Real Estate and Web 2.0 - Why It Hasn't Quite Taken Off

Real estate technology is a big business with a lot of players. There's office management software, MLS services and their technology, RETS (what a joke), dozens (at least) of real estate agent web site providers, hundreds of FSBO sites, ad infinitum.

But, as Marc Davison laments, no one has created "the next big thing" in Web 2.0 for real estate. Nothing sticks. Why not? Isn't Web 2.0 great?

Well, here's my take:

Web 2.0 is a more social and open version of the internet. It is entirely based on the ability to share data: person-to-person, company-to-person and company-to-company. Now, think for just a second. Who controls data in the real estate business? Yes, that's right. MLS services control data. In order to access the data, you often have to have a contract in place with a Realtor that works with that MLS. In some cases, you have to be a broker to get a data feed. This GREATLY limits the sharing of data. (It's so Web 1.0, if you will.)

Now, sure, you can browse Realtor.com or any number of sites that do have access to the MLS data feeds. You can even work your tail off to find Realtors to partner with to get access to every MLS throughout the country. But you're still bound by the MLS terms of use.

It's understandable why this is the case. Competition is fierce in the real estate business and brokers and agents have to protect their own interests.

But, it's ultimately going to hinder the growth of Web 2.0 in real estate. Most people still find their homes via MLS listings, so FSBO's and FSBO sites are facing an uphill battle to make headway.

On top of that, poorly designed and implemented standards, such as RETS (Real Estate Transaction "Standard") will further hinder the growth of real estate technology and information sharing. (In my experience and from what I've read from other developers, RETS is neither easy to implement nor is it really standardized. Apparently, the standards are implemented differently between MLS services.)

Web 2.0 is about sharing data and interacting with people. Any time data is "locked down" or restricted it will hinder the ability of any market that relies on that data to take full advantage of Web 2.0.

Another issue, which is really a side thought, is that real estate is often an occasional transaction for most people. Investors aside, people don't necessarily purchase and sell homes with the same frequency that they buy toothpaste or sell used CD's. That's going to deliver an automatic blow to any site that wants to develop a "following". Once someone buys a house, they're often done with the site until they're ready to sell. Which could be a year or ten.

The bottom line is that the generally accepted "rules" and "norms" of Web 2.0 aren't going to fit into the real estate industry the same way that they fit into other industries (retail, for example). It's going to require a different perspective on how to connect people within the inherent social and information restrictions.