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And Now… Another Message on Open Innovation for Realtors

Over the past few months I’ve given a number of talks on open data and open innovation to groups of realtors around the country. During these talks I have cautioned that the more the real estate industry tries to protect (e.g. not share) its data, the more it risks making access to data (control) be the source of competition as opposed to accessibility with the data (allowing others to create value-added services).

Consequently, recreating already existing data sets will become the goal of competitors if working with the real estate industries data to innovate new services is not possible or prohibitively expensive. Competition on this axis has, I believe, two possible outcomes: One is a winner take all world where the person with the biggest data set wins, or put another way, either the current monopoly maintains its grip or a new monopoly takes over. The other is that there ceases to be, in a meaningful way, a single data repository on real estate and market place data gets broken into lots of different silos. This implications of this outcome are less clear, but there is a risk it could be bad for consumers as, essentially, market information would be fragmented. In either case, both outcomes carry significant risks for organized real estate.

Despite this, many realtors don’t believe it is likely to happen, because they don’t believe their data can be duplicated, no matter how much I try to tell them otherwise.

But…. whoops! Look what happened!

Today, as if to hammer home what I believe is the inevitable, the Globe and Mail has an article today on a new service that allows one to get an estimate on the assessed value of one’s home by accessing an alternative data set (one essentially created by the banks). It is basically a data set that is outside of any owned by organized real estate (that found in MLS). Look! Someone has recreated what was previously seen as a data set that could not be replicated!

Of course the counter is: “It isn’t as good.” Well, two things here. First, it may not have to be. If it offers 80% of the accuracy and 20% of the cost then it will probably be good enough for at least part of the market. And once it is established, I’m confident the owners of the website will find ways to make their service better and the data more accurate.

The real estate industry has an opportunity to shape its future or be shaped by the future. The market (and the competition bureau) isn’t going to give them for forever to make up their minds.