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Last week a lot of noise was generated by Zillow’s acquisition of Postlets.  Is this another shot in the war for real estate listing syndication? There is an old saying that when all you have is a hammer than everything starts looking like a nail.  In his case, I think Zillow’s going to surprise everyone.

First, let me start by saying I don’t understand all of the intensity around listing syndication. To be quite honest I think syndication is stupid. It’s based upon an erroneous understanding of how customers buy homes.  And it’s simply a strategy from the days of the Sears catalogue: the more you spread it around the more people can see it, and possibly buy something from you.  But the horse has left that barn, and we have what we have. Still, syndication has wasted millions of dollars and tens of millions of dollars in this industry when one simple chart from the National Association of REALTORS Profile of Home Buyers and Sellers indicates that more people bought a home they found through their agent than they did on the Internet last year.  And yard signs were the third most common source of the home the buyer actually bought. Not listing data fertilized into every corner of the web.

Maybe syndication has some ancillary benefits, like bragging rights between competitors in the industry over who has more of their overpriced, unstaged, unsellable inventory spread it across the web.  But everyone knows that inventory is a relevant, no matter where you place it online, if your agents aren’t paying attention to leads, haven’t been trained in converting and nurturing them, and your managers never read any of your leads management reports.  That assumes those report even exist.  Image if the real estate industry put as much effort into the basics sales activities as it has in to the technology of listings syndication.  But I digress…

My friend Rob Hahn of 7dsassociates was quick to tweet that he thought the solo acquisition of Postlets was a big mistake.  He blogged that it seemed to be a counterattack to move.com in the ongoing war for listing aggregators and syndication.  He also correctly noted that Postlets is significantly different than other aggregators, notably the RPR, because it features the ability for individuals too bad and edit their own listings.  So as actively Postlets is a very basic form of MLS system.  Rob and others seem to think that Zillow will have to turn this feature off in order to retain and MLS clients who were feeding and data.  Otherwise Zillow would appear to be a direct competitor with the MLS.

And that is my point exactly.

If I were Zillow, I wouldn’t try to compete in a space that has been largely saturated and likely their competitors have more money and political goodwill to eventually emerge the victor.  Instead it’s time to shift the playing field entirety.  And what Zillow is doing might actually be very prophetic.  I think they are building features and acquiring companies, with 500,000 users by the way, that will set up their technology to a viable, inexpensive, and established mechanism for promoting and distributing inventoried and a post-MLS world.

You see, many people in the real estate industry envision a time after the dominance of MLS Systems. We have consistently questioned the costs, restrictions, and clunky technology that frequently do more to inhibit the real estate broker’s ability to use their data and sell more homes.  At the same time, over the past 10 years, many companies have developed their own significantly more substantial data management systems in house.  It would not be that complicated for them, in the future, to share data with any website, social environment, or distribution System without any third party involvement, or costs.  Especially when that third party traditionally the company by committees of busybodies who enjoy spending their day coming up with rules that would restrict they are more capable competitors.

The acquisition of Postlets not only prepares Zillow for the possibility that fewer brokers will maintain their expenses membership in an MLS technology going forward, it also provides them with an entry point into hundreds of brokerages who currently may not have a very good technology platform.  In some ways we can imagine that many of the users of Postlets have to use their technology because their brokerage is either too small or has been unable to create and maintain a listing distribution platform, or even that their local MLS does so very poorly.  Perhaps Zillow will offer a variety of enhancements and features that now include the simple ability to add an added listing data to these brokerages in the future.  And what better way to catch the attention of the broker than through the loyalty of his agents who have been already using your technology.  It is a classic grassroots strategy for making a play for the brokers business because you already have his agents’ allegiance. It’s how “lead aggregators” have been able to sell buyer leads back to the brokers on their very own listings for years.

They are important possibilities as well.  It is possible that Zillow is envisioning a future in which the listing data does not necessarily have to flow through the broker’s technology.  There are a variety of experiments in the industry in which brokers are providing nearly the legal minimum oversight services to agents who are then working with vendors of their own choosing to implement an online marketing strategy.  Some of these agents are simultaneously experimenting with not offering compensation to the buyer’s agent; their goal is to use technology to find the buyer themselves and have greater control over the outcomes.  Likewise they are attempting to affect the cost of brokerage to the seller clients with this approach.  It doesn’t matter whether everybody jumps onto this model.  It’s simply matters that a significant group of potential customers will need a service that not only distributes inventory, but permits them to manage it using a simple interface such as the one Postlets designed. And we know it can be amazingly affordable, since Postlets was either free or $5.

So let’s recap.  It could be that this acquisition really has nothing to do with the way current aggregators are playing the game. It could be that Zillow as an strategic vision of the future that is not mired in the structures and assumptions of the past that still bind RPR and other REALTOR/MLS-influenced companies.  We haven’t even thought of ways in which the Postlets acquisition might even create new opportunities for consumers to become engaged in listing distribution.  It’s also possible that such a system would open the listing network in the United States to foreign brokerage companies who do not operate under MLS style systems, nor do they frequently have distribution technologies in place.  There are so many ways this acquisition can be envisioned to radically alter the playing field while the traditional competitors are still arguing over whether or not someone can include all water mark on their listing photos.  But, I digress….