I don't think the question is when will real estate tip and become a massive online category but how fast. Brokers have done at great job at restricting access to information and using uncompetitive behaviors to limit the offline-online shift so far but the information is starting to become freely available on the web.
Scoble brought Trulia to my attention yesterday. They have launched a beta for the state of California that provides a great interface for consumers shopping for a home. It does most of what Olivier Travers suggested in his post a few months ago. Trulia is in the business of delivering highly qualified leads to brokers (and their customers) with a listing. Wow - that is pretty valuable. Isn't that used to be what an agent working on behalf of the buyer did? Hmmmh - why am I paying (indirectly) 3.0% of the purchase price as the buyer of the home to an agent if I found the house. That sounds like a lot for someone who does nothing more than set up appointments and assist in the negotiation. What if I decided to represent myself, found the house, and offered to spit that 3% with the seller.
Trulia is not in the business of putting agents out of business - at least, not yet. Once they have built the demand side of their marketplace to scale, they will become an interesting place for FSBO (for sale by owner) folks to list their properties. Because the one thing that a listing realtor does do right now that creates value to the seller is that they bring you valuable demand by listing your product on the MLS so that other agents can find it. Where else does the other demand come from? The sign out front of the house and the neighborhood fliers. I don't actually think that the print classified ad does anything anymore; at least, that what a local realtor friend tells me.
As a last comment, if you are in the business of lead generation in the real estate space, would you rather be generating sell side or buy side leads for brokers? I think the sell side lead is much more valuable because of the conversion rate. I am guessing 1 in 4 sell side leads become listing for realtors and 1 in 25 buy side leads become buyers of a property. That is probably why HouseValues has a $400MM market cap despite auctioning of their customer names to annoying realtors.
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