three black swans of real estaterob hahn

#1: The MLS Becomes a Public Utility

1. The MLS Becomes a Public Utility

House Financial Services Subcommittee on Housing and Community Opportunity

“The Changing Real Estate Market”July, 2006

1. The MLS Becomes a Public Utility

“Second, because the MLSs and Realtor.com so dominate listing services, they function as a near-monopoly and should be regulated as a public utility.”

Stephen Brobeck Executive Director Consumer Federation of America

1. The MLS Becomes a Public Utility

1. The MLS Becomes a Public Utility

then 2008 happens

1. The MLS Becomes a Public Utility

1. The MLS Becomes a Public Utility

$12.8 trillion

1. The MLS Becomes a Public Utility

“The absence of relevant data for use in RMBS modeling left the credit rating agencies unable to accurately predict mortgage default and loss rates when housing prices stopped climbing.”

1. The MLS Becomes a Public Utility

1. The MLS Becomes a Public Utility

No National Coverage

1. The MLS Becomes a Public Utility

Powered By

‣ Detailed listings data for everyone!

‣ Pay to use; get paid to add (see, electric utilities & solar power)

‣ Rules & fees set by government regulators

‣ Compliance a matter of law

‣ No cooperation and compensation

1. The MLS Becomes a Public Utility

#2: Realogy Acquires Zillow

2. Realogy Acquires Zillow

vs.

Market Cap $6.35 billion

Market Cap$1.84 billion

Revenues$4.7 billion

Revenues$116.8 million

Core Operating Cash Flow$593 million*

Core Operating Cash Flow$32.3 million

* I estimated this figure in my premium Report on Realogy

2. Realogy Acquires Zillow

What’s missing?

2. Realogy Acquires Zillow

+

Unparalleled footprint 50 million monthly uniques

Strong managementtrack record

Enormous technology capabilities

Core part of industry;ultimate “insider”

30% of GCI Model (see relocation)

* I estimated this figure in my premium Report on Realogy

2. Realogy Acquires Zillow

‣ Massive recruiting & retention advantage for Realogy companies

‣ Syndication no longer an issue

‣ Realogy gets more “broker leads” for overrides & Zillow gets relocation-type referral revenues

‣ Veteran leadership, meet brilliant young entrepreneurs

#3: WalMart Realty Expands

3. WalMart Realty Expands

‣ 2013 Forecast for Existing Home Sales:

4.98 million sales

$173,600 median price

‣ US Housing Market = $864 billion

‣ Industry GCI (@6%) = $51.84 billion

3. WalMart Realty Expands

3. WalMart Realty Expands

‣ NRT is largest brokerage in the U.S.

‣ 710 offices with 41,300 agents

‣ 289,409 closed sides in 2012

‣ $3.4 billion in revenues in 2012 (7.8%)

3. WalMart Realty Expands

‣ 2.2 million employees worldwide

‣ 4,637 stores in the US

‣ 100 million customers every week

‣ Has brokerage licenses

3. WalMart Realty Expands

this license more difficult to obtain

3. WalMart Realty Expands

walmart data centercolorado springs Area 71Caverna, MO

‣ World-class information technology

‣ Big Data & Predictive Analytics

‣ In 2004, WalMart had 460 terabytes of data (twice the size of the Internet)

3. WalMart Realty Expands

+How’s that for a discount brokerage?

‣ Footprint + Technology + Management

‣ Dominant Cost Competition Advantage

3. WalMart Realty Expands

scenario planningleads to strategy

Thank You!

rhahn@7dsassociates.com

@robhahn