I’ve continued to spend time digging in and unpacking the implications of the NAR settlements and the fallout to come. One of the biggest issues in my opinion is not about buying and selling homes.
It’s about data and, frankly, fairness.
When you really think through the current system, it hurts agents in more ways than one. Firstly, Independent Listing Sites (i.e. the aggregators) are deriving multiple billions of enterprise value… from the AGENTS’ listing efforts. Agents are further hampered by unnecessary costs and archaic geographic barriers that often require them to register and pay dues to multiple MLSs in different locations.
As far as I’m understanding it (please respond in the comments section if I’m missing something), here is how it works:
> Listing agents hustle to win sellers as clients.
> Then, due to the rules and regulations dictated by the NAR and the associated realtor organizations that run local MLS’s, agents are required to put their listing on the MLS within 24 hours
> The local MLs’ then sell the data to the aggregators, and then the aggregators sell the advertising space next to the list back to the agents!
In other words, agents work really hard to get their listing and then the data is sold back to them if they want their picture and contact info placed prominently next to the listing they worked so hard to get.
> Then there’s the geography problem.
> If an agent wants to conduct business for a single client buying or selling property in, say, Miami, Chicago and Los Angeles, the agent will likely need to be a dues-paying member of the NAR, as well as three different MLSs.
> This means that agents who want to access the MLS often need to join the NAR or a local Realtor association.
Agents have historically complied with NAR guidelines and standards - and how could they not? The NAR and MLSs are distinct, but interdependent entities. To be competitive as an agent, you’d be hard-pressed not to be a part of these systems, pay dues as needed and follow their rules.
It’s a system that is extremely convoluted, monopolistic and seems very unfair to agents on both sides.
As investors looking at the space, we believe there are few times that the bedrock systems of an industry get disrupted. In this case, we expect new solutions to enter the market with the aim of bringing a win-win scenario to agents on both sides, as well as the aggregators. In particular, we see opportunity in how listing data is used, owned and accessed by agents.
If you’re a founder working on something ambitious in this space, please don’t hesitate to reach out if you’d like to chat.
