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November 26, 2017November 23, 2021

Industry disruptors changing real estate

Reat estate industry disruptors (infographic from nar.realtor)

Buying and selling homes hasn’t really changed much over the years. It still requires a buyer and a seller. Getting them together often requires a real estate agent or broker. Sure, technology has changed the brokerage relationship dramatically. It has also forced players in the real estate industry to change or get out of the business. A new trend of real estate brokers are embracing technology like never before. Will these real estate industry disruptors change how real estate services will be provided in the future? Will these industry disruptors drive a new enthusiasm for “real estate technology brokers“?

One the largest players in the real estate industry is Zillow. Although Zillow has a number of services that can bring home buyers and sellers together, they are mostly a technology company that serves to provide consumers information. The company generates revenue by selling services to real estate brokers and agents, as well as mortgage companies and loan officers. Many consumers visit Zillow’s websites to view information about homes for sale or rent that are listed with brokers or the homes’ owners. Consumers don’t pay Zillow a fee or commission for the service.

Over the years, many have talked about how Zillow’s technological influence will predict the real estate industry’s future. Those real estate prophets foretold a time when home buyers and sellers will be able to do business on the internet without a real estate agent or broker. But in reality, Zillow’s influence only cemented the necessity of a broker or agent to facilitate the transaction. Zillow’s success has generated millions of dollars in revenue, but the company has struggled to post an annual net profit.

Redfin is another real estate company that has a significant internet presence. Some think of Redfin as a technology firm offering real estate services. But the reality is that it is a real estate brokerage built around technology. Redfin has built its brand, and went public this year. Although the company generates millions in revenue, the Seattle Times reported that Redfin’s IPO offering indicated that the company has yet to post an annual net profit and has accumulated losses of $613.3 million (Seattle real estate company Redfin files to go public; seattletimes.com; June 30, 2017).

Companies like Zillow and Redfin are not the only players in real estate know for technology, but they may be the most well-known. These companies are part of a new generation of companies that strive for a huge internet footprint to drive business. But Zillow and Redfin demonstrate that technology in and of itself is not a guarantee of profitability, nor has it been an absolute “game changer” for the real estate industry. Instead, technology has been the catalyst for change.

Industry disruptors and real estate

Consumers probably don’t realize the subtleties, but the rapid changes in real estate technology has forced real estate agents and brokers to change how they engage their clients. Since companies like Zillow and other real estate aggregator sites have propagated the internet, the role of the real estate agent and broker has shifted away from being the source of information to being the source of a meaningful analysis. Agents and brokers have also shifted their roles from information keepers to transaction managers.

What better way to be a real estate change agent and industry disruptor than to build a business around technology. Redfin is probably the most poised to make major impact to how consumers are served in the real estate industry. With all of its tech goodness, Redfin’s contribution to the industry hasn’t been as much technological than financial. The brand will likely be known for being instrumental in reducing real estate commissions. In markets where Redfin has been successful in establishing its brand, agents have been under significant pressure to lower listing commissions and/or offer buyer rebates.

Original published at https://dankrell.com/blog/2017/11/26/industry-disrupt…ging-real-estate/

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

May 5, 2017May 5, 2017

Home listing syndication is big business

Your home listing is a hot commodity! Not just to home buyers looking to buy, but to those who buy and sell information on the internet. MLS home listing information syndication is big business.

Much of what you see, hear, and read on TV, radio, and the internet is syndicated and distributed through a broad network of affiliated outlets. The purpose is to have as large of an audience as possible. The larger the audience, the larger the advertising revenue. Syndicating and distributing media content has been around for a very long time, and has been very a lucrative industry for those involved.

Internet syndication is no different and has become sophisticated, such that websites will pay for licensed content. The content attracts visitors and generates revenue via ads and/or pay-per-click. Needless to say, internet syndication has developed to become a multi-billion-dollar industry.

When you think about making money in real estate, you probably think about buying and selling property, not the internet. Most people don’t realize that real estate information generates $billions on the internet. Real estate portals generate revenue by publishing content that attracts home buyers and sellers. The sought after content, of course, is your home’s MLS listing. Websites generate income by selling real estate and other professionals access to consumers who visit their sites to view your MLS listing.

You may not know this, but your home’s listing is copyright-protected by your agent’s Multiple Listing Service. The content is licensed and syndicated to internet real estate portals and other publishers for a fee. How much do websites pay for MLS licensed content? Heck, you’d be hard pressed to find that information, much less acknowledgement that there is a fee paid at all! And I suspect that information is not readily disclosed because consumers would be up in arms if they knew.

However, an article by Natalie Sherman appeared in the Baltimore Sun on January 27, 2015 (MRIS looks to partner with Zillow) gives a hint about the monetary relationship between MLS boards, syndicators and publishers. Ms. Sherman wrote:

“Under the current system, Zillow pays to receive listings from Listhub.com, which has agreements with hundreds of multiple listing services, including MRIS, to provide syndication services to sites such as Zillow. Earlier this month, Zillow and Listhub said their existing deal would not be renewed.

A representative for Zillow, which has been working to establish more direct relationships with brokers and listing services for years, said a new deal would help keep the site more up to date.”

The article refers to the 2015 shakeup of real estate listing feeds to specific websites, such as Zillow. At that time, Zillow sought direct deals with individual MLS boards, such as our local MRIS (now part of Bright MLS), to get MLS home listing feeds.

Chances are that you are unaware that the information about your home that is uploaded to the local MLS (including pictures of your home) become the property of the MLS. Much less, you may not know that the information is licensed to others for a fee to be used on other websites.

Even though the MLS boards charge subscription fees to agents for the privilege of uploading and viewing content, they might argue that the fees generated by licensing and selling your information helps maintain the MLS system. However, not disclosing this aspect of the real estate listing poses some ethical questions that must be addressed.

Of course, there are real estate brokers who have opted-out of syndication of their MLS listings. These brokers want to retain control of home listing information to ensure accuracy and maintain professionalism when presenting your home to the public.

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July 22, 2016November 23, 2021

Real property disclosure

Finally, there is a new resource to get real property disclosure for home buyers. Home buyers can access property information that is not always readily available or hard to find. A July 19^th RealtyTrac (realtytrac.com) press release introduced Attom Data Solutions, their new parent company. The introduction described what the company offers to the real estate industry and consumers. Attom Data Solutions’ (attomdata.com) self-stated mission is: “to increase real estate transparency by arming businesses and consumers with the property and neighborhood data needed to make wise decisions.”

You may recognize RealtyTrac as being the go-to resource for foreclosed homes. But what you may not realize is, like other real estate websites it is an aggregator of information. RealtyTrac describes itself as “the leading provider of comprehensive housing data and analytics for the real estate and financial services industries…” by providing information on over 125 million properties.

So the idea of aggregating property information is not new. However, until now, there has not been this amount of information available for each property located in one place. The size and scope of Attom Data Solutions’ aggregated information is mindboggling. RealtyTrac’s press release revealed that the new parent company’s database of property information (called “ATTOM Data Warehouse”) holds more than 9 terabytes of information! (One terabyte is 1 trillion bytes). Putting the jargon into perspective, the data represents 99% of the U.S. population. And it features “enhanced and standardized data for more than 150 million U.S. property parcels.”

Before the ATTOM Data Warehouse, you would have to check a number of websites and make inquiries to several local agencies. The aggregated info includes: a property’s historical and current public records, ownership, mortgages, foreclosures, neighborhood information, demographics, environmental issues, natural hazard information, potential health hazards, and property features and neighborhood value information.

Besides being able to help you decide on which home to buy, Attom Data solutions’ reports may also help you decide on price. Additionally, home sellers may find the information useful as a form of disclosure, to answer many of the questions that are often difficult to find. Attom Data Solutions is reportedly offering data licensing to the industry, however the information is also available via their consumer websites RealtyTrac.com, Homefacts.com and HomeDisclosure.com.

The idea of consolidating property information into one location has been trending for several years. There have even been hints of creating a national MLS. Several years ago, the National Association of Realtors® created the Realtors Property Resource® (narrpr.com) to assist Realtors® in providing detailed reports to home buyers and sellers. Besides offering details on neighborhood comps, the generated reports incorporate data from various sources. Buyers and sellers are informed of analytics, trends and other factors. Of course, RPR is exclusive to Realtors®. But if you receive a report from your agent, they can help you with the analysis.

The amount of information about any given property seems to be ever increasing. However, an ongoing issue echoed among professionals and consumers is that the data is not always reliable. Even information that is pulled from public records are not always current. Verify the veracity included in any property report by cross checking several resources.

By Dan Krell
Copyright © 2016

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February 4, 2016July 23, 2019

Evolving real estate scams – vigilance needed

Last year, an old wire transfer scam evolved to target Realtors® and their clients. A December 15^th “Alert” put out by the National Association of Realtors® (realtor.org) reminded NAR members and consumers to be vigilant. “The hackers often send an email that appears to be from an individual legitimately involved in the transaction, informing the recipient, often the buyer, that there has been a last minute change to the wiring instructions. Following the new instructions, the recipient will wire funds directly to the hacker’s account, which will be cleared out in a matter of minutes. The money is almost always lost forever.”

NAR offers guidance and “best practices” to prevent being a victim of scams and cybercrime. Even though your agent should be mindful and exercise caution, you should take the initiative to protect yourself. You should be attentive and alert to the possibility of email scams by: not sending sensitive information via email; never trust unverified email; you should not interact with suspicious emails; clean your email regularly; do not conduct business over free WiFi hotspots; and use strong passwords that are changed regularly.

NAR stipulates that the guidance is “not all-inclusive,” and you should check with your agent about their office’s cybersecurity policy. The warning states that the scammer emails are “extremely convincing,” such that “many sophisticated parties have been duped.” No one is “too small” to target, and don’t be over confident about being tech savvy. “This fraud is pervasive, convincing, and constantly evolving.”

According to an August 28th report issued by the Federal Bureau of Investigation (Business E-Mail Compromise, An Emerging Global Threat; fbi.gov) BEC (Business E-Mail Compromise) is an insidious scam that is not only targeting real estate, but all businesses and consumers. According to FBI Special Agent Maxwell Marker (of the FBI’s Transnational Organized Crime–Eastern Hemisphere Section in the Criminal Investigative Division), “BEC is a serious threat on a global scale…It’s a prime example of organized crime groups engaging in large-scale, computer-enabled fraud, and the losses are staggering.”

BEC statistics compiled by the FBI’s Internet Crime Complaint Center (ic3.gov), from October 2013 to August 2015 reported 8,179 total victims (U.S. and non-U.S.) and $798,897,959.25 combined U.S. and non-U.S. exposed dollar loss. The IC3 has reported that computer intrusions related to BEC are on the rise; and can be initiated via a phishing scam that downloads malware that can access the victim’s data, passwords, and financial information.

Multiple versions of the scam are being implemented, and it’s likely that the tactics will change as cybersecurity catches up with the scammers. The most recent version identified by the IC3 has fraudsters claiming to be a law firm handling confidential information (including real estate transactions). The scammer may use email and/or telephone to contact potential victims, who are pressured to act quickly at the end of the business day.

To learn more about BEC, protection strategies and how file a complaint – visit the Internet Crime Complaint Center (ic3.gov). If you are a victim of BEC, the IC3 recommends that you: contact your financial institution immediately; request that your financial institution contact the corresponding financial institution where the fraudulent transfer was sent; contact your local FBI office (if the wire is recent, the US Department of Treasury Financial Crimes Enforcement Network might be able to help return or freeze the funds); and, regardless of dollar loss, file a complaint with the IC3.

By Dan Krell
Copyright © 2016

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October 7, 2015November 23, 2021

Real estate agents getting back to basics and focus on relationships

Don’t be surprised when you’re getting more real estate agent phone calls, or seeing more agents at your doorstep. You may be surprised to know that in this increasingly tech dependent world, agents are getting back to business basics; which is founded in personal introductions, building relationships, and providing personal service.

You see, many real estate agents (like the rest of the population), are realizing the limitations of the internet. What was once the promise of a new market place for products and services has become a super-saturated arena of information, advice, and “content” clamoring for your attention; and is a growing disappointment for many due to the increasing irrelevance of information, not to mention the surge of fraud and hacking.

The National Association of Realtors® (realtor.org) has reported on the growth of internet use in real estate over the last fifteen years in their annual Profile of Home Buyers and Sellers (the 2014 Profile indicated that 92% of buyers “use the internet in some way in their home search process…”). And although the statistic is astounding, it is becoming clear that is still not wholly understood how home buyers and sellers use the internet.

You may not be surprised to know that home buyers and sellers don’t entirely rely on the internet for choosing their agent. In fact, many choose an agent through friend/family referrals, personal introductions, and even serendipitous meetings (such as visiting an open house). Furthermore, buyers and sellers are increasingly aware of the internet’s limitations as well; as one home buyer’s recent statement of “…this home is not what was advertised on the internet…” illustrates the type of misleading information that is often found.

Although many are just waking up to the fact that “point and click” does not sell homes, “big housing data” knows it generates online revenue by capturing your information and selling it to real estate agents, loan officers, movers, and others. Last year’s acquisition of Trulia by Zillow was thought by many analysts to be an industry game changer by merging two of the most visited real estate portals. However, many did not consider that the move was to increase traffic and revenue for two companies that were reportedly not “yet profitable” on their own, by “grabbing a bigger slice of the advertising market” (Logan, Tim. “Zillow Deal to Buy Trulia Creates Real Estate Digital Ad Juggernaut.” LA Times. 28 July 2014.<latimes.com>).

More recently, HousingWire’s Ben Lane reported on Zillow’s downgrade by Barclays (“Is Zillow in Trouble?” HousingWire. 20 July 2015. <housingwire.com>), referring to a slowdown of traffic due to saturation and competition. Months after the major acquisition, growth of the online real estate portal is “slowing significantly.”

Just as the growth of the internet created markets and changed how real estate agents conduct business; personal needs and attentions are changing how consumers view the internet, as well as producing voids left by agents and brokers who heavily relied on the internet for business.

The NAR’s recent DANGER Report misses the mark by highlighting perceived shortcomings in Realtor® ethics and competency. However, the real issue may be more about the lack of professional intimacy; which is necessary for commitment, integrity, and building trust. While some already know it, others are waking up to the notion that the quality of the professional relationship is vital to the consumer’s satisfaction – and it all begins with an introduction.

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