Over the last year I have had the pleasure of working with a very talented and visionary team of business people in Brazil, who realize it is time to take real estate in Brazil to the next level. Today, like much of the world, buying and selling real estate in Brazil is a frustrating, fragmented affair, where sellers always feel they have not reached the right buyer and sold their property for too little and sellers always feel they have not seen the right property to buy and, of course, they worry they paid too much. Why? Because in Brazil there is no MLS, until now, and every real estate broker and agent is an island.
To go house shopping in Brazil you can cruise a couple of very mediocre real estate portals or you can contact dozens of real estate brokers to try to understand what is on the market, what the prices look like, but you never have confidence that you really know what the market is. There is very little cooperation and exclusive listings make up probably less than 10% of the listings. It is a very inefficient way to buy and sell property. Anyone that has spent any time in Europe has experienced this same thing. Each broker or agent (agents in Brazil do not have to be affiliated with a Broker) has their own listings to sell and often, several agents are given the same listing, because sellers realize they need to expand their listing’s exposure. For brokers and agents, however, this creates a very difficult situation. How hard should they advertise a property when the work they do may result in a sale for another real estate company.
Those of us that have had a chance to work in other countries always scratch our head and wonder why all countries just don’t use the system that has made the United States the most sophisticated and efficient real estate system in the world, the Multiple Listing Service. The answer is simple actually, it’s because change rarely happens until a sufficient amount of tension occurs. Until things get uncomfortable, until there is sufficient tension around any thing you look at, change doesn’t occur. We all will do whatever we can to maintain the status quo until doing so is more uncomfortable than trying something different.
So what is happening in Brazil that makes it seem like it is the right time for MLS? There are multiple factors of course, but the big ones that make it clear to me that MLS has a real chance of success here is that the big Brokers, financial institutions and the real estate organizations similar to our NAR, realize it is time for a change. They are all feeling tension and pressure and that is always required for change to occur.
Brokers feel the pressure of poor market data and an explosive market in which they are basically driving blind, or at best, with limited vision. Internet advertisers are taking advantage of these market limitations and, like our 3rd party portals in the US, have responded to consumer demands for data but at a very high cost to brokers and agents. Broker spend huge amounts of money today to advertise on these portals with very mixed results.
Financial institutions in Brazil, due to changes in government regulations, now must use a portion of reserves for mortgages and they are 100% committed to expanding this side of their business. The problem for banks, however, is they don’t have solid market data to work with to manage their risk. They absolutely understand why MLS makes sense and how it will benefit them and their objectives.
Consumers also are frustrated, because in the end, they are ones that suffer most from market inefficiencies. They would benefit most from MLS but at the end of the day the key to the success of MLS in Brazil will come down to whether real estate agents can convince sellers to sign exclusive listing agreements, with the understanding that “exclusive” in this case is not a limitation, but an expansion. Through an exclusive listing they, in fact, will have all of the members of the MLS representing their property creating greater exposure, more accurate market data and a better chance of a fast sale at the optimum price. It seams like a no brainer but changing habits and business processes that have been in place for hundreds of years is never easy. Over the next year or two we will see if there is sufficient tension and market pressure to drive these changes forward.
Having been involved in international real estate for over 20 years now I have always had a personal desire to see our system of MLS expand internationally because it is clearly such a better way of managing real estate transactions. I have scratched my head time and again when talking with real estate agents in Europe and other parts of the world who understood how poorly their system worked yet had no intention of changing their ways. Seeing the energy, progress and excitement around the concept of MLS in Brazil gives me hope that this is just the beginning of a movement that will take one of our best inventions, MLS, to many more places in the world.
Stay tuned for updates as Prolist MLS in Brazil becomes reality!