Listing Syndication: The ‘Dirty’ Industry Secret In the SpotLight

Listing Syndication: The ‘Dirty’ Industry Secret In the SpotLight

Wow. I don’t believe I have seen drama at this level in the real estate industry since, well – a few days ago with the approval of the Zillow Group formation, or with the Samuelson Memo.  Then there is Move Corp and it’s Heavy-Weight match about to happen in the US Courts.  The drama only exists within the industry and because people WANT it to exist. Stop, everyone take a breathe – this doesn’t matter to your business if you are “doing it right” – this only matters to a very small segment of our industry, and in that case it is a painful lesson in diversification.

Listing Syndication Doesn't Matter to a Consumer a REALTOR DoesIf you took a poll of 1,000 consumers asking them what ListHub is, what this all means, they would have no idea and probably not notice a thing.  Why would they notice anything?  If a REALTOR is doing their job well, then a client would never know, a consumer won’t know either but a consumer might not find you if you spend a lot of your marketing monies nested over with only Zillow or Trulia.  This is a reason that marketing diversity is a very wise idea.

The True Effect on REALTORS
There really should be none.  In 2015 most agents have their own websites, many have a product that offer “Broker Reciprocity” feeds via their local Multiple Listing Service (MLS).  For example, I belong to TrendMLS in Pennsylvania, Delaware and New Jersey, through my IDX provider I have completed paperwork, and received Broker approval to get a direct feed from the MLS for my website with my Market Listings.  I did have three such websites at one point, but today I only have one.

The Point: ListHub Dropping the Feed Won’t be Noticed by Consumer
Or it won’t be noticed by most consumers.  What I think the problem is that Trulia had a legitimate feed, and that might have been part of the value of Trulia to Zillow, or maybe not.  Don’t forget Market Leader with RealEstate.com, this is more about PR than anything else in my opinion.   I never understood WHY ListHub was providing data to a competitor, in 2013 in Orlando I asked that question directly of some folks at the Move VIP party, when I was told that the competitors were to be at a ListHub party and event – “They are our customers and pay us for the data, there isn’t really competition” the conversation went on to cover the benefit of the business relationship.

I will add that one of the people at the table for a portion of the conversation was Errol Samuelson, and I will say Errol never said a bad word about anyone ever when I spoke to him, he was always positive and believed that competition led to improvements in the industry and offerings.   Errol was very pro-Move and Realtor.com in my opinion and experience, so the news of his “defection” to Zillow was a total shock to me.

Anyone else notice the Starbucks location PR blitz via Spencer Rascoff?  It grew some nice media legs, and a few other things in the last week, in the run up to the approval of the merger you had the media blitz of the book, then a few other small and intriguing concepts like the Starbucks relation to property value, which in my opinion was a purely a PR move to get more traction – that’s what a business does to promote itself right?  This might be another move for traction, but so far the public opinion I have seen has NOT been terribly supportive, nor positive.  Don’t discount Rascoff, he is a brilliant individual and business person, his track record speaks for itself beginning with Expedia.

What REALTORS Should REALLY be Upset About
You spend your time building your real estate business, you work hard for your Seller clients and spend time and money preparing listings for market. You spend even more time managing the listings, posting them, sharing them, marketing them, and if they don’t sell – you don’t make any money.  Lots of other people do make money from your listings, but no one asks about that.

We pay to get an IDX feed from our own MLS’s, which we also pay to be members of, and then in turn that data is moved through various systems and channels to become syndicated and shared to multiple media websites focused on attracting consumers, selling advertising to real estate professionals and selling the listing leads back to us.  This isn’t the case with EVERY MLS or Association, but the practice is a common one.  I could rant on for pages, but the MLS/Big Data topic is another blog post coming soon.

The Data is the Power
The Data is where the power is, in all industries, the more reliable and accurate it is  the better the reputation of the provider.  That is really what this entire conversation is about.  The reliable data feed that ListHub provides is the basis for the value of a media site that serves consumers real estate listings, if the data isn’t accurate then the consumer will go elsewhere, without the consumers then the REALTORS won’t pay to advertise.  You go where the business is, or should.

Agents do not understand how this business really works, it’s not about your sales and the portion of the commission, it’s about the peripheral services – the title policies, escrow companies, mortgage lenders, and so on – included in this is listing syndication, training and coaching programs, partnerships with other organizations, each and every thing your Big Broker sells you have a percentage that is most likely going right into the Brokers pocket.

That’s where the money is made in the real estate business, strategic partnerships and alignments, not in determining which website the consumers will find the data on.    ListHub saying it doesn’t want to share is fine by me, they are aligned with Realtor.com and therefore REALTOR.org and NAR, so it’s about time someone stood up for us – since we won’t do it for ourselves.

There is one other factor, the question of the idea of a National MLS – is that coming?  I believe that it is, but real estate is an ancient business with many archaic business models, it’s difficult to break the mold and truly innovate, or is it?  Behind the scenes there is an amazing tool that is available to all of us, it’s our NAR member benefit known as REALTORS Property Resource aka RPR.  The power of RPR is rather remarkable, I believe it is a preview of what we COULD have available at a National level, but that isn’t what it is about – it is about serving the needs of the REALTOR Member with a lot of AMAZING data, more amazing than any public, and many premium, websites I have seen.  Why are some MLS’s resistant to join and share the data WE provide them with our PARENT organization?  That’s a pretty good question, maybe a more important one to ask than getting involved in the ListHub/Zillow Group conversation.

Why not just work with what we have – I think a public facing side of RPR partnered with Realtor.com – combining the marketing power, and the lobby of the RPAC – consumers would have the best and most reliable quality of data EVER. Right?  What do you think?

 

 

 

Expert Answers: What is an AVM?

Today’s question comes from a consumer in Michigan.

Question: “What is an AVM?”

Expert Answer:

An AVM is an “Automated Valuation Model”.   AVM’s have long existed, most frequented used in actuarial processes for lenders or lien holders of real estate.   First, there are many different kinds of value to be determined, is the value “Fair Market” or is it “replacement” or another?

Companies have created systems and algorithms to calculate the value of a real estate portfolio, which could be the total of loans outstanding for a large lending institution or the portfolio of individual real estate investors.  Insurers also have their own methods for creating AVM’s.

Today consumers are most familiar with some forms of AVM’s that are frequently available via real estate search sites – which in reality are really media companies advertising properties to attract consumers and then sell the “consumer lead” to a real estate professional who is paying the media company for the lead.  That is the simplest means to explain these portal websites.

The AVM models displayed are proprietary, created specifically for the purpose of that use.  Data collected determines the results provided, the larger the pool of data the more likely an accurate valuation will be provided.  Many models are based on geographic methodology that might not hold water in a different geographic area.

Much like real estate itself, a property value in California can’t be determined in the same way that a property value in Boston might be.  A zip code is a lousy means to measure a value but is frequently the main means for some of the most popular portals to provide values.

Today, the most current valuations are those that use many sources for data collection.  For instance the National Association of REALTORS has invested greatly in creating REALTORS Property Resource (RPR) to help REALTORS meet the needs of the consumers seeking valuations of their properties.   RPR uses data only available to real estate professionals via listing services (Multiple Listing Services), loan processing services, various data aggregation, public records and more.   The result, as I have tested myself, is an incredibly accurate and powerful valuation model, in this case it is called an RVM – REALTORS Valuation Model.

I have been using RPR for a number of years, and for full disclosure I am a certified contract trainer for RPR.  I have shared my valuations with clients, REALTORS and appraisers.  I have been told numerous times by appraisal professionals that the RPR RVM is “spot on” accurate in the comps, and the values determined.  Yes there is some human input in the final adjusted results, as there should be in any valuation.

People are not machines, and an AVM is not for people – so looking at a portal AVM for your property, or a property you are interested in, without consulting a real estate professional, is not going to give you a realistic – nor fair – view of true value.

Before you put stock in that “estimate” of a properties value, put your faith in having a real estate professional, and even a appraiser, tell you what that true value is.