Do We Need More Sites That Post House Listings?

I'm not an MLS apologist.  I believe that information wants to be free and that agents should be good interpreters of information and not gatekeepers, but we're coming to a point where listing real estate is going to get much worse before it gets better.

While Zillow.com made the big splash in allowing people to list their homes for sale, the Merc announces that HomeGain and HouseValues are joining the fray.  HouseValues (which, in full disclosure, I hold an ever shrinking stock position in) will make it easier to post on Google classifieds and Oodle, while HomeGain will be facilitating listings to its own web site.

Maze
Maze

What concerns me isn't the availability of this information, but that people looking at real estate will not be able to make decisions based on the highest quality information.  Here's why.

It seems clear that freedom of information is a good thing for all parties.  As a seller, the more people who know about your house, the more prospects you'll attract.  And as a buyer, the more houses you have information on, the better you can get the best house for your needs.  Making houses more "liquid" will increase the number of transactions and people who don't have the time, inclination, or patience to learn the minutia of getting real estate transactions right or protecting themselves from unscrupulous sellers will hire agents.

But it's not all candy and rainbows. 

Meet the New Boss, Worse than the Old Boss

This quote indicates that the information may not be as "free" as you'd think, "HouseValues plans to add the feeds to other real estate and classifieds sites. The company declined to address whether it would make feeds available to Seattle-based Zillow." 

The unfortunate fact is that when an organization originates data using its own systems, it can do whatever it wants with that information.  But if these organizations selectively offer information to some sources over others that "threaten" or compete with them, what is the additional benefit to the masses?

Inefficiency Through Disintermediation

With all these different sites taking different approaches in doing the same thing, searches and potential traffic get divided across all the various outlets for this information.  And searching every site will quickly result in information overload.

Having more distinct sources also dramatically increases the chance one of the sources being wrong.  Worse, the shelf life of bad information will be prolonged because it will propagate across sites with varying update and editorial capabilities.

Less Accountability

HomeGain's General Manager, Louis Cammarosano, states, "Our solution does not allow Tom, Dick or Harry to add listings."  Maybe so, but I'm going to pick on two services.  First, I use (and really like) Craigslist, but all you need to post a home for sale on there is an email address. 

Second, I respect Zillow (though I wonder how you can tell someone the value of their house but not the formula used to get there).  They explicitly state that the Zillow community "requires honesty" to function and that "false claims and claimants may be removed."  And, back at MIT, I remember when there'd be a major uproar when someone posted anything remotely commercial on the Internet.  Zillow does ask for your credit card information to verify property ownership though... 

In contrast, when you add a listing to the MLS, you put your name and license on the line with each transaction.  That doesn't mean you'll automatically be dealing with someone ethical, but you sure know who to go after if something goes wrong.

Dropped Information Means More Games

Selling a home is one thing but how are you going to know the transaction history of the property you're looking at?  While some MLS systems (and there are a lot of them across the country) have been reluctant to share this information, they keep a database of when a property is listed, what the asking prices have been, what it sold for, and a lot of other useful information that's been aggregated (vs. disintermediated) over the years.

If there are going to be a "dozen" different national MLS-like systems floating around the Internet, this information will need to be collected again in order to get a good property history.

Without a centralized history and with reduced accountability, the games people play with listings are going to get more advanced than just taking it off the market for a couple months when it doesn't sell.  Imagine, for example, being able to have a different list price on each site based on the target demographic and traffic pattern that site generates.  Is this necessarily bad or unethical? 

No, changing faces like this is a marketer's dream and companies like airlines do this all the time in a virtually real-time way.  But it adds another layer of games that the consumer needs to look out for, over and above the factual presentation of a property.

Bottom line: Buyers and sellers need to understand that it's going to get messy until the home listings world shakes up.