Seth Godin on Disruption, Pricing, and the Future of BusinessThe brokerage and agent discounters are back. And even though they make up a small percentage of the marketplace, that could possibly change in the future. And if that did change and the discounters made up a majority of the marketplace, then the real estate industry would look a lot different than it does today. That realty would mean fewer agents would be able to make this into an actual career because agents would be reduced to becoming simply order takers and expert at opening lockboxes. Seth Godin is someone I think we should all check out. He has an interesting thing to say about pricing and the “race to the bottom”. Watch this clip at 2:25 to 2:55 covers the “Race to the Bottom”.
It’s all about informationRedfin, Zillow, Trulia, and the rest are not the bad guys here. The guys that are responsible for the current state of affairs when it comes to YOUR listings data are the MLS’s, the National Association of Realtors, and every local Realtor association in the country. Let me explain. Our current system for how we handle listings data is an outdated system designed for a pre-internet world. Currently, agents upload thier listings to their MLS. Typically, there is no branding allowed on any of the visuals or remarks that are being uploaded. All of this listings data is then kept hidden from rest of the world, except for the data feed the MLS’s supply to third party portals like Zillow, Trulia, Redfin, Homes.com, and the rest. The MLS is sort of like North Korea. The MLS closes off itself from the rest of the world, except for it’s member agents and the information they decide to let out. Therefore, no buyer and/or seller can connect directly with an agent for a listing, because there is no way for the public to access this data unless it’s through one of the third party portal sites. Instead YOUR listings data is fed directly to the third party portals where they can then up-charge agents for leads and premium advertising on thier websites with YOUR own data. And YOUR data is gold baby, gold… Third party portals like Zillow are literally making billions of dollars in revenue off of YOUR listings data. Plus, the third party portals are building powerful brand recognition that is topping over even the largest brick and morter brokerages. Don’t believe me? When a buyer/seller goes online to search for properties are they more likely to end up on Zillow or Remax.com? Even past president Barak Obama choose Zillow over NAR in his series of town hall meetings about the housing recovery. Follow the money. Article, CNBC February 8th, 2018: “Zillow Group Reports Fourth Quarter and Full Year 2017 Results”. Revenue for Zillow (full year 2017) was up 27% to $1.1 Billion. Read the full article on CNBC CLICK HERE. Again, your listings are being fed for FREE to the third party portals, and then you have to pay the third party portals for leads coming from your listings. While at the same time, the website and system in place for marketing and selling homes, the MLS, is closed off from the rest of the world. It’s a backwards and outdated system and it’s giving agents a raw deal.
What the MLS is and what it should be…The MLS is the most powerful tool that any real estate agent has. It has always been that. The MLS is both a marketplace and a social network. And YOU, the real estate agent, OWN IT! I know technically it’s not, but it’s still YOURS. You pay for it, you own it and the executives that run it are stewards of it. The MLS is the most efficient marketplace for both buyers and sellers to interact and exchange information so that they can buy and sell properties. It’s so beautiful, like eating a fish taco and watching the California sunset at the same time. However, the public doesn’t know this. Because we have allowed the MLS to operate as if we were still in the Cold War. Remember, it’s like North Korea and closed off from the rest of the world. As Ronald Reagan would say “Tear Down This Wall”. We need to tear down this wall and make the MLS public. This is the case for a single national public MLS.
How to Beat Zillow and Protect the Real Estate Industry for Future Generations of RealtorsCurrently, the MLS is broken down into several hundred local and regional networks. The current system creates an extreme amount of redundancy and inefficiency from a technology and business standpoint. We need to break up these mini-monopolies and create one single country-wide MLS with a public facing portal. Once we have this, we can stop feeding the third party portals with your listings data and agents can begin directing web traffic to the new public MLS. In this scenario agents can connect directly with both buyers and sellers online. This will not come easy. Because change is hard. And when money is involved, it’s even harder. Each MLS has a Board of Directors, CEO, CFO, and other executive and middle management employees. If we were to create a single public MLS many of these employees will lose thier jobs. I believe they will fight to protect thier jobs and keep things the way they are. But if we don’t start the change now, then future generations of Realtors may not have the same opportunities that you have today.
The Future is on the Rank and File REALTORS, not the Current LeadershipThe current leadership of the NAR, the MLS’s, local boards, and even at the major brokerages are not going to change this situation. They will continue to empower companies like Zillow and Redfin until it’s too late. To me our leadership’s position is like the U.S. Policy towards the Soviets during the 1970’s. The policy was called, Detente, look it up here. It did’nt work and almost ruined our little experiment in democracy and freedom. We need to begin a conversation about what the future of the real estate industry is going to look like and who is going to lead it. Here’s my plan for starting that conversation. Step 1: Rank and File agents need to become aware and educated about this situation so that we can begin to have more conversations about how to move forward and save this industry from itself. This is where I believe the Women’s Council of Realtors has a major role to play. More on that coming soon. Step 2: Next, once a movement is formed from the ground level we need to change the current leadership at the MLS’s, NAR, and local boards. They need to be replaced by actual agents who understand and acknowledge the situation and are willing to make the tough choices for real change to occur. Step 3: Build the National MLS Database. The technology already exists but it must be implemented. We can take the best MLS we have now and use that as the base. The new public MLS must offer a phenomenal user experience for consumers searching for listings data. If we want to take on Zillow, then we must also think like Zillow and be consumer-centric so that we can build out the best consumer experience for searching for properties online. Step 4: Training future and current agents. We need to redefine what a REALTOR is in an online world. An agent today is much more of a consultant and trusted advisor than a salesperson. But it feels like we are still training agents to be just salespeople. The change here needs to begin at the core of it all, which is, Agent/Broker Licensing. How we currently license new agents kind of makes no sense. And the CE thing, I’ll just leave that there. After you took the 30 to 60 hours to get your license in your state how prepared were you to represent buyers or sellers in the biggest financial transaction of thier lives on day 1? Let’s look at the approach the beauty industry takes. It takes an average of 600 to 750 hours of training for someone to become a cosmetologist. They practice, practice, and practice. It’s not easy and it takes a real commitment to become a licensed cosmetologist. We are going to have to develop some type of an apprenticeship program where new agents take the course work, but also work within a brokerage or team for hands-on training. Finally, we need to learn more about actually sharing and helping each other out. We need professional courtesy. Little things like giving showing feedback or just being nice to a buyers agent who just submitted an offer on your listing. If we want to keep that 2.5% (average) commission then our professional standards, ethics, experience delivered, and value proposition must also up its game in a major way.
The Next Generation of AgentsThe next generation of agents will be more tech savvy, but more important than being tech savvy will be developing agents who truly care about thier clients and this business. We will need more Zig Ziglar, than Alec Baldwin from Glengary Glen Ross. By focusing more on delivering a phenomenal buyer and seller experience and offering true value to the marketplace Realtors can win this battle and begin leading what this industry will look like in the future, instead of being led by companies like Zillow and Redfin. So let’s end this with some Zig Ziglar. It’s all really just about this:
“You can have everything in life you want, if you just help enough other people get what they want…”