. Yes Realtors need to define themselves (as always) but now so too does NAR. Rallying the troops, calling them to action to go out and “redefine themselves” should also call on NAR itself to lead the charge and redefine itself and its ability to remain relevant to Realtors in this fast changing environment.

    So what does anyone else think?

    • Broker Associate

      Our own Realtor Associations did not build the portals that people go to that are easy to navigate and create leads back to their members that pay thousands of dollars every year. Steve Jobs did that to bring the consumer back to the source with Apple. Zillow and Trulia purchases our data and then sells the leads back to Realtors. Realtor Associations need to build a portal that does just that for it’s member and brings the consumer back to the source. There will always be people looking for the flaws in business models and filling the need however Realtor Associations need to always be looking to help their members and build strength within the community.
      Realtors should also be required to be real estate brokers in every state and not have a large percentage of their members weekend warriors as this is someone’s largest investment, purchase of their lifetime.

      • Kary

        I’m not sure the leads generated are all that good. Look at how few leads Redfin converts with a really good website that presumably pops up a Redfin agent picture with every page. Redfin is probably the most viewed website in Seattle, but they are not anywhere near the largest firm.

        • Lowell Peabody

          Keep watching, thin as the leads may be now these companies are about one aneurysm, I mean algorithm away from getting this aspect right. The fact that a system is out there and running is the real news. The quality is coming.

      • Lowell Peabody

        Not sure I follow the Steve Jobs comparison, but if you meant he innovated to get consumers back, I agree. I also agree that Realtor Associations should and could have presented a leads system based on Realtors listings but “that horse is now out of the barn”. “Realtor Associations need to always be looking to help..” but how’s that working out lately? The article suggested that Realtors need to stand up for themselves and recognize the value they create. I just thought that to be nice I could agree with that premise so long as Realtors hold the feet to the fire of the Realtor Associations that to date have missed the opportunities to help their members.

    • Lowell Peabody

      Apologies for the multiple typos. Clearly I was typing ahead without seeing and paying attention to the auto changes being made…

  • whysoserious

    trulia + zillow = LEADS…they take your MLS ” data” that you post, make it look better and easier to sort through, generate a name and number aka a LEAD and sell it back to you..you’d be surprised at how much you knuckleheads pay for LEADS.

    • whysoserious

      they add blogs + QandA + real estate “data and information” to get more traffic, which generates more LEADS

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