Harder, better, stronger, faster

7DS Associates

Two American companies have recently decided to setup shop north of the border, bringing both excitement and trepidation to the Canadian real estate scene. You may consider them our payback for Celine Dion and Justin Bieber.

But truth is that Celine and Justin are fantastic entertainers who have enriched the American music scene. Similarly, Redfin and Zillow will enrich the Canadian real estate scene… if you let them.

In writing this, I am hopeful that Canadians will learn from our ten-plus years of stupid battles over listing syndication, and avoid making the same mistakes that American brokers, agents and MLS boards have made. That way, you can navigate the changes ahead for the benefit of consumers and real estate professionals alike.

I’ve already been hearing some information coming out of Canada, typically from Canadian readers of my blog, The Notorious ROB. They are, to be frank, somewhat dismaying.

For example, I’ve heard that the giant brokerage Royal LePage has circulated a set of talking points to its almost 18,000 agents to help explain why they chose not to market their clients’ homes on Zillow. I assume MLS Boards are meeting everywhere throughout Canada to talk about how they’re going to make sure that Zillow doesn’t get listings. That is the kind of idiocy I hope to help you avoid.

What Did You Think Was Going to Happen?

Last I checked, Amazon is in Canada. So is Apple. And Netflix, and Google.

Major consumer trends sweeping the rest of the world are not going to skip over Canada. I mean, Canada is not North Korea; it’s a G8 industrialized nation with a lot of well-educated, tech-savvy, high-income consumers.

It was obvious that things that worked here in the U.S. were going to find their way to Canada, wasn’t it? Zillow and Redfin are bringing great websites and mobile apps for finding houses and contacting real estate agents to Canada. This stuff has been so tested and so proven that we in the U.S. are already referring to it as “real estate web 1.0”.

In the U.S., we are not far from a point where providing real estate advice without advanced data analytics to back up your recommendations might be grounds for malpractice. After all, we don’t think it’s reasonable for doctors to operate without x-rays or CAT scans in 2019 either.

And now, we have gone past the Internet into a new mobile web-everywhere world, where people complain if the wifi on airplanes cruising at 30,000-ft is slow.

And I have to tell you… most of the brokers, agents, MLSs and Associations in the U.S. are not ready for what’s coming next. They’ve spent most of their energies in the past ten years fighting over listing syndication, trying to hold on to what they’ve got, and defend the status quo… instead of embracing the future and proactively evolving to make even more gains than ever.

Don’t repeat our mistakes. Do better than America has.

There are three big mistakes you could learn from, and thereby easily avoid making.

Mistake #1: Don’t Drink the Zaterade

The first mistake you should avoid making is drinking the Zaterade. American real estate has been stuck in a deranged delusion for over a decade, convinced that Zillow was the big bad wolf at the door who was going to disintermediate every real estate agent and broker on its way to becoming Homes ‘R’ Us.

Let me give you an example of how Zaterade hurts the industry. Lack of single data entry for listings has been a major complaint across the US for at least ten years. Each MLS has their own system and agents are forced to enter the same listing over and over again. Total pain in the rear, and the industry has been working on solutions for well over a decade.

Here's the thing - there is a technology solution that exists today. It's called Bridge Interactive. But many MLSs and brokerages refuse to use it because Bridge is owned by Zillow. If that's not a glaring example of misplaced fear and outrage creating blindspots, I don't know what is

This is like refusing to take the one and only drug available proven to treat your illness, because you don’t like the manufacturer. That’s crazy. The rational thing would be to take the drug, and still dislike the manufacturer. That’s Zaterade, when you refuse to use a product that will solve your problem because you hate Zillow.

Don’t drink the Zaterade. It might make you feel better in the short term as the ecstasy of self-righteousness overtakes your senses. But it blinds you to the reality of the situation and prevents you from seeing the real threats and the real solutions.

Mistake #2: Stop Talking About “Real Estate Data”

I have written far too many posts on my blog about this problem, but it rears its ugly head every single time when listing syndication comes up.

Let’s start with a fundamental premise: it’s not your house. It’s your client’s house. Yes, remember them? The nice family who needs to sell their beloved home because they need to relocate to another city?

The listing is not “real estate data”; it is an advertisement of a property for sale, a property that belongs to your clients.

The more that real estate brokers and agents talk about “real estate data” and “data privacy” and “protecting our intellectual property”, the more those clients start wondering where you get all this wonderful and valuable real estate data from. And when the public starts to wonder, guess what? The people who want votes from those people start to get curious.

After all, the people of Canada didn’t vote for real estate boards and CREA and MLSs to represent them and protect their interests as consumers. They did vote for a bunch of MPs who then hired regulators, like the Competition Bureau.

And let’s be honest… Canadian authorities are a tad more activist than their counterparts down here south of the border. See the recent Competition Bureau v. TREB case out of Ontario for reference. And just in case you need to understand how the authorities see that case, here’s a very nice video from the Competition Bureau.

“We expect that consumers in the GTA will soon have access to new and innovative real estate services. This includes websites that will provide more transparency and convenience about what you want to know.”

What do you imagine that the Competition Bureau will think of some Canadian industry effort to stymie Zillow and Redfin? What do you think they would make of the not-so-secret memo from Royal LePage? (Because, let’s face it, when 18,000 agents receive it… that’s not a secret.)

Many people already know the ancient Chinese curse: May you live in interesting times. Fewer know the second part of that curse: May you attract the attention of the powerful. Stop talking about “real estate data” all the time.

Mistake #3: Do Not Put Agents Ahead of Consumers

The biggest mistake by far is to do what American real estate has been trying to do for the past ten-plus years: putting the needs of the real estate agent ahead of the needs of consumers. Let me explain.

The business model of almost all aspects of real estate, from brokerage to franchises to MLS to Associations, has evolved around meeting the needs of real estate agents as independent contractors. What started out as a tax issue has transformed; real estate agents are essentially small businesses unto themselves.

As a result, brokerages have become B2B companies whose customers are actually real estate agents. MLS and Associations have become B2B companies focused on meeting the needs of the members. Technology vendors focus incessantly on the needs of real estate agents, as they should, since those are their customers. Trouble is, the world has moved on.

And yet, the real estate industry keeps wanting to fight for the needs of the agent, instead of the needs of the consumer.

Take listing syndication as an example. If what is important is the need of the real estate agent to get buyer leads off of her listing, then sending buyers to some other real estate agent seems like a bad idea. So you fight it with some vague idea of “My listing, my leads!”

But the needs of the consumer are different. They just want to find homes easily, in exactly the same way they find restaurants (Yelp) and information (Google) and dates (Tinder) and car rides (Uber and Lyft) and airplane tickets (Travelocity) and rare cat condo decorations (Ebay) and so on. They don’t care about all of the inside-baseball stuff of real estate. Sellers don’t care about how many buyer leads you generate or don’t generate from the advertisement of their homes for sale. (And we ought to be grateful for that, because if they did start to care….)

In effect, what American real estate industry has been doing for the past ten years is to try to mold consumer behavior to fit the needs of the real estate agent. It has not been successful, because no effort by any business in any industry anywhere in history has ever succeeded placing its own needs ahead of the needs of consumers.

What’s more, there is collateral damage from placing the agent’s needs ahead of the consumer’s needs. For example, once you go down the “My listings, my leads” path, you start thinking, “Wait a minute… IDX sends buyers to some other real estate agent, doesn’t it? For that matter, why in the world should I be sharing this valuable listing information with other agents over the MLS? If the buyer wants to see the house, he should call me instead!” That’s pretty much where American real estate is today with major companies wondering about the value of IDX and agents everywhere engaging in private listing clubs, off-MLS listings, and “Coming Soon” listings as a routine business practice instead of a rare once-in-a-while exception to the rule.

A far better approach is to mold agent behavior to better meet the needs of the consumer. Think about the fact that half of online inquiries go completely unanswered. Instead of trying to force consumers to come to your website or use your mobile app, getting your agents to be more responsive to consumers wherever they might go is a far smarter strategy.

The Choice: Zillow or Redfin

What is particularly amusing and tragic about the syndication war, especially in Canada, is that the choice is not between the status quo and Zillow dominating. If that were the case, one might understand why the defenders of the status quo are trying to make syndication the bogeyman.

No, the real choice here is between Zillow dominating and Redfin dominating online real estate in Canada.

Today, Realtor.ca is the #1 website for real estate in Canada. Realtor.ca is the public facing website owned and operated by CREA, the national REALTOR organization, which is a not-profit trade association, just like NAR in the U.S.

Now, consider these numbers from 2017:

  • Redfin spent $42.5 million USD just on Technology and development
  • The entire CREA “Services to members” budget was $20.7 million CAD.

CREA can’t stop Redfin from getting the same listings that all the other brokers and agents get, because Redfin is a Participant brokerage in the MLS.

Stop Zillow, and Redfin will reign as the #1 website for Canadian real estate. How do we know?

Because Redfin has already overtaken Realtor.com in the United States in certain key markets, and by quite a lot.

In at least five major U.S. cities (San Diego, San Francisco, Seattle, Chicago, and Washington DC), Redfin is now the second largest portal by unique visitors, beating Realtor.com. In December of 2018, Redfin’s traffic beat Realtor.com’s by solid margins: 121,000 to 83,000 in San Diego; 446,000 to 356,000 in Chicago; 310,000 to 142,000 in Seattle.

That’s not a little brokerage website Redfin beat. That’s not even a big brokerage website like Howard Hanna or Long & Foster that Redfin beat. That’s the former #1-by-a-mile, dominant portal of its era, which had all the listings and virtually no competition, owned by News Corp, a real multi-national media company with annual revenues in the billions that Redfin beat.

Redfin is not even going to get slowed down by Realtor.ca. And if the national public facing portal can’t compete, Canadian brokerage websites can’t either. Plus, all of those anti-syndication talking points don’t apply. Now what?

So look, fight Zillow to the death if you want and fend them off. Just understand that what you’re doing is handing online real estate in Canada to Redfin. Which is your right to do, of course.

I just urge you to understand a very important difference between the two: you can advertise on one, but not on the other.

Zillow gets attacked for putting paying Premier Agents below the listing agent, who might not be thrilled about the competition on her listing. But then again, she didn’t pay a dime for the free exposure of her client’s home for sale, so there is that. Redfin doesn’t show any agents, listing or otherwise, and works those leads itself.

Zillow tries to introduce potential sellers to paying customers. Redfin calls the potential seller to see if they want to list their homes… for a 1% listing fee.

Zillow makes money from its paying real estate agent customers, so would hate to see them go out of business. Redfin makes money from commissions, so it would be thrilled to see competitors become Uber drivers.

If you don’t like buying leads from Zillow, wait until you can’t buy leads from Redfin. Your choice at the end of the day.

Harder, Better, Faster, Stronger

A far better approach is to embrace the change and see where opportunities for gain lie, rather than fear the potential loss.

The bottom line is this: consumers want something better, something more convenient, something faster, something cheaper. The only way for the industry to deliver what they want is to become far more efficient, far more personalized, and far better than we are today. There is no way to become any of that without technology, without data science, and without innovation that can deliver the “Push button, magic happens” experience that consumers demand.

Combine the best technology there is available, with data science creating new tools for insights and analysis so you can be the best version of you for your buyers and sellers, layer on lead generation from whatever sources generate a return for you, and focus on creating an excellent service experience for your clients. “Push button, magic happens” might come to mean, “Push button, a magician named REALTOR appears.” But only if you embrace change and think of the possibilities, rather than fight it and see only losses… as we have done in America for far too long.

Don’t repeat our mistakes, Canada. Harder, better, stronger, faster. That way lies salvation.


7DS Associates

Headquartered in Greenville, South Carolina with clients spread across North America, 7DS Associates is a management consulting firm for the real estate industry. We work with select clients in all sectors of the industry, from Associations to MLSs to Brands, Brokerages and Agent Teams to Technology companies large and small. We work on mission critical, bet-your-company, change the course of the industry projects for some of the largest organizations and institutions in real estate.

For more info, please contact:

Rob Hahn | (917) 921-7612 | [email protected]  
Sunny Lake Hahn | (360) 319-4750 | [email protected]