* Patforms such as Zillow, Trulia, and BeatYouThere.com are changing realty business
Of all of the industries that have been transformed by the Internet one of the slowest to change has been the real estate industry. It is also, arguably, one of the most in need of change.
Real estate professionals have, for decades, benefited from a major advantage: Information asymmetry. REALTORS® (which is how the National Association of Realtors insists on writing the word) were the ones with the market data and the expertise in navigating the processes involved in the acquisition and disposal of property. But with the rise of the ‘Net and the increasing flow of information from expert domains such as realty out to consumers this situation couldn’t last.
Back in 2005 Steven D. Levitt and Stephen J. Dubner wrote in a Wired article, “Cracking the Real Estate Code”, adapted from their excellent book “Freakonomics”: “The Internet, of course, is all about smoothing over these asymmetries; in one industry after another, from life insurance to used cars, the Web has eliminated the expert’s upper hand by giving once-exclusive information to the online masses. But some industries have been slow to change – real estate among them.”
Since Levitt and Dubner’s book there have been all sorts of attempts to smooth out the information asymmetry in real estate and the recent antitrust settlement between the Justice Department and the National Association of Realtors over blocking access to Web listings was definitely a step in the right direction.
On the settlement topic I’d recommend reading “Realtors, Prepare to Lose Your 6 Percent” by Jeff Jarvis who comments: “This new economy can now come to real estate sales as information become freer. Oh, it’s not fully freed yet. But I do believe that the combination of this settlement and what it does to empower discount players and the depressed real estate market will combine to finally shove dynamite up Realtors’ rears.”
Even so, the power of the ‘Net is so great that change has to happen and there are many service companies pushing the realty market to free up information. I’ve covered a few in this newsletter including articles on Zillow and, most recently, Trulia. These are great examples of how the morass of realty information can be marshaled and contextualized such that the non-experts – consumers – can extract value and gain advantage.
Another recent entrant into the realty information market is BeatYouThere.com. This company is aiming for similar service territory as Zillow and Trulia, but they’ve added that latest of Web 2.0 trends, social networking, into the mix. Registered users can rate the performance of realtors (sorry, REALTORS® – I have always thought writing it like that to be ridiculously pretentious) and comment on properties.
Another key issue in the design of BeatYouThere.com is that all listings are provided for free and the service doesn’t accept payment for properties to be shown at the top of lists.
While the current economic downturn is a huge issue for us all, it is having a powerful effect on realtors (I refuse to capitalize it) because as the realty market softens and property prices fall it is in realtors best interests to compete as aggressively as they can. Now that platforms such as Zillow, Trulia, and BeatYouThere.com are available and attracting significant user populations realtors are having their hands forced into being part of the information asymmetry flattening process. Best of all once they do they can never go back. The realty business is finally changing.
