Organized Real Estate is In Trouble. Own It.

A friend of mine saved a life over the weekend.  It wasn't spectacular in that her actions didn't involve any heroics.  She didn't leap off a pier to save a drowning man, or rush into a fire, but the point is -  she didn't need to be heroic to save a life; she just needed to be brave.  She identified that a man was in trouble, calculated that he needed help, acted by calling 9-1-1, then owned her action by staying in contact with the man until help came.

What do I mean by "she didn't need to be heroic...she just needed to be brave"?  Well, the fact is, she told me that there were other people watching the same man in trouble - some of them filming his distress - but none of which acted to assist him.  I think bravery comes into play when an individual is willing to buck what others are doing and run the risk of embarrassment or ridicule,  by intentionally choosing not to be a passive spectator.  Think about it:  Out of a crowd of people, no one would cast blame on any individual for not acting, so by making the decision not to be a passive spectator, a person takes ownership of the result of their action - succeed or fail.  It takes guts to act on your convictions - especially when surrounded by others who do not recognize the danger, are afraid to cause "a scene," or are content to remain passive observers, confident that someone else will take action and relieve them of the responsibility.

On any other, regular summer day swimming to shore or righting the canoe might have been plausible outcomes, but for the first Saturday in June with water temperatures somewhere in the 50's and a very strong off-shore wind, this boater was not getting back into his canoe, nor was he swimming back to shore.  Neither was he going to survive for long in 50 degree water, clinging to his swamped canoe.  It was the circumstances that made this an emergency, but only one person in the crowd on shore recognized it for what it was.   This got me thinking about organized real estate.

WE are the passive spectators to the swamped canoe that is organized real estate.  There are a few voices like Redfin's Glenn Kelman, and CRMLS' Art Carter, trying to raise awareness to the danger, but what seems to be working against them is the slow motion nature of the "accident."  Like the canoe being flooded, it takes a combination of events to make it fatal - and unless we understand what we're seeing, by the time its clear there's serious trouble it's too late.

I've been watching the Department of Justice workshop on competition in real estate all morning.  What I am hearing from the expert witnesses is that there are real fundamental changes taking place in the industry right now, and it isn't any single one, but the combination that is swamping organized real estate.  

I find the argument persuasive that Zillow's and Realtor.com's persistent efforts to monetize every aspect of the real estate transaction has materially harmed both Realtors and consumers.  There can be no other way to look at the portals' willingness to permit agents with no specific knowledge of a property to impersonate the listing agent and buy placement on a listing not their own.  The portals know it is confusing to consumers and they know that consumer's questions about a listing cannot be quickly met by an agent that has never visited the property.  If Luke Glass believes what he said in the DOJ meeting this morning about what Realtor.com knows about what consumers want, then Realtor.com has some explaining to do about why their business practices do not match their stated intent of serving the consumer.  

This is not to say that Zillow or Realtor.com are evil or that they don't have a real, valuable role in exposing listings to consumers - but it IS to say that some of their practices need revisiting.  To stretch the canoe metaphor a bit more, it's almost as if the portals don't understand that they're in the same canoe with everyone else in real estate.  Glenn Kelman's point about the portals' unequal value exchange with listings (portals do not reciprocate, they only consume listings) was absolutely on-point.  Zillow especially has created the ability for unscrupulous agents to hype exclusivity by putting listings in "corners of the internet" that never see exposure on the MLS.  By enabling pocket listings they undermine confidence in the quality of MLS data that is the very heart of what the entire industry relies on.  And if the portals take no action to address the concerns, they're no different from the spectators filming the poor canoeist instead of taking action to prevent his drowning.

While many brokers and agents are more than willing to blame Zillow for their problems, the bigger problem is looking back at them in the mirror.   The reason the industry is in the shape it's in is due to years of neglect, inefficiency, outsized egos, outdated policies, and lack of professionalism in the leadership and staff running some Associations and MLSs.  Despite having had the pleasure of working with the phenomenal, engaged, progressive leaders at MetroMLS,, ARMLS, and the Austin Association of Realtors, over the years I have experienced too much of the opposite.  The greatest of the sins, in my opinion, is the inability or unwillingness to face the reality of changing markets and new technologies by making difficult or unpopular changes to products or services.  Whether it's the President's vanity year (or ten) or the CEO being an industry naif or ill-suited for the job, the boat they are in is sinking.   The water is too cold to survive in for long without help, but by God they're going to keep ignoring the problem in the hopes that someone else will deal with it - preferably after they retire or move on.

It's complicated and simple at the same time; It's about ownership.   We need to own the problems facing our industry, both as individuals and also as brokerages, Associations and MLSs.  MLSs offer antiquated technology because agents lose their minds when forced to learn a new product and because MLS vendors have been starved of capital by overly aggressive contract negotiations.  Associations have been living off the MLS income for so long they've forgotten why they exist in the first place.  And Brokers... Brokers have it the hardest because they're being squeezed on both sides of the commission from consumers and their own agents.  But brokers need to get out of the mindset that the consumer has to come to them and start understanding that consumer choice means they better figure out a way to make consumers want to come to them.

I started this post with a story about a friend saving a life.  It's a true story - and luckily one that ended happy.  It took someone recognizing the danger, stepping away from passivity and owning the solution by calling for help.  As metaphors go, it seemed like a pretty good one for what needs to happen in organized real estate.

- CP