Electricity isn't a competitve advantage anymore

I find all the F.U.D. regarding opening up MLS data to be kind of overblown. Perhaps, it’s because I’ve been a software engineer my entire career, and the notion of technology changing business models and society at large seems anti-climatic to me. Perhaps, I have this attitude because my former employer, embraced the notion of “Only the Paranoid Survive“? Regardless of the root causes, the fact that the N.A.R., and other members of the real estate industry are so scared of the upcoming tidal-wave of technology changes just seems so short-sighted.

Your friendly neighborhood realtor from the 22nd century?
After all, during the past 100 years or so, the only constant has been change. So the fact that more technological change is coming, shouldn’t surprise anyone. I don’t remember the explosion of digital photography during the past decade cause anywhere near this much fuss, do you? What about the growth of photocopiers & other printing technologies during the last 40 years? Before computers, I’ve heard that people used to use a device called paper to exchange & store information, and the ability to manage these paper records efficiently was a key competitive advantage for many businesses. And yet, I can’t help but wonder if the MLS placed the same kinds of restrictions on printed property listings 30 years ago that they are trying to place on digital property listing today. Surely those all free real estate magazines at the grocery store are harming agents & brokers, by giving away valuable information for free?

I’d argue that associating digital photos with electronic MLS records on free web sites has done more to decrease the value that people place on a real estate agent, than anything I or other software engineers are going to invent during the next few years. Maybe the embrace of digital photography was just a way to get back at all those real estate magazine publishers?

Anyway, my advice would be to tell the powers that be to get over it. Things are changing: deal with it. Nobody thinks electricity is a competitive advantage anymore and in a few years from now, I suspect nobody will give the new generation of real estate web applications a second thought. I suspect very few realtors are afraid of the value that maids, handymen, and landscappers bring to the real estate industry but yet somehow software engineers & database administrators are out to destroy the industry. I can’t speak for all IT professionals, but I think it’s safe to say our area of expertise is NOT in the sale, finance, or purchase of properties (which should be the core competency of any real estate agent/broker). Similarly, it’s foolish for the real estate industry to think that they can job a better job of developing tools that let Joe & Jane Consumer search & browse listing data than software engineers. After all, if the engineers at Google can search 20 billion web pages in a fraction of second, processing the 20,000 properties in the MLS is sleepwalking by comparison.

On a related thought, how did people buy & sell homes in the “dark ages”? That seems more mind boggling to me than anything I or the folks at Zillow are going to be doing in the next year.

In closing, it’s not geeks with SQL Servers or even free web servers you should be scared of. It’s those real estate androids showing homes at a holodeck near you that should keep you up at night. That’s REALLY going to shake things up.

Caffeinated Software

6 thoughts on “Electricity isn't a competitve advantage anymore

  1. Funny you used a Star Trek photo, though I would have used Spock. The answer lies not in the “Data” but the Vulcan mind meld:-) The melding of the best technology brains coupled with the best agents in the industry, would be the correct formula.

    Per my discussions with Galen, if the technology would truly empower the buyer consumer, as it can, but does not in present form do, all would be well with the world.

    For instance, we at Sound Realty ran a promotion last summer that said if you find the property you are going to buy via the website, you can get a substantial reduction in agent cost.

    So far those using the internet to “feel” empowered, are being used by bottom feeders, who capture the discount dollars by selling those buyers to agents. The money ends up in the website owner’s pocket, and not the buyer’s pocket or the agent’s pocket. The best technology sites are pulling the dollars out of the transaction and into their pockets.

    I expect Zillow to be more of the same, with Zillow ending up with the money saved and not the buyer consumer, based on what I have seen in their labor pool.

    Using the internet as a home search tool, could save the agent time and consequently the buyer money. But in present form, that is not what is happening.

  2. I agree that the vulcan mind meld would be the best formula for the real estate industry, I just don’t think things are going that way. I think reason why it hasn’t is as follows:

    • Consumers want cool technology and they expect such technology to free.
    • You need software engineers to build good web sites and they expect to be
      well paid.

    Given these facts either the agents/brokers can pay for the costs of technology development or venture capitalists can pay for the costs of development (becuase customers aren’t going to pay for it).

    If the venture capitalists pay for it, they’ll make their money back by doing what you dislike (selling leads to agents). The growth of Google has shown the tech world, you can make a lot of money selling advertising to business, to help finance technology development that consumers will use.

    If the real estate industry pays for it, agents wouldn’t be paying for leads anymore and could use the technology to their advantage (yeah!). However, there would still be short term pain because you still have to pay for software engineers, but the longer term gain should more than make up for that pain.

    I agree that pay per lead sites, zaps, or bottom feeders aren’t in the real estate industry’s best long term interest. However, most agents and many brokers either are unable to afford or unwilling to spend what is required to develop competitive technology. I think that the real estate industry is still trying to decide if software engineers bring more value to the home buying process than cost. Meanwhile, the venture capitalists have already made up their mind are busilly changing the future to their advantage.

    After all, consumers don’t know or care who paid for the web site, they just want to use it for free. And software engineers don’t care, they’re going to be happily employeed regardless of who pays for their salary.

    FYI – I picked Data because he’s an andriod (and Spock doesn’t have a holodeck). Although I do realize the pun value, now that it’s been pointed out to me. 🙂

  3. [quote]
    ..it’s not geeks with SQL Servers or even free web servers you should be scared of.
    Actually, I wouldn’t be 100% sure about that. I would like to point out that US Department of Labor does not qualify Real Estate Agent as specialty occupation (based on O*Net data) i.e. professional occupation which not necessarily needs professional training and higher level of degree:
    Overall Experience:
    Some previous work-related skill, knowledge, or experience may be helpful in these occupations, but usually is not needed. For example, a teller might benefit from experience working directly with the public, but an inexperienced person could still learn to be a teller with little difficulty.

    Job Training:
    Employees in these occupations need anywhere from a few months to one year of working with experienced employees.

    These occupations usually require a high school diploma and may require some vocational training or job-related course work. In some cases, an associate’s or bachelor’s degree could be needed.

    When at the same time SQL Server geeks with at least bachelors degree and 2 years field experience get the jobs.

    I understand that that is completely different field, but I just would like to point out that education and experience can be very competitive and we know that real estate attracts everyone today.

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