Three black swans 2.0

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  • “ a rare bird in the lands, very much like a black swan” - Juvenal, Roman writer Describes things often thought of as impossible.
  • Patricia Combs President, NAR 2006
  • As the wise sage Biggie Smalls once said, “things done changed”
  • According to a team at Bloomberg News, at one point last year the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy.
  • According to a team at Bloomberg News, at one point last year the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy.
  • Credit rating agencies did not have good data.
  • Then you have RE industry telling Wall Street how awesome MLS data is for predictive analytics.
  • Realogy’s revenues are 40X that of Zillow. Its cash flows are 18X Zillow’s.
  • “ A key advantage of mainstream brokerage, then, will be the extent to which it can make financially advantageous deals with those portals.”
  • Realogy: Worldwide -- 240K agents in 13,600 offices. 1.26 million U.S. transaction sides in 2012.
  • Did you know WalMart had a real estate division?
  • Three black swans 2.0

    1. 1. three black rob hahn real estate swans of
    2. 2. #1: The MLS Becomes a Public Utility
    3. 3. 1. The MLS Becomes a Public Utility House Financial Services Subcommittee on Housing and Community Opportunity “The Changing Real Estate Market” July, 2006
    4. 4. 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
    5. 5. 1. The MLS Becomes a Public Utility
    6. 6. 1. The MLS Becomes a Public Utility then 2008 happens
    7. 7. 1. The MLS Becomes a Public Utility
    8. 8. 1. The MLS Becomes a Public Utility
    9. 9. 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.”
    10. 10. 1. The MLS Becomes a Public Utility
    11. 11. 1. The MLS Becomes a Public Utility No National Coverage
    12. 12. 1. The MLS Becomes a Public Utility Powered By
    13. 13. 1. The MLS Becomes a Public Utility‣ 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
    14. 14. #2: Realogy Acquires Zillow
    15. 15. 2. Realogy Acquires Zillow vs. Market Cap Market Cap $6.35 billion $1.84 billion Revenues Revenues $4.7 billion $116.8 millionCore Operating Cash Flow Core Operating Cash Flow $593 million* $32.3 million * I estimated this figure in my premium Report on Realogy
    16. 16. 2. Realogy Acquires Zillow What’s missing?
    17. 17. 2. Realogy Acquires Zillow + Unparalleled footprint 50 million monthly uniques Strong management Enormous technology track record capabilities Core part of industry; 30% of GCI Model ultimate “insider” (see relocation) * I estimated this figure in my premium Report on Realogy
    18. 18. 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
    19. 19. #3: WalMart Realty Expands
    20. 20. 3. WalMart Realty Expands
    21. 21. 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
    22. 22. 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%)
    23. 23. 3. WalMart Realty Expands‣ 2.2 million employees worldwide‣ 4,637 stores in the US‣ 100 million customers every week‣ Has brokerage licenses
    24. 24. 3. WalMart Realty Expands this license more difficult to obtain
    25. 25. 3. WalMart Realty Expands walmart data center Area 71 colorado springs Caverna, MO‣ World-class information technology‣ Big Data & Predictive Analytics‣ In 2004, WalMart had 460 terabytes of data (twice the size of the Internet)
    26. 26. 3. WalMart Realty Expands +How’s that for a discount brokerage? ‣ Footprint + Technology + Management ‣ Dominant Cost Competition Advantage
    27. 27. 3. WalMart Realty Expands
    28. 28. scenario strategy leads to planning
    29. 29. Thank You!rhahn@7dsassociates.com @robhahn

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