The real estate industry, slow to adapt to new technology, has been experiencing growing pains from outside startup technology companies pushing the boundaries of its comfortable digs.  The latest flavor of dust-up was well-documented by Drew Meyers of Geek Estate.  Redfin’s Agent Scouting Reports change the nature of how formerly-private sales statistics are displayed in a public forum.

While most of the discussion has centered on the vast inaccuracies of the reports, the lack of adherence to MLS membership rules, and the lack of transparency in the user interface, it makes sense to step back and look at a larger subject.  Is it possible that the influx of venture capital into a real estate tech startup is creating an even larger change in the way we work together as an industry?

Tech Startup Culture

I worked in, and consulted for, a number of tech startups in the Silicon Valley over a decade ago.  The energy within these companies is immense, and creates not only a sense of confidence but also a fair bit of hubris.  When you work within a company that is “changing the world”, pats on the back are never far away, VC money supplements your shortfalls, and the rallying cry is “always faster, before someone else does it.”  A tech startup’s focus is getting new information to the consumer as quickly as possible.  Transparency takes on an almost religious tone in this world:  “We are delivering information.  What we’re doing is important.  What we’re doing is good!”

The quest for larger amounts of public data at ever-increasing speeds is certainly positive in many ways, but it seems that sometimes we allow ourselves to forget our most basic responsibilities in our rush to achieve those goals.  Case in point:  our current debate over publicly displaying agents’ sales statistics and doing so in an accurate and transparent fashion.

The Ethics of Open Data vs. Accurate Data

I’ve stated before that I’m open to this data being public, but the majority of my colleagues are not.  This is fine, because we belong to member organizations which can vote on these kinds of decisions.  Inaccuracies in data will certainly lend themselves to legal issues for those who display incorrect data about business competitors.  More importantly, though, the personal interaction between our industry’s professionals is being thoroughly tested.

At what point does the need to be “first to market” in Seattle trump the damage done to a small business owner in Sonoma County, CA?  When consumers in Cynthia Larsen‘s neighborhood search online for her name, what does it cost her when they find a page on another broker’s site stating that she only sold 2 homes in the past year (missing 95% of her sales)?  Cynthia doesn’t know, because those potential clients will never call her.  She doesn’t have millions of dollars in venture capital to create a comparable online presence to combat the misinformation.

What happens when agents in Phoenix, looking for a new brokerage, search for Jay Thompson’s company statistics and 44% of his agents are not even listed with Thompson’s Realty?  Jay doesn’t know, because those potential agents may never call him about joining his brokerage based on that data.

Were These Questions Even Asked?

What does this say about the publication of such a model in this manner?  The Realtor Code of Ethics certainly comes into play.  I’ll give the benefit of the doubt in saying that Redfin didn’t intentionally disregard the well-being of thousands of professionals’ small businesses across the country.  More likely, it’s the arrogance that can be created in an exciting tech startup culture, distancing its members from the mundane details of industry, and allowing them to simply disregard the ethical implications.

This service was released publicly with a brazen “Let’s just see what happens,” attitude.  There was no timeline in which it needed to be released, no deadline coming from some regulatory board.  There was plenty of time to make sure that it would not unduly harm other professionals, but no one felt the need to raise those concerns.  Why?  Because it was going to be exciting.

Real Estate Is A Cooperative Industry

Real estate is unlike many other industries.  Most sales professionals compete against each other until one makes the sale.  Attorneys compete with one another for clients and in litigation, and at the end of the day, one wins and one loses.  In real estate, while we compete for clients, positive results are only achieved when we work together with our professional competitors to create a satisfactory transaction for both sides’ clients.  The only success for buyers, sellers, and brokers, lies in all sides reaching an amenable agreement and the subsequent closing of a home sale.

Whether my cooperating broker in a transaction is from my Seattle real estate brokerage of Coldwell Banker Danforth, or a competitor such as Windermere, John L. Scott, RE/MAX, and Sotheby’s, we know that our clients’ best interests are served when we aggressively negotiate for them, but maintain a professional relationship throughout the process.  The majority of brokers actually enjoy working with our competitors. We have a genuine concern for our cooperating brokers’ well-being, because will be working with them again in the future.

Redfin is hoping to expand its partner agents nationwide.  Whiteboard Friday lesson:  “Partner”.

**UPDATE**  As this was being published, Redfin was making the decision to pull the plug.  Inaccuracies in data were noted as the cause for the decision.  I’d be more inclined to believe that the threat of widespread litigation, multiple MLSs declaring it in violation of their terms, and the burning bridges within the industry had a lot to do with it also.  If this can be done correctly in the future, by a neutral party, we can give it another shot.