The real estate industry’s information lock on the availability of homes for sale is slipping, threatened by more technologically sophisticated alternatives of bringing home buyers and sellers together.
Several entrepreneurs outside the real estate field are challenging the role once performed exclusively by the multiple-listing service, a computerized database of homes for sale in a given market controlled by local offshoots of the National Association of Realtors.
The powerful real estate trade group is marshaling its forces to fight off the upstarts, which include the System of Multiple-Colored Images for Internationally Listed Estates Inc. (SMILE, for short), SureFind Classifieds by Telephone, and HomeView Realty Search Centers.
Regardless which eventually prevails, the outcome should bring largely good news for the home buyer. The first step in the home search-eliminating unsuitable candidates-is destined to become easier and less time consuming.
And, the same innovations that allow buyers to narrow their searches work to the advantage of sellers by exposing their properties to a wider array of purchasers, industry analysts said.
The typical home search today starts with a buyer contacting a real estate agent to learn what properties listed by other agents are currently for sale.
The agent can search the local MLS database by location, price, number of bedrooms and other features to produce a list of homes for consideration. The agent then escorts the buyer to view the prospective properties.
But such a process is outdated, said Gerald Matthews, executive vice president of the Florida Association of Realtors and head of an industry task force studying how to improve the competitive position of Realtor-run MLS’s.
Although no one is ever going to buy a home without first seeing it, “we can save a lot of shoe leather and tires in this country by first searching electronically,” Matthews said.
A recently released NAR study found that in 1991 the average home buyer spent 16 weeks and visited 19 homes before reaching a decision.
However, a number of technological innovations could radically alter the way buyers scout out homes.
Already it is possible for shoppers to get a feel for the market without immediately involving a real estate agent. Companies are offering access to listing information from a home computer, by phone and fax or through kiosks located in airports or other public settings.
Other firms are encouraging buyers to narrow their search list by color computer images of homes for sale. Taken to its technological extreme, that may some day mean electronically “touring” a home by way of virtual reality, an exotic computer operation.
Also within the realm of possibility: homeseekers being able to search by computer for properties nationwide or internationally, simultaneously collecting other information pertinent to a sales transaction.
Buyers may also be able to obtain data, from the same system, on homes put up for sale by owners themselves as well as those listed and sold through real estate agents, a development that particularly grates on the real estate sales industry.
Meanwhile, the NAR is trying to hold onto its information franchise. Earlier this spring NAR president William S. Chee, a Honolulu residential broker, warned association members that the organization may well be cut out of the property information dissemination business within the next few years.
“Even if we implemented the best of plans today, we might still be too late. I personally think we have less than a 50 percent chance” of saving NAR’s hold on the information business, Chee said.
One reason so many MLS systems have failed to stay competitive in the information game, said Denver-based realty consultant Stephen H. Murray, is because the MLS operation subsidizes other local Realtor board activities.
Murray said he is aware of one board, which he declined to identify, that recently siphoned off $1 million for other purposes “instead of investing in MLS improvements.”
MLS turf fights leading to splintered markets also contribute to the problem, Murray said.
For example, a buyer searching for a home within commuting distance of Chicago would have to work through 19 different MLS systems, although several have recently joined forces as a regional information clearinghouse, said Thomas W. Dooley, a Chicago-based real estate consultant.
Chee agreed fragmentation is a problem, likening it to a “few Chihuahuas fighting over a bone, unaware that a hungry lion is coming over the hill.”
Matthews, though, said he believes the NAR can strike a deal to gain the technological upper hand with a “large partner that has this as their business.”
The NAR stands to incur substantial membership and revenue losses if it is dethroned as the primary source of for-sale information, Dooley said. “A lot of real estate agents only belong to the Realtors to get MLS access,” he said.
Although Matthews said the information-sharing function represents a “major piece of our value” to NAR’s members, he predicted the organization will remain viable as a provider of educational and legislative services.
The loss of the MLS information lock could also exert downward pressure on real estate sales commissions, Murray said.
“A broker’s job consists of knowledge and personal service, but no one has ever priced those two parts separately,” he said.
What’s more, Murray said, the ease with which buyers and sellers may someday find each other may well deprive brokers of some business at any price.
