I took part in a radio interview yesterday. The interviewer sent me some questions in advance.
We never got to any of them. But one really stood out and beckoned me to respond:
How might Google upend the real estate Industry?
Of humans
I exited the Fremont Theatre last weekend readjusting to life in 2D. Having spent the last three hours on Pandora, the bright incandescent lighting of Monterey Street required a visual as well as mental correction.
James Cameron’s Avatar is the Star Wars of my eight year-old’s generation. His feelings were summed up in one comment: “dad, this was the best movie I’ve ever seen.”
I agreed. When you bake a killer love story featuring a 10-foot, blue-skinned, sapient runway model into the sci-fi genre, zap it with unearthly special effects and allow the oppressed to triumph over the oppressors, well” it doesn’t get much better than that for me.
“Sure dad” my son said. “Whatever that means.”
I thought about sharing the truly tangential take fluttering around in my head. But I figured he had better things to think about than real estate.
Pandora
This fictitious planet is home to a group of indigenous “savages” who reside above the richest deposit of the most sought after mineral in the universe. The humans refer to it as unobtainium. The Na’vi (the “savages”) regard it as part of the bio-botanical network that connects everything on the planet.
Not that dissimilar from agents and brokers, whose unobtanium is known as listings.
The RDA Corporation are the outsiders. Unwanted interlopers. Humans. They stop at nothing to access Pandora’s riches. When political measures fail, they employ brute force.
Not that dissimilar from the many outsiders who apply their own version of force to displace or leverage agents and brokers in order to acquire their riches.
RDA’s assault is met head-on by the savages, who are armed with simple wooden bows and arrows of sharpened bone dipped in poison. Not much in the way of sophistication against the RDA’s mighty armor.
Despite the RDA’s rockets, their red glare, and the fiery bombs bursting in air, the Na’vi prevail.
Real Estate’s Pandora
When my eight year old gets older, I will explain to him how resilient the real estate industry is. Like Pandora, its ecosystem is every bit linked to a vast energy field spanning its surface. Its strange neural network of agents, brokers, associations, and MLS’s – savages to outsiders – is possessed of seemingly primitive defenses with strange power.
You are impenetrable. Legions of MBA’s and VC’s have fallen before you.
History has proven it. Every RDA-Corp like entity that loomed large off real estate’s shores has eventually sunk.
The silhouette on the horizon that is Google will be no different. It will, like an Avatar, jump you, knock you down and try to concur but you will dock with it. And absorb it into the magical collective matrix that is the real estate industry.
If I were James Cameron, this is the real estate story I would tell.
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Jeesh” dare I be the first to respond to your “Avatar” inspired post?! Can I be so bold as to digress from your” “When my eight year old gets older, I will explain to him how resilient the real estate industry is ["] Like Pandora”"
Marc, mate, I think you could’ve made a different point on this one” far from alluding to how ‘Google might upend the real estate industry’” may I remind you how traditional brokerages do this on a daily basis against the ‘RDA Interlopers’ threatening their so-called piece of the pie the discount brokerages?!
I’m assuming you’re for the so-called ‘transparency’ of the latter and, that traditional brokerages are evil” or, at the very least flawed, (because we all hide our true motivations) but, what I’ve seen of late is that buyers have eschewed, nay, rejected, discount buyer brokers (aka., RDA Interlopers), for their lack of local knowledge, insight and competence” what you might, with this tortured analogy, call, lack of” “regard ["for"] the bio-botanical network that connects everything on the planet”" i.e., local knowledge and expertise.
I guess what I’m speaking about is that our little boutique real estate agency triumphed over a discount brokerage (RDA Interloper), educating a buyer who was initially seduced by the promise of a ‘gift back’ (from a discount brokerage RDA Interloper) only to realize that they were going to get more ‘specific + local’ knowledge through a real broker, who knew the product, and who ultimately cared about their ‘needs, wants + desires’. The point being: Discount Brokerage (RDA Interlopers): 0 | Traditional Brokerage (The Na’vi): 1
In any case, the ultimate point being, a private boutique brokerage was considered more ‘helpful’ and, hence, ‘more valuable’ for a buyer than a discount buyer broker, whose only perceived benefit, at the time, was a gift back on the commission” which begs the question” do discount brokerages feel ‘valued’ or, do they just feel dirty?!
The cancer that is the ‘RDA Interloper’ is not what google may or may not do with respects to Real Estate, quite frankly I applaud and welcome google’s real estate play” that doesn’t scare me” I’m on board” the more I can ‘sell + market’ my clients’ listings” the better.
Look, maybe it’s because of the nature of your business” I get it!” you’re trying to get us all to be better, and, I appreciate that” but, sometimes its like you’re just speaking to your big clients, which is cool” its your prerogative” but, sometimes I wish you just spoke to all of us” after all, the majority of us are your stalkers, lurkers and the ones who just want to learn from you.
That said, when you implied that ‘brokers’ were so superficial that they would be “["] agents and brokers, whose unobtanium is known as listings”. I believe my earlier point is to explain that we’re not all about listings or, ‘unobtanium’, we’re about connections, clients, people who will become our friends” if nothing else, people who will trust our knowledge + local expertise.
Over all, I found your post irrelevant to a brokerage that has integrity and has been online longer than you have been in (your real estate consulting) business and, hence indulgent and facile. Normally, I drink everything you have to say but, today, like George Thorogood, ‘I Drink Alone’”
Cheers, mate”
In my 18 years in the business, I have seen many real estate titans fall hard and fast. They all seem to forget that most of this business is still done over a kitchen or dining room table, is based on emotions, and can change on a dime.
Sebastian,
There is room for more than one business model in this industry. In fact, there needs to be. Discount brokerages serve a need out there for a certain buyer and seller. Full disclosure here…I do not work for or in a discount brokerage. I work in a full service brokerage.
A few weeks back I responded about Google getting into Real-Estate. Then I spoke of the “evil empire” and to look out for them. Lately I have had a change of heart. This has been brought about partly from my most recent experience trying to find a suitable IDX vendor for my MLS to work on my new WordPress website. The vendors with solutions I really like don’t support my MLS.
And that is where someone like Google with the money and capability comes into play. NAR cannot seem to get it’s act together so we can get some “standardization” in our MLS systems. There are too many and they all just don’t play nicely in a share environment. But Google can just muscle past all that and finally get to some type of National database that works, really. Yes RPR is the end all save all.
I think MIB or The Visitors might be a better analogy. Hiding among us, making buyers and sellers think they are “us”. Only to divert them “our resources” to their websites so they can sell the resource back to us in the form of “leads”.
@Barett – you wrote ” think MIB or The Visitors might be a better analogy. Hiding among us, making buyers and sellers think they are “us”. Only to divert them “our resources” to their websites so they can sell the resource back to us in the form of “leads”.
I say: I do not see these activities as disintermediation or displacement but a rather natural evolution of the real estate industry that provide new opportunities for agents and brokers. Contrary to the accepted mindset in real estate I don’t view the consumer public as belonging to anyone. They aren’t selling your stuff back to you. They are helping them find you – something the ranks and file agent and brokerage is challenged by.
@ Sebastian – Appreciate your take and sincerity. You actually caused me to reflect a moment on what class or category of real estate I write too but I can say in all honesty and with full transparency the audience that is most present in my mind when I write are the loyal readers who have made themselves known to me and the issues that are important to them. I have lists of items and topics taken from comments, emails and calls and go from there.
As for the “discount brokerage” well… I personally don’t like the word “discount” and feel it poorly represents their contribution to real estate. I don;t view them as evil nor would I compare them to the RDA much like I wouldn’t compare and ambulance chasing lawyer to Park Aven Attorney. The alternative model is as much welcome to participate in this business IMO and as I see it, offers a more traditional like model an opportunity to step up and market its own value prop that much more.
@Marc – I think if our industry was providing the services and information buyers and sellers were looking for, they would not need to visit those other companies. But I agree it is not necessarily seen as a bad thing.
I think what I am referring to are companies like Movoto. Disclosure – I am a Movoto referral agent. If we were providing the information and content of a Movoto, why would a buyer need to go there? Personally I really like their site.
This is a great/interesting post. As a team of people that never intended to exploit the resources of the industry, but rather deepen the industry’s capabilities as MC(s) (masters of ceremony) of the real estate transaction, I can say with confidence that there is a large amount of frustration built into being a tech vendor in the real estate space. The frustration is merely a product of the fact that the industry is likely the most oversold to bunch on the planet, and it therefore has built in skepticism of anything unproven.
I understand the argument that providing data, having it leveraged in a unique way, and selling leads/traffic etc is wrong from the industry’s perspective. I also see it as wrong that the industry claims ownership of data that property owners would likely want to be free and readily available to anyone that promotes the movement of housing. So, I have to wonder if this argument doesn’t find it’s end in two questions:
“Who does a better, more efficient job of dishing buyers/renters to the people looking to sell/rent properties?”
“As long as inventory moves efficiently, who cares?”
In the end, real estate is a very human business, which is why I recognize and commend the fluidity of the industry.
Here’s something funny to end with: a hugely prominent VC, whom prides himself on a quick “yes” or “no” for tech entrepreneurs looking for funding cut me off as soon as I said the words “real estate” with a “NO!” I wasn’t there looking for money, which made this experience funny, but he said no because he’s a tech guy that knows full well that automation of RE is not possible. I call people like him smart.
While it’s an interesting analogy I think it’s flawed because it assumes that the real estate industry has a right to listings and outsiders such as Google do not. Isn’t it the consumer who has ownership over their listing and they have the right to choose who, if anyone, has the right to represent and sell their property on their behalf. I would say that the Na’vi better correspond with the consumers and we’re all foreigners in their land.
Google is a search engine company. They make money by selling links. They have not been successful in creating businesses that take advantage of the traffic they generate. The advantage they have in real estate is that they have invested heavily in maps (aka one layer of a property-centric approach).
It’s no surprise that technologists are the ones who are attempting new business models that challenge the status quo of the three percent listing commission. This is most likely due to their lower operating costs in automating the real estate search process and providing the consumer (aka Na’vi) with tools to do it for themselves. A similar thing happened in the stock brokerage business when companies such as eTrade came on the scene in the early 90s. The internet allowed for technical innovation and a shift in customer behavior providing greater value at a lower cost. Now flat rate pricing and fees less than $10/trade are standard.
Ignoring all licensing issues, I would consider anyone an outsider who doesn’t appreciate and provide value to the customer. This will mean different things to different people, but that should be the basis of differentiation between the “good” guys and the “bad” guys.
[Disclosure: Paul Mobley is a CA Broker who is attempting to build lifestyle-centric real estate search websites that create a unique customer experience such as liveneargolf.com and livenearthebeach.com - follow him on Twitter at @paulmobley]
@ Barett – you wrote: “I think if our industry was providing the services and information buyers and sellers were looking for, they would not need to visit those other companies.”
My answer: These “other companies”, are now part of your industry.
@Paul.
I can see where the post might come off as assuming that the real estate industry has a right to listings. That is not the case. I have historically believed that listings belong to everyone and should be set free.
@Christian – Having worked in management and PR in the music business for 20 years, as well having been an artist myself as young man who wrote songs that were published (and still receive royalty checks) there are many similarities between these two industries.
The bottom line is everyone would just remember that the brokers goal in representing a seller (not that different from representing an artist) is to get that home listed, seen by the world and sold and for the buyer to present to them every single available property so the buyer has a complete selection to choose from.
The only thing in real estate that might be considered evil to me is anything that stands in the way of that and what I consider good is anything that enters real estate to empowers it.
If I were a seller and learned that my broker needs to have 3 different search mechanisms on his site because the 3 MLS’s he’s in do not allow commingling of data I would be incensed.
Imagine Towers records not carrying SONY label artists in the came alphabetical file as Universal Artists.
Sadly, narrow minded vision has hindered this industry and has often prevented potentially great vendors with great ideas to venture into the space and improve it.
The Yin: the RE business is and extremely touch nut to crack. Those without the chops to deal with that reality will go away, which makes it better for those that do.
The Yang: if a good friend that was a technologist ever told me that they are working on a RE Tech startup, my first statement would be “run away and never look back.” I’m not kidding. But, most of the people that I call friends wouldn’t listen to that.
I can’t decide if the toughness of the industry, as a person/team that wants to improve the industry via technology, is a good or a bad thing, but one thing is for sure: those with chops can make it happen. Those without it need to stay the hell away (this includes VCs and angels with a “fail fast” message to entrepreneurs, which I maintain is a very irresponsible message for “investors” to send).
End of the day: I think the industry should do a better job of seeking out and partnering with companies that make them better as professionals and brands. At the same time, I 100% understand that if your phone rings 2000 times from people with the hottest new tool and you answer, that makes you the one with the hot potato.
At first glance, I thought this post might be an announcement of sorts that Google had done something I had often thought about — made a Pandora-like experience of home searching.
I’m talking about a housing genome project, not the planet. “If you like this house, you’ll probably also like these homes….”
Hmmmm. I wonder if I could get some venture capital for that project.
There seems to be a healthy mix of those who want the “outsiders” and those who don’t. I would add this to the melting pot.
Every industry needs and should welcome “outsiders”. They bring innovation and any industry which fails to innovate has a finite existence. I am an “outsider” but what I am spending 18hrs a day on, 2yrs of my life so far, without pay and a personal investment reaching hundreds of thousands of dollars is something to move the industry forward. To make an enhancement for the benefit of consumers, agents, brokers, MLS’s and listing sites. I get up every morning and am proud that I work in real estate. My goal is to increase transaction volumes across the nation, it benefits everyone. I see myself as an “outsider” putting something “on the real estate table”, not taking from it. I think that is a core difference. I welcome Google simply because if we don’t we are stifling innovation.
PS – Pandora-like experience for home search – Genius!
I love where this conversation is going
@Marc I totally agree with your statement that [3rd party intermediaries]“”offers a more traditional [brokerage] like model an opportunity to step up and market its own value prop that much more”. That’s pretty much what happened with the example I cited in my original comment.
It’s not that I think ‘discount brokerages’ (and yes, that is an awful characterization) ‘evil’, they offer many buyers and sellers an opportunity to participate in a real estate transaction that they might otherwise be excluded from due to a paucity of funds.
I admit that I struggled initially with the notion of my original content (which really belongs to the sellers) being made freely available to intermediaries but, quickly realized that” ‘isn’t this the business we’re in?!’ After all, I serve my clients better by having awareness of their intent to sell be broadcast as far and wide as possible.
In this sense, I agree with @Christian’s comment” “As long as inventory moves efficiently, who cares?” and your subsequent @Marc comment “” that listings belong to everyone and should be set free”.
I guess what sticks in my craw is the hubris of some (not all) 3rd party intermediaries who make overstated claims of expert/specialized knowledge” and that’s why buyers/sellers should use them (implying that traditional brokerages are out to rip you off)” when by the very application of their business model they are generalists. That’s not a criticism in itself” but, I might have more respect for some of them if they were just honest about their business. Why don’t they just say” “We’re going to hook you up with some information on our website and, even though you’re going to do a lot of the work yourself, we’ll give you some money back when the deal is done”.
The buyer (our new customer), in my example above, recalculated that his opportunity cost for local/specialized knowledge was the price of the ‘gift-back’ on the commission. The value a traditional brokerage brings to a customer/client is the very knowledge a 3rd party intermediary, whether Google or a discount brokerage, can’t deliver. As @Christian observes” “In the end, real estate is a very human business”"
Far from fearing Google’s play or, any real estate information portal and/or 3rd party intermediary, I’m going to become more relevant, more valuable” better” because that’s where Google and, all the innovators are pushing me. Oh, and of course I’ll keep producing all that content for all 3rd parties to disseminate at will.
Hey, @Marc, maybe I just misunderstood your analogy and, I apologize for calling it ‘indulgent and facile’” that was probably the red wine interloping into my thinking” once again you’ve initiated a great discussion. Thank you.