Real Estately on Rails
Robbie on 06 29, 2007
Looks like our friend Galen has been busy….
In case you haven’t heard, ShackPrices has been rebranded Estately. With a new name, a new logo and a more publicized business model, it appears this old Shack has been retired. Here’s what the ole RE.net blog-o-rama has posted thus far…
- Bloodhound Blog
- The Real Estate Bloggers
- John Cook’s Venture Blog
- The blog formerly known as ShackPrices Blog
Before you all say HouseValues 2.0 or HomeGain SP1, I think the Estately business model seems pretty sound (for a lead generation / referral model).
Galen, correct me if I’m wrong, but I assume by taking a 12% cut of the agent’s commission, Estately only gets revenue if a closed transaction occurs (and the agent gets revenue from your referral)? Also, Estately doesn’t ask you for personal information unless you are actually looking for agent, so you are giving your customers a high quality lead (unlike some other companies that sell leads that resemble a Bart Simpson crank call to Moe’s Tavern). What’s really interesting is that they match agents to potential clients using Wetware (a/k/a humans) and not just some tricked out SQL statement, in order to help guarantee that consumers and agents will have a pleasant and successful transaction.
Galen, couple questions for ya…
- Who does your creative work (coming up with name, the logos)? Whoever it is, buy them a beer! A good one like Pyramid or Redhook!
- Has anybody submitted any good tag lines yet? (”We put the e in stately”)
- How long did it take to change the site name/images/documentation/branding from ShackPrices to Estately? (I remember being a part of product/feature renaming issues in my Microsoft days and it’s surprising how much work a single name change can take…)
- What are your expansion plans (I assume dominate the NWMLS service area, go where the winds of the marketplace take you?)
- When are you going public again? I think it’s finally time to buy some House Values PUTS…
Anyway, I wanted to congratulate Galen and Doug on their hard work and success to date, and wish them well on their future adventures.
About the Author: Robbie Paplin
- Author's website: http://www.caffeinatedsoftware.com/
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YAY!! Thanks Robbie! I cannot tell you how excited I was when Galen changed the name of ShackPrices to Estately. I was beside myself with glee. And I don’t have a whole lot of gleeful in me.
To those of you who may say we are “advertising” Estately.com because Galen is our friend and Fellow Contributor, I say:
YESSS!!!!!!!!! WE ARE ADVERTISING ESTATELY.COM BECAUSE GALEN WARD IS OUR FRIEND AND FELLOW CONTRIBUTOR! and we SO wish him well, and then some.
1) I’m taking that line and running over to put it in my profile over at Estately
We put the e in ESTATELY. Given most of my transactions involve many hundreds of emails with my clients, I’d say that’s a fair statement. So I’m taking it.
2) I (and apparently some others) have been harping on Galen that some people really might not like their homes referred to as “shacks”. So the news that ShackPrices became Estately.com truly tipped the scales in their favor as far as I am concerned, and give that a great big YAY!!!
3) This statement is just a little twisted around “Estately only gets revenue if a closed transaction occurs (and the agent gets revenue from your referral)?” Since Estately.com has a Broker and Broker’s license, it becomes the same as any agent to agent referral, except with less negative impact on consumers.
The Brokerage who represents the buyer or seller who is referred, gets paid as usual. Then pays Estately.com a referral fee of 12%. That can be done by Escrow or after the fact by the Broker. The same agent referral system that has been in place since Jesus referred his newly married friends to his agent friend in Cana when they were buying their first home.
At least thats how I think it works, having spoken to Galen a few times about it.
4) Referral fees of 25% to 35% are the next piece of the real estate industry that needs to be cracked, along with lead generation sites that get paid whether the consumer benefits or not. So I am SO PROUD and PLEASED that Galen is chipping away at that baby! High referral fees impact the consumer, if the agent is paying a 35% referral fee (usually unbeknownst to the client) the consumer is affected too often and to too great of a degree. So YAY! again.
5) Last but not least, for now, is that Galen TRULY wants to do this right and offer a valid and valuable service to consumers. He tries to seek out not simply an agent willing to pay him 12% of the commission, but also to Make a Match in true Matchmaker style.
Galen is making every effort to find the best people for the job at hand. This will of course take a lot of hard work and time and THAT my friends is the HUGE difference between ESTATELY.com and “lead generation sites”. Many referring sites and agents are simply looking for anyone willing to pay THEM. Just a big mill of consumers trapped in a web and shuffled to the nearest and highest bidder.
I SO wish Galen and ESTATELY.com huge success. Even more I hope that they maintain their position that they are not trapping people and selling off their names. Instead they are venturing to offer a valuable service of assisting in Agent Selection, at half the price of the lesser method of referring clients.
Best of luck with that Galen, and as always, I’m only a phone call away…anytime my friend.
Oh best of luck to Doug too
Wow! I was worried our message might get a little garbled, but all of the above is true. Even the opinions.
We are indeed hyper-focussed on matching people with great agents. There are a lot of mediocre agents out there and our clients deserve better.
We work through the traditional referral fee network: we refer clients to trusted great agents. Typically when an agent refers a client to another agent, they receive a 20% referral fee. Typically when a big named site sells your personal information to a real estate agent, they receive hundreds of dollars whether you are real or not, or they charge a 30-40% referral fee. They end up partnering with a lot of brand new and so-so agents. We can partner with great agents.
Ardell (and others) definitely swayed us on the name change. Some find shacks hip, but many, especially those who live in them, don’t want their home called a shack. We really like Estately and we never want to change names again.
As for the switch over, it took a day, and then a week of catching shack bugs as we continued to develop the site.
Random thoughts:
1) If you take it, can you give me the rare and out of print ShackPrices coffee mug?
2) I’m not surprised that they dropped they Shack Prices name, although I’m very impressed they came up with such a great replacement name to build a brand around.
3) I wasn’t really sure how it worked. All I know is HouseValue’s business model and value proposition appears to be broken and I hope Galen & Doug will avoid repeating their Kirkland competitor’s biggest mistakes.
4) & 5) I was shocked to hear referral fees are so high (in addition to the fact that the quality of those referrals is often tims so poor). Given this back drop, the RE referral industry appears to have worse reputation than others in other referral industry segments (LendingTree, AutosByTel, ServiceMagic, etc)….
I’m hopeful Galen and Doug, will run their company with the integrity, cost consciousness, and passion that will make their referral based business model one that will serve it’s paying customers (agents) better than the industry players have to date.
Best of luck guys, I hope you can give “lead generation sites” a good name!
OMG, LOL, BTW,
The internet is a strange and beautiful place. Blockbuster Video keeps asking me if I’ve signed up for online video rental. Amozon.com, Expedia, and Ebay all collect salable data on a day to day basis. Combining our shopping, travel, and entertainment data could give some corporation, some place, a pretty good idea of who we are. Let’s leave the government out of this for a minute. The internet as we all know is a government invention for different government agencies to communicate in real time.
The internet is used to collect data. The fact you can buy a cheap book through the mail is simply a faster concept today. We get the book faster today because we need the book faster today.
Now, we are looking at a guy who is going to match an agent with a buyer or seller based on an eHarmony business model. What service does this provide to the consumer? This is another redfin in the making. None of the internet Real Estate business models do anything for the consumer. Nothing!
Every day the consumer is swindled by the internet. Wal Mart shopping for the family home seems wrong to me. God help the consumer who turns to the internet for financial advice. It’s ten times worse that the largest single investment most people make in a life time comes down to who will charge the least for a sale.
Now this business model is geared toward who will charge the least for lead generation. This lead only costs 12% verses 30%. So let’s support this guy who is charging me less and we know this guy. How does the consumer possibly benefit? This is like saying the consumer is going to get screwed anyway why don’t we screw them for less.
Where is the benefit?
Robbie,
The highest referral fees are paid via Corporate contracts when Real Estate firms pay the company of the relocated employee. That is a pretty standard 35% for the employee buying a property in the new location, and often a 50% referral fee on the house they sell where they are coming from. That hasn’t changed much in 15-20 years. It
is time for it to change IMNSHO.
A small portion of that is paid to the go between division, and not all to the consumers’ source of employment. Used to be 30% of the 35% went to the consumers’ place of employment. But that was 8-10 years ago.
The relocated employees are all too often negatively impacted by these referral fees. Someone get Bill Gates on the phone
Lets knock them down to size so the employees can get best service, best agents and maybe some real leverage in the real estate transaction to boot.
David,
As easy as it may be for you and I to find a good agent, more and more agents are simply throwing darts up when placing referrals.
So IF Galen puts the hard work into it that he has been, then:
1) The consumer benefits by getting some REAL assistance with finding a good agent that suits their particular needs.
2) The fee for that valued service is a fair rate.
3) Since all consumers negotiate the commission with their agent, buyers too, then the lower referral leaves some room for the consumer to negotiate further.
With a 25% – 35% referral fee, the lead generator has sucked out any possibility for the consumer to negotiate the commission. The lead generator sucked out their leverage in the transaction as well. With a 35% referral fee, the agent is less likely to chip in for that washer and dryer or dry rot repair.
Follow the chain of events down to close of escrow, and every too high referral fee will have negatively impacted the consumer.
I have to go put my spackle on for the Inman TV thing…but I’ll check back later.
David,
As to “another Redfin in the making” lets all rise up and say “bring em on!”.
David,
First of all, Estately costs the consumer nothing. The consumer also gets to use a state of the art home search tool (ad & pressure free I might ad) while they begin their home search.
OK, it costs their agent some financial flexability for transaction costs and cost the consumer a little bit of personal information if they want to get matched to an agent, but they need to know something about you in order to find a good match. When I looked at the Agent Match feature, it appeared the information they were gathering was just the essentials. If you don’t want to give out personal information, use Google or the phone book and start cold calling agents…
Furthermore, web sites don’t build themselves (I wish they did, because things would be a whole lot easier). Galen & company deserve to get compensated for the hard work they’ve put into building their site. If they want to monetize their efforts by selling referrals, instead of selling ads (Trulia / Zillow), homes (John L Scott / RedFin), or web sites (RealTech / me), that’s their perogative.
Besides, I met my wife over the internet, who am I to argue with it…
David, I think Ardell and Robbie covered a lot of the bases, but I’ll rephrase it simply:
If we are successful, great agents will have more business and, as a whole, will spend more time working with clients and less time marketing. Mediocre and bad agents will have less business. I think that is very consumer friendly.
There are a lot of consumers who have horror stories about working with bad agents. If we can create a place where those people can find great agents, we’ll be providing a great service.
“Besides, I met my wife over the internet, who am I to argue with it…”
LOL…I’m AMAZED!!! I LOVE Steph! Lucky guy! Yeah for the internet!
Congratulations Galen!
“Matchmaker, matchmaker, make me a match”…I think matching clients to agents is great Galen!
People need to be a good fit to work together effectively, and it should result in a more positive experience for the comsumer.