I’m working on a new weekly email featuring my thoughts on the industry and more. Check out the last one here (Can NAR and C21 reckon with ghosts of the past?) Send me feedback at brad@inman.com. And if you would like this in your inbox every Friday, sign up here:
[email-signup]
Real estate’s Frankenstein
“Nothing is more painful to the human mind after a quick succession of events, than the dead calmness of inaction which follows and deprives the soul both of hope and fear.” – From the 1818 novel Frankenstein by Mary Shelley
Two years ago, Inman Connect held a panel on the Upstream Project, the budding real estate broker initiative to take back control of its home listings.
After a detailed explanation by one of the founding Upstream members, I asked one of the other panelists, savvy real estate team leader Lisa Archer, what she thought of Upstream. She deadpanned, “What is it? I don’t understand. How would that help me, exactly?”
Her answer spoke mounds about the confusing history of this scheme to allegedly save brokers from Zillow, MLS fiefdoms, data-entry headaches and monsters that the industry created itself.
Upstream is an expensive and risky effort to rewire its own Frankenstein.
Earlier this year, I was speaking at a conference where the very capable Upstream CEO Alex Lange was delivering an earnest 16-slide powerpoint deck on the two-year old project.
I had heard the pitch before, so I suggested that he dump the slides and just tell the Upstream story.
With gritty determination, he delivered a much more compelling explanation, and I better grasped what this expensive tech project is all about. Archer also understands Upstream better and says she now supports the initiative because it will “put the data back in the hands of the agents,” where it belongs.
But I still think it’s time to pull the plug on this project. I do not want to trivialize the well-intended efforts and opinions of so many hard-working people, but it reminds me of Trump’s Wall — grandiose, impractical and inspired by fear. Yes, there is a problem, but Upstream is a wrong-headed solution and a political hairball to build and gain adoption.
Funded by the National Association of Realtors (NAR), the project now has that unstoppable bureaucratic momentum. Though Upstream has been slimmed down, NAR has earmarked a total of $15 million for the project and already spent $12 million.
It’s like a hemorrhaging Defense Department contract for some outrageously expensive submarine that was authorized 20 years ago and makes no sense today. But because of tricky politics, it cannot be scuttled.
Upstream was one more raison d’etre for NAR’s data company, the Realtors Property Resource (RPR), and for the $167 million expected to be spent this year. It provides the technology behind Upstream.
New leadership at NAR should throw in the towel and call it quits on Upstream.
This is new NAR CEO Bob Goldberg’s opportunity to walk the talk and end a glaring example of old top-down pyramid thinking. Upstream is a classic NAR inside job, intended to benefit a small group of its overall membership.
As in most succession plans, Goldberg has about six months to blame it on the “dead pilot” (former NAR CEO Dale Stinton). Then he must “OWN IT” — good or bad. RPR is Stinton’s love child, not yours, Bob.
Lange could get any job in town, if he showed up for his next board meeting and said, “Enough is enough — let’s end this folly.”
Even the guy who cooked up Upstream, HomeServices executive Bob Moline, has retired. He does not need a legacy; he accomplished so much in his real estate career.
And for the smart brokers who are behind Upstream: Do you truly believe that the NAR tech bureaucracy is going to deliver the goods? That is as likely as your top producer walking into your office on Monday morning and offering to lower her commission split.
Most importantly at this moment in time, you have bigger fish to fry.
Take $5 million of NAR’s Upstream funding (your money) and get busy doing research on how brokers and agents can get in on the true game changer — iBuying. You are already behind the curve as you putter around with Upstream meetings. Doesn’t your gut tell you this is not going to turn out well?
Losing control of your intellectual property is scary but that fight is over. Move on to opportunity.
The $1 billion splash
Are Apple and Keller Williams really spending $1 billion each on their recently announced projects?
The Wall Street Journal reported that, faced with threats from Amazon and Netflix, Apple has budgeted $1 billion to produce original video content, a sign of how serious it is about the entertainment business.
I suspect Apple, with its $800 billion market cap, can handle $1 billion on this risky venture.
But what is the scoop with Keller Williams’ billion-dollar announcement to fend off the likes of Redfin and Opendoor?
KW Chief Innovation officer Josh Team said that the company has created a $1 billion technology fund for everything from customer development to strategic acquisitions.
Is that really in KW’s budget? The fast-growing Austin-based real estate company is private and does not have to disclose such details, even a $1 billion promise. And it may not matter. I am sure billionaire Gary Keller could call up Bank of America and get a credit line for such a plan.
The good news: Something significant will be spent. The traditional real estate business is way behind when it comes to making smart tech investments. Consider the billions Redfin, Compass, Zillow, Opendoor and other tech companies are spending on innovation.
In 2014, Realogy shelled out $140 million for ZipRealty, a catch-up move but not transformative.
Comments of the Week
On streamlining the transaction ·
“I wonder how streamlining the process of buying and selling real estate will actually work. I mean, who is going to talk the buyer \’off the ledge\’ when they don’t get the house they wanted because they got bid out by six other buyers. What am I missing here?” – Realtor Glenda Krull
“This should come as no surprise. Those who try to disrupt the industry do more harm than good a majority of the time. The idea that a client can pay what they want diminishes our services.” – Kim Carty, principal broker
“Congrats to Sarah, Zach, and Alyssa for innovation, courage, and boldness. They are bright people with real passion for helping agents and consumers create better lives and communities. It takes guts to challenge industry norms and long established models.” – Kevin Woody, managing regional vice president at BHGRE
“I am not surprised they are closing their offices. Real estate is a hard and expensive business and commission is our bread and butter!” – Realtor Maria Ferreira
“I wish the smugness (about the news Bamboo is closing) surprised me. It does not. These are real people and real families who are affected here. Do we really want to raise the bar in this industry? Show that we are better than our collective reputation? Maybe we start with some empathy. Just a thought.” – Valerie Garcia, speaker and consultant
