Editor’s note: The following is a guest perspective.
By VICTOR LUND
Real estate listings syndication was set spinning in 2010 by a variety of forces. At the core of the centrifuge is a groundswell of dissatisfaction on the number of leads generated for agents and brokers.
By secondary measure, data quality on third-party websites continues to be bad.
Combine this with the fact that many consumer inquiries on third-party sites go unanswered by agents.
Finally, trump the entire batch of real estate listings syndication issues with ownership changes at companies such as Threewide and Point2. Welcome to 2011.
I think that in many ways our industry faces an inflection point on listing syndication. The industry finds itself stationed precariously on the listing syndication curve. There are forces that could drive the curve up or down.
Forces pushing listings syndication down
We have seen a major change in the airline industry. Delta and American Airlines stopped sharing their fares and schedules with third-party sites like Orbitz and Expedia. According to a Delta spokesperson, the driving factor is to build brand loyalty and maintain a more direct connection to its customers. Sound familiar?
In consult with brokers like Realogy, Leading Real Estate Companies of the World, and The Realty Alliance, I have learned that they feel a lot like the airlines. They, too, are looking to rebuild brand loyalty and maintain a more direct connection to their customers.
According to some online statistics, in nearly every demographic market area across the United States, like a city and its suburbs, you will rarely find a brokerage that ranks in the top 10 for online share of voice with consumers.
In other words, when consumers are looking for homes they are not thinking of visiting the local broker website. They are going to a third-party website. Most leading brokers are very concerned about this, as are major franchise brands.
Listings syndication started out as a way to increase exposure to for-sale real estate listings beyond local websites — now local websites are being crushed and brokers are losing that direct connection to customers online.
Perhaps the greatest risk to brokers, and oddly of least concern — are the terms of use related to listings syndication.
Brokers are not reading the fine print of listings syndication agreements. In an era where brokers and multiple listing services are taking a hard look at limited-use data-licensing to entities such as the Realtors Property Resource, CoreLogic or ListHub — they may be turning a blind eye toward the terms of syndication, which could include the transfer of unlimited data rights to third parties.
If you are a broker pay close attention to the terms of use when entering into syndication agreements. You may find statements that indicate that in submitting real estate listings data, you may be transferring the license to use, retain, transmit, copy, create derivate work of, sell, or distribute your syndicated listings data — while possibly maintaining liabilities associated with that data and its third-party usage.
You might ask yourself: If listings syndication is so bad, why do brokers do it? Oddly, in 1914 we saw a similar collaboration with media by none other than Francisco (Pancho) Villa. Villa signed a movie contract with Mutual Films to film his future raids on towns, banks, and government installations.
In return for $20,000 plus a piece of the profits, Pancho Villa agreed to provide the place and time of his raids in advance, and agreed to stage his raids in daylight (for transparency). He realized that he was putting his people at risk, but needed the money. He succeeded in his raids for a while, but this ultimately led to his demise. Brokers may be on the same track.
Forces pushing listings syndication ahead
All is not lost. Third-party websites are providing a great service to consumers — far better than what consumers gain at most local broker sites. Although third-party sites often do not have the most current and comprehensive listings content, they have invested millions in the real estate search experience.
They wrap excellent information around real estate listings that brokers either cannot afford to provide or do not know how to provide.
In many ways, real estate listings syndication my get a leg up in data quality resulting from Realtor.com-operator Move Inc.’s acquisition of Threewide, providers of ListHub syndication services, as an example.
With ListHub, brokers may selectively distribute their listings. If you couple the ListHub syndication technology with the quality of data powering Realtor.com — third-party websites can resolve some listings-quality issues. Brokers should likewise also gain from Yardi Systems’ acquisition of Point2.
Zillow also did something this year that organized real estate has failed to embrace: agent ratings. I have heard from a countless number of brokers who want to raise the level of professionalism among agents.
However, the same brokers rarely toss agents out of their offices who do not produce revenue, or who represent their brand poorly with bad service.
In a bold move, Zillow may harvest the consumer voice to support brokers in a way that directs consumers to the best agents that a brokerage has to offer. If an agent has not completed a transaction, or gets bad reviews on transactions — consumers may not select that agent. That may foster natural selection and attrition.
The federal government may also be a beneficiary of higher-quality real estate data. Government agencies are hungry to gain access to better data that can facilitate in finding solutions that allow banks to modify loans, process short sales and reopen the capital markets to mortgage-backed securities, as examples.
This is the chief requirement to mitigate the downward pressure on home values and stem the foreclosure rate. Without a data standard for automated real estate valuation models (AVMs) like those generated by the Realtors Property Resource or CoreLogic — the problem will be extended.
Better listings syndication would support business models like Zillow and possibly new offerings to create high-quality AVMs.
The continuation of the status quo in listings syndication positions brokers in a lose-lose match. Today’s solutions do not provide enough benefit. The inflection point is clearly going to reveal itself in 2011. I believe that this year will unveil either a move in the direction of fixing the problems, or abandonment of listings syndication.
Victor Lund is a partner with the WAV Group, a real estate consulting and research company.
