New Business Practices, Technologies Present Challenges

"The best way to predict the future is to invent it."  –Stefan Swanepoel

Born in Kenya, Stefan Swanepoel traveled the world before settling in the USA. He has 30 years of real estate industry experience, including stints as an MLS president, dotcom CEO and consultant to real estate companies.

Each year, he writes the Swanepoel Trends Report, a distillation of his perceptions about trends that are influencing and will influence residential real estate. Since issues of consumer confidence, the reduced first-time homebuyer market, a highly regulated mortgage market and technological innovation loom large, his insights help industry professionals understand the market’s new direction. 

SWANEPOEL'S VIEW ABOUT THE VULNERABILITIES OF THE MLS
Off-MLS listings, third-party portals such as Zillow and the frustration with listing syndication are part of Swanepoel’s MLS analysis. 

While the MLS is central to how real estate practitioners do business,  most of the nation’s 850 local MLSs are inefficient, he noted, due to:

1) Outdated technology.
According to Swanepoel, the typical system has outdated software and user interfaces. Common problems are:
• Failure to permit access via mobile devices. Forces Realtors® to use mobile apps from Zillow, Trulia, Realtor.com and other third parties to access information in the field. 
• Undependable Mobile Apps: Many MLSs have mobile apps that lack the third-party apps’ dependability and functionality. 
• Property searches aren’t intuitive. 

New technology transformed the role of the MLS from that of a marketplace (the most cost-effective way to advertise a property) into a conduit to the marketplace (The Internet). This shifts power away from the MLS. 

2) Varying MLS Governance Models.
MLSs are organized using an association model. By insisting on reviewing all actions and expenditures, boards may tie the hands of CEOs. Many MLS staff leaders may have ideas about which programs to launch and which ones to cut, however the boards must vote on changes, he explained.

3) Conflicts between Large and Small Brokerages
Small brokerages support the MLS public portal because their Realtors® can receive no-cost leads, Swanepoel stated. Large brokerages oppose this because they have their own websites and apps and don’t want competition from other portals.

Syndication is another source of conflict between brokerages. Large companies prefer limited syndication by the MLS since they have listings on their company websites. Small brokerages want their MLSs to provide the free service of sending their listings to the portals, he wrote.

PROJECT UPSTREAM: A NEW BROKER PUBLIC PORTAL
Project Upstream is proposed as a for-profit corporation that will serve as a broker public portal owned by big brokers and large franchises, according to Swanepoel. The proposed company will deal with the aggregation of all listings to power searches and displays. Upstream would serve as a private database of various types of real estate-related information designed to give real estate practitioners control over the distribution and use of their data, according to Real Trends. 

The Project Upstream database will be “taking a direct feed from all of the participating brokerages. This option also preserves the original vision of Project Upstream: to create a national listings database that stands ‘upstream’ of the MLS, and can’t be tampered with by the MLS,” stated Swanepoel. 

 A NATIONAL MLS?
The term “MLS” may refer to a software system, an organization or a database or all of these three things. Problems of data security, data standardization, data integration and third-party participation make a national MLS software system or organization unlikely in the near future, he observed. One national MLS database is the most likely scenario, he concluded.

TECHNOLOGIES TO WATCH
• Messaging. The quality of communications is changing. Brevity is valued more than intimacy. Texting is preferable to e-mail..
• Wearables. Wearable cameras make it easy to add a house or neighborhood tour to a listing. They also enhance agents’ security since they can keep a record of everyone they encounter. 
• Mobile payments and Mobile Wallets make it possible to transact business anywhere at any time with anybody.
• The Cloud. Being in the Cloud is cheaper. There are no huge outlays for hardware. People can access accounts from anywhere and you aren’t wedded to expensive, obsolete technologies. The “cons” of being in the cloud are that since people in a shared space, the information is not perfectly secure. 

TRANSPARENCY/AGENT REVIEWs
Social media and crowd-sourced information create new challenges. Ratings, reviews and recommendations are instantly available on sites such as Yelp, Facebook and Twitter. Consumers rely on reviews because people trust peer recommendations, he wrote.  Real estate professionals suddenly find themselves under intense, constant scrutiny. 
The following survey results, cited in his book, reflect the role of trust in real estate:

PORTALS AND THE RACE FOR ONLINE SUPREMACY
Portal Timeline: 
o 1997: Realtor.com launched
o 2005: Zillow launched
o 2014: Consolidation of the portals down to two leading players
Before portals, homebuyers had to decide which agents they would work with in order to get access to inventory. The portals enable homebuyers to decide what inventory they wish to see before they select an agent. 

The trend toward self-service information gathering has escalated because of easy access to portals. Survey data confirms that portals are the first choice for housing information among consumers and the first place homebuyers look when they begin home searches. 

As reported in the Trends Report and in NAR news, Realtor.com was purchased by News Corp. in 2014. The site competes in cyberspace for the number one ranking – head-to-head with Zillow – and for the eyes of house hunters for years to come. 

For a more in-depth look at trends that Swanepoel studies that are shaping the industry, visit retrends.com.