This article was originally published on Inman News:
Recent moves by Realtor and MLS boards have ignited the national conversation about the proper use of real estate listing data in mass-display formats like syndication and Internet Data Exchange (IDX). A variety of innovative approaches to properly transmitting and displaying listing data are being discussed and put into action across the country. The opportunity for a wide-ranging, multimarket experiment into data distribution may be one of the most transformative things to happen to real estate in years.
In come the teeth, and the future of listing display begins to appear
The impetus for the current rash of procedural changes are the incongruous rule sets for listing display and accuracy that govern agent-generated IDX listings and marketing portal-generated syndication listings. Portals’ popularity and profit margins don’t seem to be affected significantly by data accuracy issues at the moment. Brokers, Realtor boards and MLS boards have stringent rules as to how they are allowed to display real estate listings, but limited ability to control the way syndication portals display them once they’ve been released. Many of these boards have recently decided that they’ll need to bare their regulatory teeth to force downstream marketing to adhere to the same quality data display guidelines that govern the boards’ members.
In the past few days we’ve seen some of the most interesting clues as to where real estate listing display will be a few years down the road. A variety of boards have enacted new rules to tighten the reins on the quality of their listings’ display, including limiting their use, or managing the data agreements and delivery from within.
The nationwide MLS incubator experiment
The Austin Board of Realtors recently pulled the plug on its partnership with syndication conduit ListHub. Brokers or agents will still have the ability to syndicate their own listings directly if they wish, but the board will no longer assist in the process, due to their concerns about a lack of control and accuracy. This move will certainly slow the rate and volume of listings being syndicated to portals, but to what extent we’ll have to wait and see.
In a different tactic, North Alabama MLS just developed its own distribution platform for syndication, and set its own rules. They’ve negotiated agreements directly with major national portals to add links back to the original listing, increase listing agent visibility and update the data more frequently with MLS-direct data trumping all other sources. The MLS not only sets the downstream rules for its data, but it holds the keys to independently altering the entire syndication process at the drop of a hat if it sees the need in the future. These moves are fueling wide-ranging conversations within other boards across the country as to how their listings are best promoted.
The fractured nature of the real estate industry finally provides an advantage
We talk a lot about the lack of consensus and focused strategy within the agent-centric real estate world, and how the distributed, loosely connected broker structure contributes to it. The absence of a unifying hierarchy with administrative clout impedes many of the industrywide efforts at changing course in an expedient fashion.
In this instance, however, our separation actually allows us to run a range of exciting, large-scale experiments that most industries would kill for. Boards from across the country can simultaneously take widely divergent steps to attempt to improve the way listing data is displayed.
As much as technology eggheads cry for national standards and unified portals, a local real estate market can operate in a vacuum quite efficiently. Each individual real estate consumer is a single-metro buyer. They’re not concerned with what the next state is doing to market their listings. They just want to know what their local real estate market has available. If every major metro’s MLS adopted a different approach to marketing and syndication, we’d get the largest test case we could possibly imagine with real-world results.
A test case in every city
HAR.com is already succeeding with a public MLS portal and syndication simultaneously. Austin and NAMLS are the two most recently created variations. There are hundreds of MLS organizations, and just as many different ways to approach the marketing of their listings.
Consider a Florida MLS restricting syndication to one single portal and negotiating a highly controlled and profitable agreement for doing so. The process could potentially cover the local MLS’s entire operating costs while creating a single efficient marketplace for its consumers to rely upon.
A California MLS could test the ability to transfer consumer traffic by going completely dark on syndication and allowing only IDX display. The scrutiny and anticipation in the real estate world would be immense as we watched the traffic numbers ebb and flow between different online listing sources. It would be the syndication critic’s Bethlehem star, and the syndication advocate’s opportunity for a statistical vanquishing of its detractors.
Flexibility for unique markets
A board in a small market with fewer resources could flip the entire listing entry process, with agents inputting listings directly to a portal and receiving back a feed for their agents to use as IDX. Strict data rules would still govern the process, but the board would take advantage of the portal’s superior engineering capabilities and govern compliance from the syndication level down. While the thought probably makes many brokers shudder, it would be an interesting exercise in focusing on the board’s assets and delegating those tasks that are not its forte.
A different board could pull the ultimate wagon-circling and shut down IDX, virtual office websites (VOWs) and syndication, creating the first MLS-run single-location listing market. The SEO experiment would be epic. One single Web page would be the only authorized “for sale” listing on the entire Web for a single home. As the links and social signals found that listing, it might very well dominate the property address long-tail search results. Consumers in this marketplace would certainly not be confused as to where the proper information for a particular listing was to be found.
Even a mix of science and competition would be intriguing. The local board could pit marketing portals against one another in a “Survivor”-style analytics battle for the right to display its members’ listings. Portals would be rated every month in terms of how much traffic they provide, how many buyer inquiries are generated for properties, and how accurately and timely their display of those listings was. The board could whittle down its list of syndication partners to a select few that are responsibly and effectively using its data to benefit its members and their clients. In the meantime, it would shed light on the often-overlooked fact that syndication is not simply the big three. Remember that companies like oodle, Yakaz, geebo and trovit are also receiving syndication feeds and must be monitored in a similar way.
The possibilities are vast, but the results could be hugely enlightening for every player in the industry. Very few markets would be directly affected by what was happening in another city, but they’d be able to very quickly see what was working and what wasn’t in the other real estate oases across the country.
Finding clarity in a sea of voices
Our opportunities for great conversations about the future of distribution and display of listing data are often short-circuited, unfortunately, by high emotions and lack of depth. There are a vast number of stakeholders in this arena, and most of them are shouting disparate arguments at one another without ever hearing an appropriate rebuttal.
Many of the statements we hear are, at best, simplistic:
- “More exposure is always better!”
- “They’re just trying to sell me back my leads!”
- “Consumers like it, so they’re doing it right and you’re doing it wrong!”
- “The MLS needs to go back to its original intent and get out of my way!”
There are some very smart, passionate people who make these statements, but they often get bogged down in clichés and make our conversations about proper real estate listing display shallow.
Let’s challenge some of the conversational sacred cows before we dive in again to discuss the propriety and opportunity involved in the shifting world of listing display:
1 – The consumer is not always right.
2 – Broad exposure is good, but there is a limit to its value.
3 – All businesses prioritize profits, even if they say they are “just here to help.”
If we allow ourselves to ditch the fallback platitudes and take a critical look at the actual players, motivations and parameters in the real estate marketing arena, we can have much deeper conversations about where we should be headed as an industry.
The consumer is not always right
Steve Jobs was well-known for telling consumers what they wanted. He once said: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”
He was famous for selling products that were at odds with what consumers said they wanted. Apple was always one step behind on consumers’ demands for new cellular data networks or wireless technologies, until it released its new product and consumers adjusted their demands to fit. Jobs knew that what these consumers thought they needed would change as soon as he showed them the right answer, and his success proved it.
Consider consumer popularity over the years of savings and loan (S&L) junk bonds, cigarettes and tanning beds. In real estate, we had negative-amortization loans, Chinese drywall, and asbestos-based everything that became wildly popular for periods of time and then disasters for years after. Consumer demand is often undereducated and counterproductive. When we know that a consumer trend is heading in a direction that is not in consumers’ best interests, it’s our job to continually redirect the consumer’s perception in the right direction, not follow it wherever it happens to be leading today.
As we develop policies to properly display listing data, understanding current consumer preferences is a worthy goal, but pegging their current tastes as the holy grail and following them at all costs would be a strategic mistake.
Ever-expanding exposure is not always necessary and can be detrimental
Any marketer knows that exposure to a sufficient buyer pool is essential to selling a product. At the same time, the location and quality of that exposure are just as important as its breadth when it comes to actually securing the right buyer.
Used car lots were notorious in years past for misinformation and disreputable marketing practices. Their marketing staff would advertise a vehicle far and wide in newspapers and TV ads, often with different “gotcha” prices to drive a large number of buyers to the location. Once there, the buyers often found that the price was different, the car was already sold, or it might not have ever really been available at all.
This unreliable marketing provided wide exposure, but inevitably affected the consumer’s impression of the salesperson and the product he or she was selling. Whether the inaccuracies were created from deceit or simply ineptitude, these buyers formed negative opinions about the trustworthiness of the salesperson, and the quality of the product he or she was selling, even though it was the marketing staff who misled the consumer.
Compare that with a well-run boutique that advertises its vehicles only to a select crowd of car enthusiasts. Its scope of marketing is narrower, but it advertises only guaranteed prices and focuses solely on consumers who are in the likely car-buying stage. The reassuring environment with trustworthy marketing and a straightforward salesperson will allow that same consumer to feel that he is engaged in a reliable process with someone who sells a quality product. While the spread of the exposure to the public may be narrower, the sales conversion percentage of a buyer who feels he is making a wise decision with a competent business partner will be significantly higher. The seller and buyer are better served by smaller, yet more refined, exposure in this case.
This isn’t an indictment of syndication, per se. It’s an argument against poor marketing in the pursuit of wider exposure. Whether on a broker’s website or a third party’s, marketing should be accurate and professional, or else it is a detriment to the seller. Professionals selling quality homes should be able to demand that their marketing partners present their product accurately and professionally, or eschew the marketing opportunity altogether if it can’t live up to those standards.
“I’m here to help” lasts only as long as that help is profitable
All businesses, including real estate businesses, are developed around a profit model. When we want to make long-term decisions as to how businesses will interact with our industry’s ongoing strategy, we need to honestly assess the profit motive.
This is important to remember whenever a corporation says it is here to “help the consumer do X.” While that may be true, it’s true only as long as doing X is also profitable. As soon as it’s not, the corporation will shift to “helping the consumer do Y,” even if Y is less helpful than X was.
Jolt Cola and the Triple Whopper didn’t make the world a better place, but they were extremely profitable for a time. They’re not evil, and they’re not illegal, but the corporation making them also knows that it could be producing something that would keep consumers healthier. If the consumer will buy the unhealthy products at a higher profit margin, however, the corporation will happily sell them instead. This isn’t the corporation’s fault — it’s just the nature of corporate structure and motivation.
The slippery slope of the featured listing
The segue to real estate listing display is the order, prominence and probability in which a listing will be presented to a consumer. From the standpoint of providing an honest and transparent experience, a buyer who searches online for homes in one specific price range and one specific city should see only those homes. Of course, in the real world, a few “featured listings” get the first eyeballs. This is something we’ve become accustomed to in syndication.
To add a bit more advertising revenue, other paid featured listings that are just 5 percent outside of the buyer’s desired price range might begin to be displayed before the consumer’s intended listings. This doesn’t significantly affect the consumer’s experience, in the eyes of the ad team. Next, a preferred “premier brokerage” can pay to have all of its listings appear before any other company’s. Although this further skews the market picture that the consumer is viewing, it can easily be defended as just tweaking the process to make it profitable.
When advertising revenue is stronger than data rules, however, there is no safeguard in place to hold back this inevitable slide. As consumers become comfortable with the current norm, the creep continues. A premier brokerage may buy out an entire city’s listing display for the first five pages of every buyer’s search results. Without a regulatory leash, the marketing platform will continually bend toward its shareholders’ primary objective, which is the profit margin.
Realtor and MLS boards must have an authoritative control structure in place to regulate how listings are displayed. This data can, and will, be manipulated toward the highest profit margin, whether or not it serves the consumer in the best possible manner.
Agents don’t escape the profit-first paradigm
Real estate agents are for-profit businesspeople as well. There are a significant number who protest the process of their leads being “sold back to them” through syndication. Although they will often disagree, much of this motivation comes from the desire to double-side a transaction. It’s true that the listing agent can answer buyer inquiries quickly and knowledgeably, but the overwhelming reason a listing agent would want buyer inquiries is to increase his or her overall commission. Reasonable professionals will virtually all agree that independent buyer representation is superior.
This argument against syndication is certainly logical from a business perspective, but it doesn’t hold up in any way when consumer benefit and transparency is the goal. There are a plethora of reasons to dislike syndication in its current form, but the desire to capture every buyer lead on your own listing is merely a desire to increase income, not improve the system. If the agent/broker world builds its arguments against syndication on a balance sheet instead of a consumer-first platform, it is likely to continue to fall on deaf ears.
The train of logic here usually devolves into syndication and MLS expansion being the culprits in the downward slide of the real estate industry. In reality, they’re just the natural progression of competition in a lucrative marketplace being driven more and more by technology. As MLS organizations take on larger roles in managing the online real estate marketing space, we see far better results for consumers and agents. The real estate world has changed, and asking the MLS to get back in the box is asking to sit back and observe while the other power players steer the ship.
Proper display of real estate listings, without the clichés
After laying bare the real estate marketing conversation, it’s clear what motivates the consumer, the real estate professional and the marketing portals involved in this process.
Consumers want to buy homes, and listing agents want to sell homes. Both of these groups depend on listing data to be accurate and timely for their transactions to work smoothly. Syndication portals’ profits, on the other hand, are not as tightly tied to accuracy. Portals generate income based on total traffic and buyers’ agents’ desire for advertising exposure, which can both be increased without necessarily improving the accuracy of data.
It’s not that portals don’t want to be more accurate, they’re just not significantly rewarded for it. The ability of the listing agent, and his or her Realtor or MLS board, to create a framework to manage the accurate display of listing data is critical for a transparent marketplace. The added exposure created is valuable only if it lives up to these standards.
Moving forward with creativity and clarity
The stars are aligning for Realtor and MLS boards across the country to make some bold moves, and to stabilize their relationships with whichever marketing partners they choose to do business with. Wherever those decisions land, from full-bore syndication to centralized local MLS control, the industry and the consumer will be better for the data guidelines that come down from the data creators, not upstream from the marketing portals.
There is a surprisingly low risk level in making these big moves. Local consumers will find listings, no matter where the MLS allows them. Behavioral changes in online consumers are lightning-fast, and sellers and buyers in each market will quickly adjust to the changes in their markets. In the meantime, our local boards will also get a tremendous amount of education and research from their counterparts nationwide. The grand MLS experiment, even if conducted by many opposing viewpoints, will let the entire country see what is possible, what is profitable and what is beneficial to the consumer in the end.