Your Information: What It's Worth
Your Information: What It's Worth
NAR recently launched a campaign to raise members' awareness of the value of their property listing information -- essentially the "intellectual capital"of the real estate industry. Its key message: Members should carefully consider where and how they invest their intellectual capital on the Internet. Hanauer--a member of the board of directors of RealSelect Inc., which operates REALTOR.COM for the REALTOR® organization--provided the following opinion piece to respond to questions about intellectual property issues he's received from NAR members.
Why all the fuss about intellectual property all of a sudden?
Simply put, it's as if you gave your MLS book or computer access code away to everyone that asked. Intellectual property is the information you have about the market. It's a major part of the bundle of benefits real estate brokers and agents traditionally provide to consumers. For years people have gone to real estate salespeople because that was the only way to find out what was happening in the market. What's for sale, what neighborhoods are like, and what comparable homes are selling for.
While there are many other functions real estate agents perform, this is the one that made them the first point of contact with consumers and provided them the opportunity to influence customer contacts. All of this is being challenged because, through technology, consumers can get access to all kinds of data without going to specialists like travel agents, stockbrokers, or real estate brokers.
Why not just withhold listing information from all Web sites and return to the way we used to operate?
In all industries, things simply don't stay the same. What at one time may have been the key to an industry's success eventually becomes neutralized and new competitive advantages emerge.
In the securities industry, it was competition between no frills transactions provided by discount brokers versus the full service, offerings of traditional brokers. Today, not only do all stock brokers provide research, but investors can get research themselves on the Internet and do their own trades. The battlefield has changed, so that, today, the company that can provide the widest array of financial supermarket services at the lowest cost wins market share.
The fact is, NAR has spent years effectively promoting and defending the REALTOR's® position as the gateway to property listing information. However, at best, delaying actions are exactly that, since, inevitably, innovation, and particularly technological innovation, bring about permanent change.
Information on recent home sales, neighborhoods, and schools were always available to homebuyers and sellers. It was simply too difficult to gather on one's own and, therefore, the ease of relying on a real estate salesperson became the well-established road. With computer technology, this kind of data will permanently be accessible by the public through an ever-growing number of databases. Additionally, with the Internet, the cost of putting listing information online is so inexpensive that it is inevitable that all properties for sale will find their way to interested consumers through the Web.
Does that mean that real estate brokers and agents will lose their position as the first point of contact with consumers?
Some would like to see that happen. Mortgage providers, affinity management companies, and, for that matter, Internet companies would like to take up the position as first point of contact and let the broker pick up some pieces later on in the transaction for significantly lower fees. Some of these other industries might even like to eliminate the functions of the real estate broker and salesperson.
However, it's ridiculous for us to abdicate the first contact position, since what we have--information--is precisely what consumers will continue to want. The key is to reconsider the means by which we manage and provide this information.
Instead of guarding information until someone comes into your office, then providing it piecemeal, as many practitioners do today, consider providing it directly to anyone who wants it. Just make certain that the linkage between you and your data remains firmly in place. And make sure that whatever medium is used to offer the data has appropriate controls over how the data is used and how information gathered about consumers viewing the data is used.
Is that what lead to the information of RealSelect to operate REALTOR.COM?
Not directly. Actually, when we began negotiating the wind down of the troubled REALTORS® Information Network, we quickly gravitated from the goal of stopping the financial bleeding of RIN to the bigger opportunity, that of creating a permanent gateway between the REALTOR® and the consumer. I should add that this was quite a departure for me personally, because I am a strong advocate of the national association minimizing it's involvement in commerce and sticking to issues dealing with political action, licensing, education and related matters.
What became apparent, however, is that just as RIN had recognized, unless the industry worked together to share its data with the public, the unique position real estate practitioners enjoyed at the first point of contact with consumers would be lost to any number of ready and waiting players -- all of whom want first access to the consumer at the expense of the real estate practitioner.
So, then, why shouldn't real estate brokers promote their listings on every possible Web site that provides assurances that their interests will be protected?
There are two variables. One is the nature of the protection and the other is how long the protection will last.
First, for your interests to be truly protected, it's important to have controls over how information about buyers and sellers gathered at the site is used, where listing data resides, and how much advertising can dominate the site, among many other things. Second, it's important to know how long any protections offered to you will remain in place.
The agreement between RealSelect and RIN, a wholly owned subsidiary of NAR, provides a remarkably unique balance. RealSelect, as a for-profit entity, is entitled to make as much profit as it can. It's pure capitalism. Its investors who understand that technology is a high-risk game with strong rewards for those who succeed.
In return for its unique position as the operator of REALTOR.COM, RealSelect abides by a series of strong controls all designed to assure that the Web site permanently remains friendly to REALTORS®.
If the controls are not abided by, RealSelect loses the ability to operate REALTOR.COM. Essentially, REALTOR® interests have guaranteed protections for the life of the REALTOR.COM site.
Well, what if other sites do, in fact, offer protections similar to those at REALTOR.COM?
Every real estate broker and salesperson knows what it's like when a new newspaper, magazine, or TV home show is launched in their market. They'd rather not support it because, if they do, it will gain acceptance and need to become a permanent part of their promotional budget.
Yet they're offered special terms and a preferred position as part of the new venture, and if they don't take it, their competitors will, and they'll have to live with a secondary position for a long time.
Remember, though, that protections that have a time limit are of no value. If a site can capture your listing data until it has strong consumer acceptance and then change its policy regarding protections, you've simply bought into tomorrow's problems.
So, will REALTOR.COM and RealSelect be able to pull it off in this high stakes technology game?
Well, thus far most would agree it's working great. REALTOR.COM is the leading real estate site on the Web and among the most visited sites of any kind. Major investments are being made in leading edge site design improvements and search engine distribution agreements such as America Online.
Yet the challenges ahead are enormous. There is an unending list of well-capitalized want-to-be competitors that raise challenges daily. RealSelect has put together a remarkable management team, however, that has delivered thus far. And I have confidence that this unique partnership with our industry does indeed have a good chance of pulling it off.
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