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In 2013, Inman News publisher Brad Inman laid out a vision for an easier and faster real estate transaction that would be just as easy and seamless as ordering a latte. But in that almost-decade, with venture capital flooding real estate, how close has the industry come to achieving that vision?
Not very, according to panelists at Inman Connect New York on Thursday.
In a session called “Are We Confusing Motion With Progress?” panelists M. Ryan Gorman, CEO of Coldwell Banker Real Estate, and Brian Donnellan, CEO of Bright MLS, answered that question mostly in the affirmative.
“There is a lot of motion and not a lot of action,” Donnellan told attendees.
“It’s taking us way too long to get where we need to get to and I think there’s a lot of reasons for that.”
First, he said, brokers and agents are not easy to develop tech for. Bright, which is the nation’s second-largest multiple listing service, experienced multiple outages over several days earlier this month, sparking ire among some subscribers.
“In our market, we have 100,000 independent contractors all doing something differently, asking for something differently,” he said.
“You move one thing and half the people hate it.”
The transaction itself is also complicated and companies have to ask themselves what specific problem they are looking to solve, he said, adding that old technology often stands in the way.
“I think there is progress,” he said. “It’s just really slow.”
Most agents and brokers in the industry don’t actually see certain problems because they only belong to one of more than 500 MLSs, whereas companies like Coldwell Banker belong to virtually all of them, according to Gorman.
“It’s a complete nightmare to try and satisfy people,” he said. “Much of the dissatisfaction that people have, like helpdesk tickets [with] people calling in saying, ‘Hey, this thing isn’t right,’ goes back to master data management standards or things we haven’t agreed to.”
For instance, if an MLS subscriber wants to buy a particular product that they saw at Connect, that doesn’t mean they’ll be able to, according to Gorman.
“You can’t have it because it’s not in your MLS,” he said. “It’s in like 180 MLSs, but not yours. I’m glad you’re excited [but] you’ll have to wait three and a half years or maybe for MLSs to merge together, which is this weird brute force attack to try to actually get to a place of standards, which we could get to if we actually just collaborated and focused on the problem, which is to just try and make it easier for everyone to work.”
That barrier is not something that agents face as consumers of other products, Gorman pointed out.
“When was the last time you downloaded an app and they’re like, ‘Oh, sorry, that service is not available to you’?” he said.
“We’re annoyed if an Uber takes like 13 minutes and that’s actually a human coming to us, let alone just tech you can download and use.”
Venture capital, which has revolutionized other industries, hasn’t really made a difference to the transaction, according to Gorman.
“Billions of dollars,” Gorman said. “We’ve invested more in improving the transaction than we probably spent going to the moon the first time, and it’s basically the same as it’s been for, I don’t know, 15, 20, 180 years.”
“It’s pretty slow movement, in part because I don’t know that people really know how good it could be,” he added. “And if you don’t know how good it could be, then how motivated are you really to engage in some of the dialogue that’s necessary to get to that place?”
There are too many people invested in the status quo, according to Donnellan.
“We have a lot of self-interested people,” he said. “We have to admit what’s not right about what’s happening here and actually come to a place and fix it, otherwise somebody else will, and it probably won’t include the players that are here in this room. It’ll be somebody else.
“But there are people that are invested in what they have today. And that doesn’t help us get elsewhere. Quite honestly, it’s probably kept the venture capital from moving faster because of the fragmented pieces of the business. But at some point, it’ll all be digitized, and somebody will be able to roll it up.”
The “organization” part of organized real estate — the agents, brokers, brands, MLSs and industry associations — shouldn’t stand in the way of progress, according to Gorman.
“We’re swimming in organization,” he said. “But we don’t seem to really have clear goals to be chasing after really aggressively and I think that can make a huge difference. If we do, then the venture capital can move faster. Complexity benefits incumbents. So part of the reason for resistance is there’s some awareness of that, I think.”
Trying to work through the logistics of organized real estate is a “nightmare,” Gorman added.
“We’re an incumbent and we’re a leader in most of the markets in which we operate, so we kind of would benefit from things staying mostly the same, sort of, but if we really get to a place of standardization, there’s all these unintended positive consequences that flow from it,” he said.
“Less money spent in a wasteful way. Greater efficiency. The ability to move more quickly, deliver exceptional experiences. Sure, you may have a lesser moat, but the experience you’re delivering is so much more beneficial.”
As someone who’s acquired hundreds of companies, Gorman said consolidation is not the most efficient path to getting there.
“Actual collaboration on some of those standards would go much faster, and then could also allow standardization to move faster, or consolidation to move faster too,” he said.
Donnellan noted sometimes he’ll call Gorman with an idea, and Gorman will say, “That’s awesome” but that he can’t do it because he’d have to coordinate with 500 other MLSs.
“It’s a real problem trying to actually help some folks solve problems,” Donnellan said. “The consolidation thing is probably, in my experience, one of the worst conversations I’ve ever been in, but it has to happen. That’s where speed starts happening, where [brokers] can actually do something and really begin building a great consumer experience because they can actually do it faster. They can actually develop faster.”
The lack of standardization also keeps the best developers from entering the real estate space, according to Donnellan.
“The best can’t excel in these areas,” he said. “It’s something that we really need to find a way to address: How do the best actually get an easier way to make things happen?”
The search for the perfect standard can be a barrier to consolidation, when one side or the other is convinced that there’s only one right way to depict something like the number of baths in a home, according to Gorman.
“There’s a thought that we need to get to the best standard; like, not really,” he said. “I think a lot of people are kind of out there searching for Esperanto. Like, ‘let’s just all keep talking forever until we develop the perfect standard and then we’ll roll it out everywhere.’”
Donnellan agreed, noting that when MRIS and TREND merged to form Bright, “there was a holy war over ranch, rambler and some other thing. It almost brought the whole consolidation down.”
Panel moderator Sam DeBord, CEO of the Real Estate Standards Organization, noted that both Coldwell Banker and Bright build their own software, but Gorman said his company doesn’t build because it wants to.
“Like if there’s a truly unique experience we can create, we build for that, awesome, we’re excited to,” he said. “Or if there’s something that we need that just isn’t supplied, we usually do a pretty extensive RFP and talk to everyone in the space and hear all of their many promises about how in fact they can scale to meet our needs, only to watch them collapse. That process results in our need to develop things.”
If third-party companies could scale across the country and “not spend all of their time actually trying to fix breaks around MLSs or different data feeds and whatnot, which is where they invest a lot of time,” Coldwell Banker would use more third-party products “and just invest our magic on the truly unique differentiated experience,” he added.
Gorman said he’d like to see more standards around who actually owns a listing.
“We’d have standards around listing agent attribution, which is obviously a passion point for me, but should be a passion point for everyone,” he said.
“But we don’t. If we [did], everyone would just have to take it. I don’t care how impressive your app or your website is, you would have to adhere to that standard because that is our standard. We as the industry decided that the listing of the broker is going to be represented and attributed in a certain way and everyone has to follow it. It’s easy for someone to come in and basically not do that now because we’re a mess.”
Donnellan said the next couple of years are going to be pivotal to what the industry looks like five years from now and attendees should figure out how they become part of the solution to these problems.
Gorman encouraged attendees to demand action from their management teams and Realtor associations.
“Demand answers as to ‘why isn’t my MLS territory on the list of the vendors that I just saw at the conference,’” he said. “There are very specific reasons why and I’m guessing when you hear them you will be entirely unimpressed by them.
“Demand to know what the answers are and then be like, ‘Well, that [sounds] like blame, can we just move past that and actually get to a better place?’ If you do, … we’ll all be able to move faster and get better stuff.”