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The Debate About Syndicating to Third-Party Aggregation Sites

[Note from the Editor: This article was originally posted on SanDiegoCastles.com. I reposted it here because it’s relevant to this audience of geeky real estate professionals looking to figure out what to do about listing syndication in 2012. I haven’t been able to figure out how to share the same comment thread on both blogs via Disqus – please let me know if you know how to do that]

As reported by Inman News (“Premium” content – sorry), Abbott Realty Group (ARG) recently announced that they will no longer syndicate listings to third-party aggregators. Subsequently, a big ol’ agent food fight ensued. OK, it’s more of a heated debate. But there are definitely two camps in the syndication discussion, and it’s an important one for buyers and seller, as well as agents, to understand. If affects us all.

If you are one of the three people remaining who hasn’t seen Jim Abbott’s video on the subject, here it is:

ARG’s decision followed a similar announcement by Edina Realty back in November. At the core, the arguments against syndication involve two issues: Data integrity and data control.

I’ll start with the issue of data integrity, because that is the simpler of the two. Sites like Trulia, Zillow and Realtor.com – let’s call them the troika – display loads of inaccurate data. There is no argument there. Because many of their listings are manually entered, many are outdated. I can point to numerous examples of homes being displayed as for sale that sold six months, or more, ago. I have seen my own listings entered by other agents as their own. There are foreclosure sites who routinely list homes by street – no address – that are not for sale but simply have had a Notice of Default filed, with the idea that buyers might contact their agents or sign up for there foreclosure listing services.

Some have argued that the likes of the troika do not have a corner on the inaccurate data market – that MLS listings are, too, fraught with errors. And while this is true, MLS errors represent agent input mistakes, oversight, or mere sloppiness. You won’t find double entries or intentional deceptions – or scams.

And then there are the rental scams which not only pose an inconvenience to our clients but present potential security risks. Where Craigslist used to own the rental scam space, we now see our listings appearing on the troika sites as rentals, and this happens nearly every time we list a home.  One of our clients learned that he was our latest victim when the first of a series of would-be renters knocked on his door – this one a Highway Patrolman who caused our elderly client much undo anxiety. Another client learned of the rental posting at the conclusion of a showing and from the showing agent who, having seen the listing on Trulia, was there only to help her client secure a six-month lease.

Absent syndication, would we eliminate rental scams? Of course not. The photos and listing information can be lifted just as easily from my site or any site with an IDX feed. But eliminating the ability for the scammers to do their one-stop shopping will make things a little more difficult.

Let’s talk about the larger issue of control. It’s about our information being hijacked for fun and profit and, yes, we handed them the keys.  It is about extortion. You gave us the car, and now you must pay for the ad, the enhanced positioning or profile, if you ever want to drive the conversation again. We are starting to see what this means for the agents and brokers. What does it mean for the buyers and sellers?

Let me share a story, a story that most agents have no doubt heard before. Our listings are on Realtor.com (no, we haven’t opted out), but we discontinued paying for the “special premium featured titanium agent” package on Realtor.com years ago when the bounty got a little too pricey and, philosophically, we got a little irked. So when I visited the page for one of our listings this week and filled out the contact form for more information, I wasn’t surprised by the outcome.

First we received an auto-generated response ensuring us that our inquiry had been sent to a “local area expert.” The “expert,” I’m sure, is a very fine company. It just happened to be one I had never heard of, with an office twenty miles away, and one who to my knowledge has never sold a home in this particular area. Next came another email informing us that an account had been set up for us on the referral agent’s website (“Our website has every listing in the San Diego area and it is updated daily”).

The next email was short and sweet; it gave us the name of their preferred “partner” lender who was standing by to help with all of our financing needs. It was the fourth and final email that finally hit on the subject at hand. “I have checked the status on this home and it is currently available. It is a traditional sale with no banks involved (like on a short sale or bank owned home). Did you have some particular questions about the home that I can answer for you?”

That’s it. Now with several hours and two pots of coffee separating me from my original query, I have a mortgage broker referral, I have an account on an agent’s IDX site, yet I still don’t have any answers nor have I been offered an opportunity to view the home I have expressed interest in. This is what we call a buyer left behind. The seller’s home was exposed, all right, but had I been a real buyer, the system failed him.

Further, relinquishing control of the conversation surrounding your inventory violates the most basic principle of Real Estate Career 101: The most valuable thing to a real estate agent is a stick in the ground. This is because listings breed listings, listings breed buyers, and listings build reputation. So when we “virtually” hand third party aggregators our body of work that took years and boatloads of money to cultivate, we slowly erode our own future growth potential – unless of course we pay for the opportunity to redirect the fruits of our labors back home.

Defenders of syndication say that an argument against syndication is an argument for dual agency. Nothing could be further from the truth. Much like you can opt out of syndication, you can opt out of dual agency.  Take the call, answer the questions, and then send the buyer to the nearest competing brokerage to view the home and write the offer if that helps you sleep nights. At least by having had the conversation, you haven’t opted out of your role as the champion for that home you signed on to sell, because that would not be in your client’s best interests.

Both Rob Hahn and Jay Thompson pointed out that Internet Data Exchange (IDX) sites like yours, mine, and the sites of every brokerage in the country, are no different than the Troika sites. I don’t agree. The data accuracy issue becomes a relative non-issue where IDX is concerned save the MLS input errors. Even then, the MLS’s have procedures in place for policing and ultimately ensuring compliance. More importantly, IDX sites lack the resale component of the troika sites. While an inquiry on my listing may in fact go the agent-owner of another IDX site – and often does – consumers are generally clear on the fact that they are on a particular broker’s or agent’s site. And while some ambiguity may still exist where an IDX site is concerned, they are not simply trying to sell the customer to the highest bidder.

On a larger scale, this is about an industry handing over the car keys. We moan about the flaws in the Zestimates and then we send Zillow the eyeballs. We gripe about how Trulia and the likes are using our data to redirect our customer contact opportunities (what some agents might call “leads”) and spawn their own IPO’s, yet we continue to click the submit button. We lament the fact that buyers are confused and that the best interests of buyers and sellers alike are not necessarily served by the pay-to-play lead generation model. We defend syndication by saying that our sellers demand it, but our clients in fact look to us to explain what works and doesn’t in marketing their home. If you don’t believe this, then ask yourself when the last time was that you promoted your extensive newspaper advertising program to a would-be seller. Just because it is “free” does not make it a beneficial marketing strategy.

Sure, some sellers may not get it, and therein is the conundrum for both the agent and the brokerage. That’s also the genesis of our fear, our inaction, and our continuing down this dangerous road.

You see, my client’s home does not really need to be on 400 national websites. That is just a myth we have propagated out of convenience and our desire to win listings. It is rhetoric we bought into, rhetoric delivered by those who are in the business of profiting from our business. My client’s home does need to be in the MLS, because it is through that platform of broker cooperation that the overwhelming majority of sales still take place. Of course, through the miracles of IDX, my client’s home will still be exposed far and wide on sites other than the MLS and my own. But those sites are owned and operated by other agents and brokers, not by those who are in business to repurpose and profit from my efforts.

When Brad Inman opened the New York Real Estate Connect conference with a clip from the movie “Network” in which the news anchor shouts, “I’m as mad as hell, and I’m not going to take it anymore,” he was talking about prevailing consumer attitudes in our “cottage economy.” It will take this same kind of outrage within our industry to reverse this trend toward putting distance between our customers and us. Taken to the extreme, this road could be leading toward a destination of disintermediation. In its more basic form, it is a flawed delivery system that benefits neither the customer nor the real estate community.

And it will take more than one ARG with 25 agents or even an Edina Realty with 2100 agents. One little San Diego Castles Realty with 11 agents would most certainly go unnoticed. But, I suppose, that is how big changes start – with little ripples. I, for one, applaud ARG’s move. It was bold and, in my opinion, it was right.

About Kris Berg

Kris Berg is Co-Owner and Designated Broker of San Diego Castles Realty. She has been serving San Diego buyers and sellers since 1997.

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