The most baffling question of our time -- at least in the real estate world -- has now been resolved. Despite arguments to the contrary, we finally have convincing evidence that broker data is worth at least hundreds of millions of dollars to online entrepreneurs, and no doubt a lot more.
Each day brokers and salespeople go out and list homes. The information they gather is routinely placed in local Multiple Listing Services (MLS). Once properties are entered into an MLS, they are then exposed to large numbers of local brokers.
In essence, the equation looks like this: More exposure equals more opportunities to sell. If this equation is correct, then should not brokers be elated to have their information placed online without cost?
It sure sounds enticing. What could be better than free?
The answer, by now, should be obvious. It's not free exposure that brokers are getting, it's free content for web owners.
To see how this works imagine that someone opens a hardware store. To attract buyers, the store must have hammers, nails, and other inventory.
For several years online entrepreneurs have argued that since they are exposing broker properties to large audiences, they should have access to broker data at no cost. In other words, they say that the hardware store owner -- and likewise online site owners -- should get inventory for free and keep all the profits and equity from the business.
Brokers, to their credit, have increasingly understood that their data is the core inventory needed for major realty sites to succeed. Such sites could not exist without broker data, thus such information has value. Like hardware manufacturers, brokers feel they should be compensated for the inventory they have created at great cost, inventory that site operators need.
In effect, in an information economy it is the brokerage community which has the information. Since homes will be sold with or without the Internet, and with or without one site or another, it follows that to access broker data online developers should be willing to pay for such content -- and now they are.
It's been a few weeks since Realtor.com's corporate parent, HomeStore.com, went public and the result is plain: the genie is out of the bottle. If one site will pay for broker data, why should brokers give their data to other sites without compensation and control?
How much is broker content worth? Depending on who you ask, and depending on the day's closing stock prices, HomeStore shares owned by NAR, local MLS services, and Realtors who purchased through the direct share program are valued at hundreds of millions of dollars.
Not to be outdone, both HomeSeekers and HomeX have also begun to offer brokers a piece of the pie.
HomeStore has helped brokers sell services and made a bunch of money for a lot of people. The challenge now is for competitors to generate as many benefits -- or more.
The Common-Sense Mortgage
The latest edition of The Common-Sense Mortgage is now available in bookstores online and off. In print for nearly 15 years and widely recognized as the standard consumer guide to real estate financing, previous editions have been described as "virtually in a class by itself" (The Philadephia Inquirer) and as "one of the best available guidebooks to the realty financing jungle," (The Los Angeles Times).
Whether financing or re-financing, whether you're a borrower, broker, or loan officer, this money saving, easy-to-read and well-organized guide is a necessity for anyone in the real estate marketplace. For additional information, press here.
Question Of The Week
Q We want to buy a new property and rent the home we now own free and clear. What will lenders think of this arrangement?
A They'll be elated.
What you're really doing is buying a new home and creating an additional income stream from the old one. That extra income will allow you to qualify more easily for a new loan and borrow more money, if you elect.
It's likely that lenders will want some of idea of the first property's potential rental rate, so written estimates from several brokers will be helpful. Once a rental rate is established, lenders will credit 75 percent of the monthly rental to your qualifying income.
Weekly Resource
Sun Microsystems, through its subsidiary Star Division, is now offering a complete software collection -- word processor, spreadsheet, etc. -- for nothing. The well-regarded Star Division program works with a variety of operating systems and you can't beat the price.
What's Broker Data Worth? Billions.
