Primary marketHomestore"s Ambitious Broker Reciprocity Solution
I don"t envy Homestore"s investor relations personnel right now. They have the impossible job of explaining why Homestore is developing a free product for the real estate industry. Aren"t products supposed to produce revenues? Yes, and Homestore"s new Internet Data Exchange (IDX) product will, too. But first, the company has to change the world.
How"s that going to happen? With a little help from their friends, the National Association of Realtors. The NAR plans to help brokers get out of their own way.
Homestore"s new IDX product will help Realtors who want to share listings publicly on their personal Web sites.
This shouldn"t be a big thing, but it opens a bigger can of worms that it appears. Some companies may want the listings without being members of the NAR. Some brokers don"t play nicely while sharing listings. That means that Homestore has to work out linking and framing guidelines before it can launch its new "Gateway" product so it can be sure that Realtor.com listings are helping members only.
First, a little history lesson, so you"ll know what Homestore and the NAR are up against.
The National Association of Realtors has suborganizations at the state and local levels. These local affiliates operate or contract third parties to operate multiple listings services (MLS) for their members. MLSs allow broker and agent association members to share homes for sale and pertinent listing data with each other to get listed properties sold more quickly for sellers. Because the MLSs report to affiliates, they ultimately report to the NAR, and therefore follow data display policies set by the national organization. Last year, the NAR created its Internet Data Display Policy so that MLSs could empower brokers with MLS listings on their Web sites. Brokers want the listings because they can capture leads off of them. When that happens, the Internet could prove to be a more powerful marketing tool than newspapers.
The problem is that the NAR created a mandate for MLSs to enable brokers to have public listings without a clear idea of the costs and technologies needed to accomplish the goal. Some MLSs don"t have the money to pay a third-party to implement a display system for members. Enter Realtor.com who will offer to do the service for free.
Realtor.com is the official Web site of the NAR, and operated by Homestore by an agreement with the NAR. Realtor.com aggregates listings from most of the 800 plus MLS organizations across the country. Visitors can go to Realtor.com and see 95 percent of the nation"s available listings.
That"s great, but the problem is that Realtor.com listings are often stale, sold, or expired and that"s because of broker politics and MLS technologies. Visitors don"t know or care what the reason is, and may be losing interest in the Web. Site visitors are down slightly for Realtor.com and its nearest competitor HomeAdvisor. And the quality of listing information could be a factor. And that"s why Realtor.com has more work to do besides offer free BR solutions. If Broker Reciprocity is really going to work, listing data integrity has to improve at the MLS/broker level. But that"s not going to be easy, because some brokers may feel it is in their best interests not to be so cooperative. Here"s why.
Politics as usual
While the MLSs follow the NAR code of ethics in data display, local boards also have the latitude to add their own data display rules, which vary widely across the nation. Not surprisingly, some brokers use their voting power in their associations to create rules of data display that are more favorable to their own methods of doing business. Some of these rules are not so friendly to sellers, nor to listing services like Realtor.com, but they do allow the brokers to capture more in-house business.
For example, an MLS may have a rule that allows agents up to 10 days to submit a listing to the MLS. The purpose of this rule is to give the agent time to collect complete information on the home for presentation to other brokers. This information can include such items as tax roll data, photos, sellers" disclosures, virtual tours, and showing instructions. Having a time limit for listing input is also supposed to prevent brokerages from hoarding listings. That"s the purpose of the cooperative, isn"t it? In most communities, "pocket" listings (listings known only to the listing brokerage,) are discouraged as being seller-unfriendly, yet brokers" business models are based on being able to represent both sides of the transaction. That makes pocket listings irresistable. Ten days is a long time to gather data - long enough to allow the broker"s agents plenty of time to find their own buyer for the listing, keeping the transaction in-house. Therefore, the MLS is used to enable pocket listings - for up to ten days.
While some brokers may argue that busy agents need 10 days to input their listings into the MLS, the excuse really doesn"t wash. With today"s technologies, there is no reason why listings cannot be entered into the MLS immediately following the signing of the listing agreement, with other information to follow. Perhaps there can be a time limit on getting tax roll data, if it"s not immediately available, but the essential information - that the home is available for sale, can be made public. Naysayers may argue that some agents won"t ever go back to input the missing data, but the hole in that argument is that they don"t now, unless they are forced to. Many times the home sells before the missing data is ever missed.
Now, imagine that you are a buyer looking for homes on Realtor.com - the official Web site of the National Association of Realtors. What you may find are 95 percent of available homes for sale, but you won"t find the freshest listings. You"ll find many homes without pictures and homes that have already been sold or the listings expired. As Realtors have leeway to input listings, they can also take their time to remove sold or expired listings off their MLS systems. Listings are lead generators, and even expired listings may solicit a phone call. But they don"t. They only inspire disgust in buyers who don"t understand why listings aren"t current.
It"s these kind of broker politics that handicap Realtor.com in its attempt to showcase current listings to generate leads for all brokers. If fast-moving Homestore is ever going to capitalize on brokers sharing listing data, it"s going to have to change how things are done at the broker/MLS level. And it"s going to need the NAR"s help to ride herd on errant brokers.
Why would Homestore take on such a daunting task? If the brokers want to frame listings, then Realtor.com is assured of retaining record traffic and therefore it"s ability to sell more subscriptions to agents and advertising to real estate related companies. There is also the possibility of new products, such as custom brokerage site design and framing. If a broker already has an established brand, s/he may want all pages including listings pages to have the same "look" as the rest of the brokerage"s site. The framed listings can also be an entree to selling other transaction services, such as Realtor.com"s eRealtor platform, as the products will cross-populate.
Broker Reciprocity is a sales dream come true, but only if it works as a lead generation solution for brokers, and it won"t until brokers decide they really want to have leads off of online listings.