Arrow of people - LeaderI have had a lot of interesting conversations with Associations of REALTORS, Broker groups, MLSs and REALTORS about portals. The same conversation has gone on for years. Used properly, they can be productive tools for online marketing. Used poorly, they can be a problem. A chief concern among brokers is that they do not participate in the revenue from the success that portals have. Simply stated, brokers understand that content has value and they recognize that others are realizing that value on the backs of their data assets. Feel free to agree or disagree.

Real estate brokers around the world have the same heartburn. In Australia they are planning to do something about it. They are starting a broker owned portal.

I guess that I am not sure why portals – including those operated by MLSs and Associations – do not simply pay brokers a revenue share – or at least issue them a credit relative to the content that they are issued.  If you issue a credit – you preserve pesky tax reporting. I know brokers who own their MLS and they own the MLS consumer facing website and they love the profits they reap. Investments yield rewards. Do you think that they hate their MLS? Not a bit. Do you think that they hate the MLS consumer website that they own? Not a bit. They love their MLS and they love their MLS Consumer Website.

The reality is that these firms who are participating in Australia may or may not actually be participating. I have seen this sort of conversation before. The press release is designed to get participation. You can bet that the phone is ringing off the hook from brokers who do not want to be left behind. We will need to wait and see if it will be successful. Whenever it comes to brokers writing checks to start a portal, their arms get short – but venture capitalists have no problem taking the risk. Because brokers do not invest, they get written out of the deal. The reality is that brokers are divided. The only way that they can truly accomplish lofty goals like a broker-owned portal is to agree and to invest. That has yet to materialize.

For the record – I personally invest in portals through venture funds and through investment funds. I keep trying to find an opportunity to short them – and I keep loosing my hedge. For the life of me, I do not comprehend how the market is pricing some of this stock. Its insane – but they keep proving me wrong.

My advice is simple. If you construct a business around respecting the data assets of brokers – you will have a home run on your hands. If MLSs and Associations provide credits to their content providers – they will be endeared. If portals provide credits to firms for their content – they will be endeared. If brokers decide to write a check and build their own portal – the stock market will have a field day and they will make billions – literally billions – but they will need to plop down a hundred million a year for a few years to get started. There are about 4 million properties traded each year – it would be a small reinvestment of transaction commissions – but well worth while.