This is chess, not checkers
Lots of very smart people are scrambling to figure out the changing dynamics of online real estate listings and advertising.
The end of the ListHub deal with Zillow has muddled the situation as Z furiously cuts deals with individual MLSs as the clock runs out on the contract with LH in April.
While Zillow has advanced an easy technical solution and offers a compelling proposition, many of the MLS organizations are feeling the heat from all sides as they try to figure how tough they must be in their negotiations. This is deal time for many of these local organizations who are out of their element when the stakes are so high.
On the advertising front, as Zillow strikes more exclusive deals with listing agents, local brokers and national firms, fewer listings are available to play host to ads touting the services of competing buyer’s agents.
Is this the end game? Does this mean less controversy over ads by competing agents on listings? Will this inadvertently promote more double-sided transactions? Is this another nail in the coffin of buyer’s agents?
Zillow CEO Spencer Rascoff has told investors not to worry — as long as traffic to the site keeps growing, he’ll have plenty of “impressions” to sell to agent advertisers. So this may not be checkmate, but the beginning of a prolonged chess match. Did I say that?
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More on the chess game
One indicator of the trend working against buyer’s agents as the consumer goes direct to listings online is the story of rental brokers who represent tenants in New York City. The New York Observer ran a story this week: “Last of the Rental Brokers: Travel Agents of Real Estate Press on in StreetEasy World.”
The argument goes, “With the rise of websites like Trulia and StreetEasy, listing information has never been more directly accessible to end users. The position of rental brokers, who once guarded their secrets like priests before the era of Martin Luther, has grown precarious. And those thriving in the present era have largely adopted strategies bearing little semblance to those that prevailed in the past.”
Indeed, it has complicated an already dog-eat-dog world for agents representing buyers and renters. Plus, the trend could further consolidate the power of those who have the most listings, who have always had the clout in the market. Plus, newbies have never been more challenged.
Shout out to the FTC
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Federal civil servants face the brunt of too many political backhands when most of them work diligently to protect us from bad air and water, sleazy CEOs, unsafe drugs, terrorism, corruption and other nefarious threats to our well-being.
Take the Federal Trade Commission, which among many other duties must approve mergers and acquisitions. Some might view this as interference in commerce, but the FTC’s goal is to protect consumers from monopolies. The agency does not always succeed, but it carefully does its diligence under the heat of Wall Street and other interested parties who often carry a big stick in D.C.
In the Zillow/Trulia merger, the FTC has been carefully reviewing the case for months, trying to figure out a complicated industry and how it will take shape in the future. Plus, it has been airtight about not disclosing its inner workings, other than what is required by law. Lots of gossip swirls, but the agency quietly does its job.
Speaking of the feds
China’s Anbang Insurance Group claims it has gotten the OK from federal regulators to complete a $1.95 billion deal to purchase the Waldorf Astoria Hotel in New York City from Hilton Worldwide Holdings Inc.
So which agency handles this sort of transaction? The Committee on Foreign Investment in the U.S. Who the heck is that?
“CFIUS is an interagency committee authorized to review transactions that could result in control of a U.S. business by a foreign person (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States. CFIUS operates pursuant to section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (FINSA) (section 721) and as implemented by Executive Order 11858, as amended, and regulations at 31 C.F.R. Part 800.”
Now you know.
Speaking of the thaw
As economic optimists continue to predict the U.S. economy is on the mend, mortgage standards are loosening up. Lower FICO score loan applicants are doing better at the home loan trough, according to Ellie Mae. “Borrowers with lower credit scores accounted for a greater share of loan volume in December 2014 than they did in December 2012, according to data from a sample of mortgages processed by the Ellie Mae loan origination system,” National Mortgage News reports.
Raining on the parade
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Not everyone is drinking the robust recovery Kool-Aid. A new report by the Federal Reserve Bank of San Francisco concludes the Fed often prematurely cheerleads economic growth. Since 2007, the Fed has “been persistently too optimistic about future U.S. economic growth. Real GDP growth forecasts have typically started high, but then are revised down over time as the incoming data continue to disappoint. Possible explanations for this pattern include missed warning signals about the buildup of imbalances before the crisis, overestimation of the efficacy of monetary policy following a balance-sheet recession, and the natural tendency of forecasters to extrapolate from recent data.”
Translation: We sometimes fool ourselves.
Are you in a big company? Watch this video
In this video, VC guru Ben Horowitz makes the case for how big companies can innovate, but it may not be the path you think it is.
“Innovations are things that create new product cycles for the company. Innovation does not mean adopting a new technology,” is his conclusion.
Onward!
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