Friday Flash: Need to know

While I was not sitting in crappy airport restaurants and Ubers last year, I entertained a number of escapist dreams. 

The most serious of these was buying an apartment in Italy. In fact, this dream will become a reality the minute my wife and I can get overseas safely.

As such, I’ve spent a lot of time on Italian real estate websites and apps. The big ones like Casa.it and Immobiliare.it, but also broker sites focused on the two towns I’m most interested in.

Here’s what I have to tell you about this:

God bless the U.S.A.!

See, in Italy (and pretty much the rest of the world), there is no MLS. Brokers take listings, often on a non-exclusive basis, and sell them. Many, but not all, pay to advertise these listings on real estate search sites. Cooperation and compensation doesn’t exist. The special flavor of chaos characteristic of many Italian things conditions all of this.   

I knew this going in. You probably know it too. But to experience it as a home shopper is another matter. With no MLS, and no IDX, what you’re doing truly is home search. You need to dig. There are also no confidence-inducing market stats rooted in a shared foundation of data. The whole effect is like walking around one of those birthday party bouncy houses, blindfolded, in a fit of vertigo. 

So as we enter a year in which our MLS system is likely to be challenged as never before, it is worth contemplating what we take for granted about it:

• A shared truth about housing market realities upon which both real estate professionals and consumers can make informed decisions.
• Behavioral norms that strongly curtail bad actors.
• Easy, open access to a near-complete picture of inventory for all who seek homes. 
• (This last reality is being threatened by companies, Compass most notably, that are building their business strategies upon deliberately withholding inventory from the MLS.)

Look, let’s be real: there are problems in the MLS “industry,” such as it is. Mediocrity is common, and the exceptional people generally don’t take risks. Most boards of directors couldn’t strategize themselves out of a paper bag. The entire system is kept afloat by “sleeping beauties,” subscribers who pay but don’t practice. 

I know, I know, I know. I’m guessing you know, too. 

But consider the alternative. It isn’t efficient, consumer-friendly, fair, or open. 

It’s as shadowy as an Italian hill town at dusk. 

MLS consolidation is gaining steam. Super regionals like Bright and CRMLS are raising the bar on professionalism and systems. I believe we are headed slowly but steadily toward a “Realtor crash” that will accelerate these things. 

Baby and bathwater, folks. The MLS system isn’t perfect, but it’s valuable in ways you can’t fully appreciate until you’ve spent time in a place without one. 

…

I’m starting a section in these Friday emails called “need to know” in which I share things I find noteworthy, along with one sentence on their larger significance, or what I think they might mean. 

So, here you go: Need to Know, Volume 1:

Porch, which launched years ago as a home improvement marketplace, struggled, then went public via a SPAC in December, spent $122 million to buy four companies (including a home insurance company) in its bid to “reinvent” the home services industry. This is important to watch because it’s a company with means playing the long game with homeowners in a way many brokers could and should do, but largely haven’t.

Spruce, one of a raft of new well-funded digital closing companies, announced a white-label title service, SprucePowered, aimed at proptech startups and “tech-forward brokerages.” This is yet another indicator of demand for a more elegant transaction experience, and non-brokerage profit centers.

Fifth Wall Ventures, a VC firm focused on Proptech (they have invested in Opendoor and States Title, among others) is reportedly launching a SPAC. This means more public companies in our space faster, which means more acquisitions, and more innovation, faster.

Clubhouse, the buzziest, coolest social app going, seems to have hit real estate big time in the past couple weeks (even I am onboard, which means it is actually no longer cool). I find it fascinating and uniquely aligned with the nature of the real estate industry in a way that’s potentially very powerful. 

That’s all for now. Have a restful weekend.