The Lion Has Been Coming Over the Hill... For the Last 30 Years
Thinking about the imminent "platform wars" in real estate
A loyal reader asked me to opine on the coming platform wars in real estate, and I thought… why not? This sort of thing is my specialty. I had a whole series of presentations called Black Swans of Real Estate where I would look at possible mass disruption events for the industry. They were quite popular.
Something like a platform war with Big Tech companies invading real estate (at last) is right up my Black Swan alley. I figured, it’s been a while. So here we are.
The request stemmed from one section of Greg Hague’s guest post about the Compass v. Zillow lawsuit, where he warned about the coming Platform War:
Big tech companies have been quietly circling the real estate industry for years, recognizing it as "the single largest asset class in the world." This lawsuit creates the perfect entry point for platforms with deep pockets and zero legacy constraints, exactly the kind of disruption I witnessed when online brokerages first challenged traditional models in the 1990s.
He names the three Usual Suspects of Google, Facebook (Meta), and Amazon. He could have named a couple more: Zillow, CoStar, ICE, and so on.
The idea appears to be that the Compass v. Zillow lawsuit will smash the entire ecosystem for listing data distribution, the MLS system “could fracture into specialized platforms” and once the environment is fractured and chaotic, then the Big Tech companies would come in.
Google could launch a “comprehensive home search platform that integrates seamlessly with Gmail, Calendar, Maps, and Drive.”
Facebook would leverage its strength in VR and social media to create a “platform where you can view homes in virtual reality, get recommendations from your social network, and complete transactions without ever leaving the Facebook ecosystem.”
Amazon, of course, who is the king of ecommerce “could easily launch a home marketplace that integrates with its logistics network, financing capabilities, and smart home ecosystem. When Amazon decides to sell homes the way it sells everything else, traditional brokerages must prepare for significant changes.”
It would be very easy to throw in OpenAI, or even X (which has ambitions to be the “everything app”).
All of these scenarios are plausible. I think I could probably cook up some even more dystopian platform war schemes if I wanted to.
Thing is… this particular bogeyman is now at least middle-aged, if not older. I wasn’t in the industry when some NAR President in 1915 warned about how the magic of telegraphs (“instant communication over miles and miles”) and the newfangled horseless carriages (“faster than any Kentucky Derby winner, I tell ya!”) would completely transform the role of the real estate agent.
These warnings of doom have been pronounced—let’s be honest, quite often by yours truly—over the years. Yet, the hammer of doom keeps missing real estate. Other industries have in fact been hammered, but not real estate.
Maybe this time it’s different?
1993: The Lion Over the Hill
I was just graduating college when Bill Chee gave his famous “Lion Over the Hill” speech. The quote that people remember is: “We REALTORS cannot be a few chihuahuas fighting over a bone, while the lions are coming over the hill.”
The video used to be available on NAR’s website, but I’m getting a 404 today. Doesn’t matter; enough of us were around then to remember the gist. As Greg Robertson remembers,
Remember back in 1993 when NAR President Bill Chee issued his famous rally cry that “there were hungry lions coming over the hill“? His speech foretold the impact of technology and “non-industry competitors”. At the time everyone was afraid of Microsoft. A lot came out of that speech, you could argue that was the beginning of Realtor.com.
So flash forward to 2011 and Zillow just completed their IPO. Their market cap is 3 times of Move, Inc. (Realtor.com parent company) and combined with their Yahoo partnership they now trade spots for the most real estate traffic online.
The lion is here baby. He just came from down from Seattle, not Redmond.
It goes without saying that mighty Microsoft, who was sued by the DOJ for antitrust violations for killing off Netscape, did not fundamentally change how REALTORS do business.
The Portal Era
It also goes without saying that despite Greg’s fears from back in 2011, Zillow turned out not to be a lion coming down from Seattle, not Redmond, but something that was quite different, quite industry-friendly, and quite obsessed with making agents money. (Well, at least until very recently when Zillow started talking about “allowing” and “not allowing” brokers, agents and MLSs to do things... but that’s a whole different story.)
Turned out that buyers loved being able to see information on a website, instead of having to buy the Sunday newspapers to pore over tiny advertisements with a single, grainy photo, but they didn’t go from there to, “let me self-serve this home purchase.”
Not only did the portals not destroy real estate as we knew it, real estate destroyed the portals as some thought they were meant to be. Zillow’s original business plan, after all, was to be eBay for real estate and bring online auctions to real estate.
Portals did change the industry in some truly fundamental ways, of course. The MLS, for example, went from being the marketplace to being the conduit to the marketplace. Brokers and agents lost gatekeeper status and became service providers.
The disruption was and is very real. But it wasn’t… as fundamental as many thought it would be.
The Uber Era
When Uber launched, and Redfin started doing the whole “showing agent standing by” thing, there was another surge of Platforms Are Coming fears. Consumers with their smartphones would just pick and choose, get mortgages online, do everything online, and the agent would be relegated to door openers and unpaid drivers.
It sounded compelling and I know some companies tried the model (most importantly Redfin) but… that all kinda fizzled away.
The iBuyer Era
As someone who may have been as responsible as any for driving the Platforms Are Coming fears when it comes to iBuyers, I will acknowledge (once again) that I got that one very, very wrong. But look, I was and still am a shareholder in Opendoor so I did put my money where my mouth was… and paid for it accordingly.
This one seemed super-compelling, though. I mean, remember this video from a16z?
I was convinced; aren’t you almost convinced watching this in 2025?
Yet, the transformation did not happen.
Why Did All of These Past Platforms Fail to Disrupt Things?
One might reasonably ask why.
Microsoft is a Big Tech company with nearly unlimited resources. Amazon did partner with Redfin for a while, but never broke into real estate.
I don’t know that I have the answer, but I can make some educated guesses. I think there are three reasons why big tech platforms never broke into real estate.
Really, Really Big Purchase/Sale.
First thing to note is that a house is typically the most expensive thing a human being will purchase in his lifetime. Sure, the 1% might buy $10 million of Tesla stock, or a mega-yacht or something, but for most of us mortals, the house is the most expensive thing we’ll buy. (And conversely, the most expensive thing we will ever sell.)
I truly believe that human beings have a deep psychological need—perhaps evolutionarily justified—to want someone else’s approval for big decisions. I’ve talked about that plenty, so let’s leave it there.
But the cost and size means two other things. First, it’s not something you do often. Most people might buy and sell maybe a half-dozen houses in their lifetime. Second, because of its expense and importance, there are a lot of laws, rules, and ancient customs that have grown up around it.
Laws and Regulations
Because real estate is so important and so expensive, some of the earliest laws humans have ever created have to do with real estate.
The Code of Ur-Nammu (~2000 BCE) included provisions for land ownership and property disputes. Code of Hammurabi (1754 BCE) had laws on land sales and leases. Ancient Egypt, ancient Greece, Rome with the Twelve Tables (450 BCE) had laws about real estate.
English common law having to do with real estate goes back to the Anglo-Saxon era (before the Norman Conquest in 1066). And there has been a steady development and refinement of laws dealing with real property ever since.
In our federal system, there are laws and regulations at every level of government having to do with real estate since each state has its laws, and each county or city or hamlet likely has its own ordinances.
All of that to say that buying and selling real estate is complex. Sometimes, I think it’s a bit too complex (especially when viewing sales contracts from like 1960s) but that’s because our governments and bureaucracies have grown far too big to be anything other than harmful. But laws are always involved when real estate is involved.
The Last Mile
Finally, while platforms are great for doing things like aggregating demand, especially in the internet age, they’re not necessarily the best at aggregating supply… except through the creation of a marketplace.
Think about Amazon. Yes, it’s the world’s general store with billions of users and it has aggregated enormous buyer demand. So companies flock to Amazon to sell there, either directly (selling to Amazon itself) or indirectly (setting up an Amazon storefront).
But not every company sells on Amazon; I can think of several who don’t, won’t or can’t sell on Amazon. (Think gun companies, for example.) It is far more difficult to aggregate seller demand than it is to aggregate buyer demand.
With real estate, there are millions of sellers, most of whom are not companies in the business of selling houses. They’re individuals and families who sell once every 7-10 years. That means someone has to go get those individuals to put the house for sale on the platform, who has aggregated buyer demand.
That last mile problem is a difficult one to solve. People have tried, but as yet, without much success.
Different This Time?
It could be argued, I suppose, that while yes, all of those past lions over the hill turned out to be mirages, this time, it’s different. That could very well be true. Past performance is no guarantee of future results.
Let’s look at the two factors mentioned by Greg Hague in his article: (1) fracturing of the data ecosystem, and (2) AI.
Fracturing the Data Ecosystem
It is not clear to me why fracturing of the real estate data ecosystem would lead to Google and Facebook invading. Presumably the real estate data ecosystem, which is centered around 520 local MLSs, would fracture because brokerages like Compass and Howard Hanna and others would pull out and do their own silos?
But if they did—which isn’t what any of the companies doing that are saying they want to do—why would that mean they would share all that data with Google and Facebook? Why would they open up Amazon Storefronts instead of just using their own websites?
Since the Last Mile problem still exists, even if Google came in and aggregated all the buyer demand, if Google waits for the home seller to upload directly to Google… it’s going to be waiting a long time.
iBuyers like Opendoor and Zillow spent millions telling sellers that they can use them. In Zillow’s case, they put a “Sell” button right on the website where everybody goes to look at or think about real estate. They did generate quite a bit of interest, to be sure, but frankly, neither had a breakthrough. Selling to platforms never did become the norm.
So maybe Google and Amazon and Meta could overtake Zillow in terms of aggregating buyer demand far better, but they would face the same three problems: Expensive, Complex, and Last Mile.
AI
The strongest argument why it’s different this time is AI. I’ve made that argument in the past too wanting to scare the shit out of real estate agents at presentations, so I could present a different way of thinking about things.
And we are in the very early innings of the AI game. It’s still amazing even in its infancy. I fully expect AI to improve dramatically over the next few years.
Still though… I’m not yet convinced that AI can solve either the psychological issue or the Last Mile issue.
Part of the reason, I think, is that all truly transformative technology of the 20th century gets proven out in… ah… *ahem* adult entertainment… first. VHS, Betamax, the Internet itself (one claim in an academic journal suggested 83.5% of internet traffic was adult-related), etc. If AI could replace human approval for important decisions, perhaps that problem can be overcome.
It is true that there are a few wackos today who do things like propose to an AI. But that makes the news because it’s so weird. Could AI advance enough, and could humans become… different enough… that emotional relationships with AI become the norm? Maybe. I’ll believe it when I see a lot more of it.
In other words, before home sellers talk to an AI to get approval, which their human nature demands, and have that be enough, we’ll see human-AI romance (or at least hookups) become far more commonplace and far more accepted.
Even with that though, I’m not sure how AI solves the Last Mile problem. We’re now talking about a future where regular American homeowners decide to open ChatGPT to ask about selling their family homes, rather than calling the real estate agent they know from church.
But more pointedly, if AI advances to that point, then Google, Meta, Amazon, Zillow and all other tech “platforms” will already have been made pointless and powerless. AI that advanced could and would replace all of them.
Who the hell bothers with Google searches if their AI boyfriend knows everything already? Who would be going to Amazon when their AI butler has already ordered whatever it is you wanted because he knows you and can anticipate your needs? It goes without saying that Zillow ceases to exist if AI gets that advanced.
One reason? Because an AI so advanced that it solves the psychological and Last Mile problems would not put the listing on Zillow for buyers to view. That AI would direct-connect to millions of other AI, whose owners are looking to buy a house, find the right one in a few seconds, and negotiate a deal in a few more seconds.
In other words, AI advanced enough to replace the human agent on the Last Mile would make tech platforms irrelevant as well.
Then Again…
Because the fear of Big Tech and technology replacing the agent is a constant in the real estate industry, we get these “platform wars” type of things happen every few years. And the usual suspects get trotted out, despite none of them ever making a platform play work in real estate to date.
But thinking about usual suspects, or rather, The Usual Suspects… I am reminded of this line:
Perhaps AI Keyser Soze is already here, and pretending to be a dumb chatbot.
Sleep tight everybody!
-rsh