A working paper, “The Real Estate Market 2003-2012,” offers grim views about the far-reaching effects of foreclosures and the future of big-brand real estate brokerage companies and traditional multiple listing services.
A separate, illustrated booklet, “The Demon of Marketing,” warns that rapid industry changes fueled by Internet marketing will “definitely destroy many who are not innovative” and features graphic imagery of burning brokerage offices collapsed atop bodies.
Both publications promote a “Universal MLS” that is the brainchild of Colorado real estate broker Creed Smith, a specialist in bank-owned foreclosure properties, also known as real estate-owned or REO properties.
Traditional MLSs and Internet-based real estate search sites typically place numerous restrictions on how their collections of property information can be disseminated and displayed. Smith has plans to build a new MLS, accessible to anyone who pays a subscription fee, without the long list of restrictions. All participants in this system can enter or download data, Smith said.
“That’s kind of the fun and neat part of this thing — let anybody input the data and let anyone extract it. They create a … business model, put it back out there with value-added information and the market determines whether it’s good or bad. The only thing we request is don’t lie, cheat or steal,” he said.
Data can be flagged if the accuracy is questionable, he said, similar to the craigslist.org community networks.
Smith is not alone in envisioning massive change for the patchwork of 100s of MLSs across the country, each with its own set of rules, fees and governance. This network of MLSs is definitely in transition. There are a range of collaborations and discussions taking place at the local, state and national level among industry stakeholders.
The National Association of Realtors, for example, has formed an advisory group to study the possibility of creating a national data repository that could serve as the property information backbone for MLSs across the nation. The California Association of Realtors and several other state Realtor groups are studying ways to better consolidate MLS data, and there are several examples of local and regional MLS collaborations across the country.
Populating the Universal MLS with bank-owned foreclosure properties is a good place to start, said Smith, as banks want to maximize the value of these properties and may be open to new ways to market them. Smith said he hasn’t yet secured any big REO property owners to participate in the Universal MLS. He said he wanted to “let it kind of percolate” and gauge interest in the concept before actively soliciting their participation, though he added that the Web site is already live.
Smith said he sees the potential value for developers and builders to load information on new homes into the Universal MLS system, and for sellers to input for-sale-by-owner properties. Ultimately, any type of property could be placed in the database, he said, including rental and commercial properties.
While Smith has set up UniversalMLS.com as the home for the new property-information site, he said that site is not intended to be a public, end-user site for the display of information. “We’re not a retail site,” he said. “We want to be the warehouse, the storage facility and the conduit of information.”
A real estate broker since 1987 who has a master’s degree in marketing, Smith said his vision for a new breed of MLS is based on his belief that real estate agents and brokers will inevitably play a lesser role in real estate transactions as Web-based services become increasingly popular with consumers.
“I’m absolutely sure that the way we sell real estate is going to change,” Smith said. “I foresee that there’s going to be a division between what brokers do and what the Internet can do for buyers and sellers. I think the Internet is going to be the central marketing tool in creating specialized services for buyers and sellers. I think they’re going to be able to find each other without a broker.”
He said he expects that real estate professionals of the future will focus more on handling the paperwork related to the transaction, such as purchase offers and disclosure documents.
MLSs have enjoyed a semi-monopoly position of broker-supplied real estate information for many years, Smith said, though the Internet is changing the landscape of real estate information. “They are still trying to retain copyright control, possession and have complete legal control over that information — I don’t think the market wants that anymore,” he said.
“I think the Zillows, Googles, Trulias and Craigslists — they have all proven that the market absolutely loves what they do — and yet they still kind of keep control of the data. Imagine if you open up that information to whoever wants it, and allow niche specialists to add … value and republish this for the market to use and recapture clients. I think that’s where we’re heading.”
“The Real Estate Market 2003-2012” working paper, prepared by a group Smith leads called Inevitable Change, envisions that most MLS systems existing in 2007 “have failed and are out of business,” that brokerage giants RE/MAX and Realogy will lose almost one-third of their agents because of “competition and market pressures,” and that brokers or attorneys will be hired to assist in transactions after buyers and sellers complete initial negotiations in real estate transactions in five years, as examples.
Smith, who is broker-owner for Lakewood, Colo.-based Smith Creed & Co., said Inevitable Change is a “a little think tank” that includes marketing and technology professionals — he said he cannot divulge the names of other participants as he promised them anonymity. The working paper states that it was presented to the bank-regulating U.S. Office of Federal Housing Enterprise Oversight and the U.S. Department of Housing and Urban Development, Fannie Mae and Freddie Mac. He said this week that he hadn’t yet received much feedback on the report, as it was only recently distributed.
The “Demon of Marketing” illustrated guide contains illustrations showing the popularity of real estate search and marketing sites including Zillow, Google, Trulia and Yahoo! Real Estate, and states, “The market runs swiftly to those with the best. Those not innovative will be laid to rest.”
Also, the guide states, “From a marketing perspective, the best-case scenario for you as a seller is to have every buyer on the planet know about every property you have for sale … the more buyers who know about your property, the better the chance for a sale at the highest price the market will bear.”
The cost of the Universal MLS service, according to the Web site, is $30 per month. Smith said he expects the site will catch on with niche brokers — the Web site provides the example of a Japanese real estate company that markets U.S. properties and a U.S. broker who specializes in a multistate region as potential subscribers of the system.
Plans for the Universal MLS have attracted mixed views from other real estate professionals, ranging from skepticism to support.
Kristal Kraft, a real estate broker for The Berkshire Group Realtors in Denver, said she is skeptical about the Universal MLS system. “Wow. Yet another MLS system that will change the world. And for only $30 a month,” she said.
“The concept might be nice, but this world doesn’t really need yet another MLS system. What we need is more time to help the consumer understand and digest all the information that is available to them. Information is not the problem, lack of knowledge and understanding is the issue.”
And Bonnie Cox, who leads a team of agents for RE/MAX Masters in Englewood, Colo., said that the business model for Universal MLS, as outlined at the Web site, is “not particularly straightforward.”
She added, “I wonder who will monitor exactly where this data goes and how legitimate and secure the information will be.”
Joe Staib, a property investor in the Denver area who has spoken with Smith about plans for the Universal MLS, said he supports Smith’s effort to loosen restraints on property information and he expects that an industry shift in this direction is inevitable.
“It’s just a matter of freeing up that data from the multiple listing (services) at this point. I suspect the real estate industry will go down the same path that we saw in the travel industry,” said Staib, who is founder of Denver-based real estate investment company Building Winners.
Smith’s Universal MLS concept, he said, “is right on track.” Staib said that he feels “held captive to using a real estate agent” because of agents’ access to property information via the MLS. Some deals that may be better handled by two parties — the buyer and the seller — end up with four parties and “four different agendas” because of agent involvement in deals, he said. “I really hope (Smith’s) system takes off and he’s able to bring down some of those barriers.”
Jerry Rowe, broker-owner for Executive Property Marketing Inc., a Chino, Calif., company that specializes in REO properties, said he has had several discussions with Smith about the future of the real estate market and he also believes the industry is headed for substantial changes.
Rowe, who has worked in real estate for about 26 years, said he expects growth in online-based real estate services, which will upset the current system. The current MLS system is in transition, he said, and property information once held close by MLSs has been opening up.
“I’m not a ‘doom and gloomer.’ I like to project out what the market is going to do,” he said, adding that he believes that real estate agents are increasingly threatened by industry changes and the current market downturn will wipe out a majority of agents. Consumers, he said, will “look for the easiest and shortest way to sell a house,” which could pry open a window of opportunity for new business models such as Smith’s Universal MLS, he said.