Moving Past Legacy Systems

A well known marketing strategy is the first-mover advantage. An advantage is gained by the initial significant occupant of a market segment. For a period of time this may allow for technological leadership within an industry. However, its not uncommon over for technology to continue to develop over time while an industry and/or its occupants are stuck with legacy systems. This often means that the cost of implementing new technology becomes much greater and takes much more time. I believe that this has occurred in the real estate industry were legacy systems have resulted in a dysfunctional market, unnecessary costs for technology upgrades, and barriers to entry. The status quo becomes the enemy of innovation.

Eight years ago I had the intention of deploying a portfolio of real estate websites with a customer-centric model. Unfortunately, legacy systems and fragmented MLS offerings prevented cost-effective development. What should have cost $30,000 or less, based on the technology of the day, would have actually cost a minimum of $300,000 to implement for one MLS system. The cost of integration and adaptation to the legacy systems would have required an extra $270,000 just to overcome the short comings of the status quo. This economic reality would be repeated in hundreds of MLS systems across the United States. To grow beyond California would require a multi-million dollar budget with a majority of it wasted on adapters and patches to overcome outdated technology. Therefore, the project was delayed. Even today, there are over 700 different listing services in the United States alone making it very difficult, if not impossible, to aggregate and build a 21st century brokerage lead by technology and customer empowerment.

RPR is one group within the National Association of Realtors that is attempting to overcome the past with investments in new systems. They are trying to move past legacy systems and outdated business models. It's a real life case study in big data and disruptive technology vs the status quo.

Here is a presentation by the CEO of RPR that is worth watching.

Even if you're not in the real estate industry there is a lot to be learned from challenges of Brokers/Agents, Associations/MLSs, and Service Providers. Without competition and opportunities for innovation the tenancy is to resist change and protect the status quo. They will protect the good or mediocre from the possibility of great.

Is it possible to move past legacy systems in real estate technology from within? Maybe. If not, one day we might find Zillow or another outsider taking control of the customer experience changing the bargaining power of suppliers and buyers of real estate services.