Whose (real estate) data is it anyway?

You know the process: The seller signs a mandate with the agent to market their property as best they can at the agreed price and commission. The agent gathers and captures all the info required on their listing system. Soon the property with all the pretty photos is published online.

But what happens to this captured listing data and who owns it? How much control do sellers and agents have over where this data goes? How is it used further down the line and can we link some value to the data-gathering process done by the agent?

The short answer is we can because the agent will charge a commission to recover their time with the data gathering process: “I went out and used my area expertise and systems to value this home, set the ideal price for a quick sale, compiled a list of all features, captured photos and videos, and wrote a marketing copy”.

Agents and sellers are oblivious to where their data goes

Once the listing is captured and marketed online, the agent (and seller) have little to no insight into where this data goes. The reality is that 3rd party platforms including portals, bond originators, banks, credit reporting services, social media channels, CMA and other platforms all end up with all or a subset of this aggregated data that was curated by the agent.

It is just how it works right? Why worry at all?

Data aggregation is a profitable business

In real estate, data is the new oil (although the data alone doesn’t make the sale happen). Agents underestimate the value of their data, the correlation between comprehensive, high-quality data (including photos, videos etc) and the value attached to this by 3rd party aggregators.

Without that data, portals won’t be able to charge agents a fee for leads and valuation platforms won’t be able to sell expensive property reports to banks. If you have access to this data, you can even use it in dubious ways to piggyback and launch a for-sale-by-owner platform like FNB did years ago (using aggregated estate agent data from Private Property). Interestingly, Private Property has changed hands and a majority share has now (provisionally) been sold to the country’s two largest bond originators (who also have a shareholding in national real estate brands).

Everything is interconnected, and it starts with the capture point: the agent. Should we attach more value to the initial work done by the agent, or is the commission payment (after all the deductions) enough?

The impact of data aggregation on fees

Real estate is a complicated ecosystem with many actors. Get an inexperienced agent to list a property with low-quality data and photos and the impact will be felt down the line.

When we calculate all the operational expenses of a typical real estate business, you’d be amazed to see how quickly those commissions disappear to keep the wheels running. Agents are faced with high fuel costs for viewings, time lost for buyers not showing up and other inefficiencies that all have to be covered by an eventual sale. This is why individual listing commissions are not relative to the effort spent selling that specific home. It varies with every sale and the average has to make up for all the bad actors in the system.

Somehow it all works, and although the real estate transaction is far from perfect, it is OK. It is an infrequent life event where buyers and sellers are happy with these inefficiencies, to a point.

The problem starts when the ecosystem gets out of balance and doesn’t end up benefitting the consumer. This can happen as a result of greed, monopolies, industry organisation objectives to protect the status quo or disruptive new platforms. We are seeing more agents competing against their own brands and brokers setting minimum commissions that agents can charge sellers (even penalising those who fail to meet the minimum commission on a sale). “Portal costs are high, we cannot afford to charge sellers less than 5% in fees!”. Poor seller, poor agent.

Take ownership of your data (flow)

More transparency of the overall real estate transaction underpins how we can improve the industry and the home buying experience. We don’t have to disrupt the industry and reinvent the wheel, we only have to build a faster rolling wheel. It starts with asking basic questions:

• Who owns the platforms where your data is captured?
• Where does your data flow once it is captured in this system?
• Who owns the portals and 3rd party platforms where my data is sent?

We claim this is the era of the tech-enabled agent. I argue it is the era of the data-enabled agent. These are the agents who understand the value of crafting the perfect listing record. These agents have the power to change an industry from the inside. Your choice of platform, who you support and how you value your data, is priceless.

Based on the above, do you think agents should be compensated for listing data, even without a sale being made? Is more data transparency required in this industry?

If you care about your (listing and sales) data ownership, consider Entegral. We are one of a few 100% independent platform providers. We are the ideal platform partner for those real estate entrepreneurs who value their independence, love transparency and like to be backed by a company that looks after their best interests, not those of shareholders.