In reviewing Zillow’s latest press release about their mortgage offerings, Greg Swann writes:
I’ve likened Zillow.com to Ebay.com and Wikipedia.org before, and this is another step in that evolution. On Ebay, a trader’s dearest asset is neither goods nor gold, but his reputation for honesty. Abuses of the type decried by weepy college professors are possible, but only topically, and only in the short run. In the long run, criminal behavior is flushed from Ebay, with the result that the most-crime-free market in the history of markets is the one that has no cops â€” nor even any security guards.
Patti Waldmeir, in a column in the Financial Times today titled â€œThe death of self-rule on the internet,â€ writes, â€œFor those who were there from the start of this experiment in digitising utopia, including me, this is very disillusioning.â€ By â€œradically rewriting the constitution of the democratic republic of Ebay,â€ she says, the company has closed the book on a certain brand of internet idealism.
As eBay creates new rules to deal with the abuses and fraud, do you think those who’ve invested their resources into eBay feel similarly about eBay to how Greg Swann and others feel about NAR? Doesn’t eBay, with their large market share, hold as much of a “gun” or brute force as NAR holds in the MLS? I agree with Greg that market forces are excellent at creating truth over time, but I’m not sure I see such a big distinction between rule-making in an entity like eBay or Zillow versus a trade organization like NAR, all of which have reputations to protect in order to grow and retain membership and the only distinction seems to be how big they are currently.
Let’s make this point again by imagining ourselves into a Zillow future, when Zillow is defining quality in real estate. Now, imagine Zillow requiring an MBA to be a mortgage professional under their umbrella and imagine they have enough market share to make belonging to their network effectively required. You think getting an MBA is silly but you want to be a mortgage professional and Zillow is “it” and so you spend a couple years of your life getting the MBA. Just as you’re about to graduate, Zillow changes its mind, because Zillow believes their customers are better served by those who have a PhD in economics. Who’s pointing the gun now?
The bottom line is that a “seal of approval” is a decision of one set of human beings, which necessarily is as flawed as any other decision. Market truth, however, is made of many independent decisions and that’s why Russell Shaw has it right when he says “mega agent” teams are the future. Russell doesn’t need Zillow’s seal of approval because he’s generated his own reputation based on actual creation of value through actions judged worthy by the marketplace over time. The only value to a seal of approval is to those who haven’t yet acted or been judged by the marketplace, and, to those, my advice is act, do well, be judged, and make your own reputation, without worrying about Zillow or NAR or any other seal of approval.