The Real Estate Consumer Bill of Rights

Inman News announced this morning, that the industry is being asked to consider and support the following “Real Estate Consumer Bill of Rights”.

1. Choose the services you pay for: Laws in more than a dozen states forbid brokers from refunding commissions to you, or require brokers to provide services you may not want to pay for. These laws protect the industry, not the consumer.

2. Know how your agent makes his money: In real estate, the seller pays both his own agent and the buyer’s agent a percentage of the sale; the agent earns more when his client pays more. If a house seems difficult to sell, the seller may even offer buyers’ agents an especially high percentage. Buyers’ agents should be required to explain to their clients how they are paid.

3. Know when you are committed to an agent: Often just showing a property entitles an agent to the commission for representing you, regardless of whether you intended to work with someone else or even preferred to represent yourself. The relationship between an agent and a consumer should always be explicit, so that both parties know when they’re committed to one another.

4. Know what services your agent will provide: Much of the work of a buyer’s agent begins after the buyer has agreed to buy a house. This work includes coordinating inspections, repairs, mortgages, title reviews and escrow services. But agents today are paid only to bring a buyer to a transaction. Once that happens, it is virtually impossible to fire your agent. In most cases, this is appropriate, as the agent who puts a deal together deserves the commission. But in becoming committed to an agent, you should know what services the agent will provide as part of that commitment and what recourse you have if the agent doesn’t perform those services. An open agreement between you and the agent protects the agent from being unfairly dismissed, and ensures you get the service you expect through closing.

5. Have an agent that represents only your interests: Most states allow an agent to represent the buyer and seller in one transaction, and get both sides of a commission. As a result, some sellers’ agents are on the prowl for unrepresented buyers to bring to the seller. It’s a solicitation neither side can easily refuse because the seller wants the buyer and the buyer wants the house. But an agent can’t fairly represent the interests of two parties to the same transaction. An agent should represent only one party, and take commissions for only one party.

6. Know the commission refund you can get before you buy a house: Depending on the service provided by the buyer’s agent, some sellers vary the commission offered to buyers’ agents. This flexibility is good in theory, but in practice it’s often used to thwart commission refunds: buyers expecting a refund of $10,000 or more from their agent discover on making an offer that the amount has been radically reduced in favor of the seller’s agent. Buyers should know in advance what circumstances let the seller’s agent keep more of a commission for himself. It’s fine to change the price but not at the cash register.

7. See all the houses for sale: Many of the multiple listing services set up to share listings between brokerages forbid participating websites from displaying for-sale-by-owner houses alongside broker-listed houses. As a result, home buyers usually don’t see all the houses for sale, and home sellers have to hire brokers just to get their house on mainstream sites. MLSs should not require exclusive display of listings.

8. Have an open discussion about a house for sale: On the web, you can openly discuss almost any product for sale except a house. That’s because sellers’ agents “own the listing,” controlling where and how it’s posted for their benefit. The rules of some MLSs discourage real estate websites from publishing independent reviews and preclude owners from distributing MLS marketing materials outside MLS-sanctioned websites. Once a house is for sale, everyone in the market should be able to discuss it.

9. See all the information available about a house for sale: Many MLSs make it difficult for buyers to see recent past sales data, how long a house has been for sale, or whether its price has been reduced. Once a house is for sale, you should be able to see all the information available about it on your own, without becoming anyone’s client. The only exception to this rule is information whose publication jeopardizes the seller’s safety, such as when the presence of children precludes a showing.

10. Be sure your agent will show your house to everyone: Some sellers’ agents selectively refuse to show houses to a buyer represented by an alternative brokerage, which hurts the seller and the buyer. If, as part of his service, a seller’s agent doesn’t show houses to all buyers, the seller should know it, and the buyer should be able to contact the seller directly. When agents don’t facilitate showing a house, they should at least stand aside and let buyers see the house on their own.

Greg Swann of BloodHoundBlog in Arizona, Kevin Boer of 3 Oceans in the CA Bay Area, Kris Berg and I were contacted by Glenn Kelman of Redfin prior to the Inman anouncement and asked to support The Consumer Bill of Rights on Redfin’s site. The email we received is posted in Greg’s article today.

There are portions of the Bill of Rights that appeared contradictory, and a bit self serving of Redfin, such as:

#5 which preclude’s the buyer consumer’s right to represent themself with NO agent, while still holding the listing agent somewhat accountable.

From what I’ve seen in the marketplace, there are many buyers who want the same advantage as a For Sale By Owner. They want the right to be totally commission free, and represent themselves without an agent at all. I don’t see that right highlighted adequately in this Redfin penned “Consumer Bill of Rights”. I have provided this option free of charge to buyers this year on a couple of occasions, and so know it is an option that is possible for buyer consumers. Clearly omitting this option is an error that needs to be corrected by Redfin before I would jump on this bandwagon of supposed “consumer rights”.

#4 which suggest that assisting the buyer consumer with property selection, and giving advices regarding properties with inherent market weaknesses BEFORE an offer is made, is of no never mind, since they don’t do that.

#8 seems to forget that the Seller is a “consumer” as well, and so maybe this “Consumer Bill of Rights” should say “Buyer Consumer’s Bill of Rights” and we should counter balance with a “Seller Consumer’s Bill of Rights“. I may just have to pen that one myself, showing that Seller’s have the right for the buyer to be fully and well represented, to protect the seller from after-sale consequences of the buyer being inadequately advised and represented by the buyer’s agent”.

I’m heading over to Greg and Kevin’s sites to comment on their take on this. In the meantime, enjoy the “breaking news”. I expect most of the major brokerages will simply choose to ignore it, hoping it will just “go away”.

Redfin's First Year

In a follow up to Dustin’s post, I started to examine Redfin’s numbers in a bit more detail.

Redfin released a report today (it was yesterday, but I am on vacation… I guess you can say Maui Time :)) that opens saying, β€œFinds .904% Negotiating Advantage, 1.952% Average Commission Refund, 95% Customer Satisfaction; The Most Common Type of Redfin Buyer is a First-Timer

How cool is our home search? Ice Cold!

In case you haven’t dropped by our home search tool recently, we’ve made some improvementsicecube. Changes include…

Market Analysis Tool Improvements
We thought it would be helpful, if you could get a second opinion when you get an estimate. So, we’ve made arrangements with Zillow to use their Zestimate web services on our Market Analysis page. That way, when you type in a property address, we’ll give you our estimate, get your property’s Zestimate (and the link to it’s page on Zillow), and save you some typing.

Radius Search
Want to find the all houses, within 2 miles of your house or office? Now you can here! And yes, the search results pages are Bookmark-able, RSS-able, and Google Earth-able. (I wouldn’t have it any other way).

Improved Location Search
The list boxes on the location search page are multi-selectable. Big whoop, I hear you say? Well, ours doesn’t refresh the entire page when you change the city or download a big city / community list when you first navigate to the page. Yes, you are seeing AJAX in action. It’s not something most people are going notice, until they wonder “Gee how come your page is so much faster than all the other ones”?

As always, the results from the improved location search are Bookmark-able, RSS-able, and Google Earth-able.

What’s next
Well, it’s a given that at some point I’m going have to have Virtual Earth or Google Maps integration, instead of static Yahoo Maps. If I’m going to compete with the big boys of real estate search, I gotta do maps. I’m probably going to have to create profiles, so you can save your searches, favorite properties, favorite places and other stuff that requires server side persistence.

What features would consumers and realtors like to see next? I’m more interested in hearing what realtors would like to see next because they are the ones who’ll be writing the check, when I eventually decide to release this. I have a billion ideas for what I’m going to do, but I’d get to some more feedback to find out what features I should implement next. Otherwise, I’ll continue to make it up as I go along…

Robbie

The Lame List – Real Estate Web Sites that Suck

evccliftIn a recent post, Galen said “And no, it’s not what Windermere or ZipRealty already do: their sites s-u-c-k compared to true consumer-oriented sites like Amazon.com and Google.”.

Now, comparing nearly any web site to Amazon or Google isn’t a fair comparission. Google & Amazon have 1) many of the best software engineers on the planet working for them and 2) they have thousands of them working on their web site. Microsoft (which is in the same league as Google & Amazon) is said to spend over $100 million/year on it’s corporate web site (I’m sure they spend even more on MSN)!

The only real estate company that I can think of that could afford that level of R&D is Cendant (they own Century 21, Coldwell Banker, and ERA). Ironically enough they also own Orbitz & CheapTickets.com (who are Expedia competitors). The vast majority of brokers are probably smallish companies that under-invest in technology (and Cendant is probably happy enough with the status quo that they aren’t going to rock the boat until the waves of change force it upon them).

Now, I do think ZipRealty’s site is medicore and Windermere’s site is average. But suck is way too strong a word. Could their sites be better? Yeah. But given they aren’t billion dollar internet/software companies with multi-million dollar R&D budgets, I think the sites are OK. I could do better, but don’t mistake a medicore site for one that sucks.

What I want you to do is tell me about the WORST agent & broker web sites out there. I only want to hear about the truly awful. Let me give you an example of how bad it can be.

Teri Herrera, is a very successful agent at John L. Scott with whom I purchased my first house with. However her web site makes me cringe in horror. Fortunately, she’s a much better agent than her web site would suggest, but her site is nothing but a flash link farm. Nothing of value other than links to other places and it’s wrapped up as an obnoxious flash app. At least ZipRealty & Windermere have branded MLS searches, instead of being just a link farm or framing somebody else content.

See, ZipRealty & Windermere look pretty good now, don’t they.

Robbie

Feeling "at home" on the web

There have been some interesting conversation around the web on Zillow’s business model…

But I’d argue that it is way too early to know their business model. In an interesting interview with Inman News (The link is dead) Rich Barton stated that the purpose of building a home estimation service up front was to get people comfortable using the web to find the value of their home.

Rich also mentioned that when he started Expedia he was frequently advised that he needed to “lock-in” potential ticket buyers before giving them flight information because many people (myself included) would to go the site to find good deals, but go to their travel agent to actually purchase tickets. (Marlow, doesn’t that remind you of something that is going on in real estate right now?). However, Rich stuck to his guns in giving the information up free because he recognized how important it was to get people comfortable with finding travel information on the web. In due time, people became comfortable enough with finding travel information on the web that they did away with the travel agent altogether.

I don’t think Rich’s intentions are the same with real estate agents, but I think he’s looking down the road a few years and seeing that agents are going to be more and more marginalized as home-buying and -selling consumers do the bulk of their purchasing research using web technologies. (I’d also bet that Zillow’s business plan is closer to a sketch than a detailed drawing as he likely recognizes the importance of making things up as he goes along.)

Giving away (for free!) great tools like Zillow’s Zestimator is simply a means to getting people comfortable using the internet to set a value on a home. Nothing more, nothing less. And recognizing that Zillow is a long-term project, I don’t think it is a stretch to say that Rich is developing a bunch more tools that will be a more obvious threat to the status quo of the real estate agent commission structure.

Without a doubt, it is a much softer play than with Expedia where he went head-to-head with travel agents. But then again, the stakes are even higher in the real estate industry.

RCG may have completed the real estate blogging trifecta, but which horse is going to win?

About a week ago I noted that the Zillow Blog added Rain City Guide to its sidepanel and that I hadn’t found out about both the Redfin Blog or the HouseValues blog because they hadn’t spread any link love. As Rain City Guide hasn’t done much to deserve traffic from either site, I didn’t really expect my comments to make much impact, so I was pleasantly surprised to find that both blogs added Rain City Guide to their sidepanel in less than a few days, thus completing my Seattle-real-estate-search trifecta!

I start with this story because it highlights two timely points I want to make: (1) all real estate is local and (2) business blogs can be shockingly responsive in ways that simply is not possible with a standard business website.

And just as all real estate is local, I’m happy to say that all interesting real estate search technology appears to be local as well. I’ve seen some fun tools come out of New York and California (or should we say CaliYork), but I don’t think it can be argued that the future of real estate is being developed right here in Seattle.

So who is going to win the real estate technology race? Will it be:

I don’t pretend to have the answer, but I sure enjoying keeping score. πŸ˜‰

The second (and only tangentially related) point I want to make is that business blogs are now the norm for tech companies. When done right these blogs are much more than just a place to put press releases and instead give some great insight into the corporate personality behind the company. Go ahead and read the first few blog entries from each of the big three real estate search sites:

(I’m waiting…)

Here’s is what I read… The Zillow people are a zany, tech bunch who really believe that they can crack the real estate nut through increased data crunching and processing power. The Redfin people have figured out a better business model and now only need to expand so that they can demonstrate efficiencies of scale. The HouseValues people have a laser-like focus on present marketing opportunities, so they really don’t spend much time thinking about the future. Had any of these three companies been blogging a year ago, I’m sure their blogs would read the same! And more interestingly, I’m fairly confident that if I read the “latest” three or four entries from those same three blogs one year from now, those will also read the same because the culture that created those blogs is the same culture that created those companies. There is a real honesty in blogging that is hard to mask. Both a company’s strengths and weaknesses show through in their blogs!

However not everyone sees blogging from this vantage point. Recently, Daniel Gross of Slate signaled the beginning of the end of the business blog, by focusing on all the problems with blogging. But by focusing on the financial aspects of blogging (which often don’t make sense), he misses out on the overwhelmingly positive marketing opportunities associated with adding a friendly face to an otherwise impersonal website. I’m so glad that these three big real estate tech companies out of the Seattle area have all begun blogging because it gives some great insight into the soul behind the companies.

Real Estate Search is an evil hard problem

google evilOne of my pet peeves about most real estate search sites is that I can’t search on what I want. All of them, ask the same 4 or 5 questions. Where is your house located? How much can you afford? How many bedrooms? Blah, blah, blah..

Well, I’m going to attempt to change that. I want to find houses with CAT-5 wiring built in! I want to find houses with home theaters & wine cellars. I want to find a home with air conditioning (believe it or not, summer is coming). And now, I can. I proudly present our new search remarks feature.

Using the power of SQL Server‘s Full-Text Indexing features, this is now possible. Granted, our search is a long long ways away from being Google good, but it’s a start. If somebody wants to throw a lot of money at me so I can turn around and buy a copy of Endeca In Front or a Google Search Appliance, I suspect we’d get a lot better.

For example, when I looked for “cat 5” and found a house that doesn’t have a black cat. I looked for “home theater” and found a lot of homes (but not lot of homes with home theaters). Do a search for “media rooms” and you’ll find a lot rooms (but not as many media rooms). Obviously, you need to pick your words carefully to get what you want. Also, I need to start adding words like “home” & “room” to SQL’s noise word list since those words appear on nearly every listing’s remarks section. But, let’s face it, writing a search engine is hard. Eventually, I’ll tweak things so I can get Google or Microsoft to do my dirty work.

In the mean time, I hope finding your dream home got a little easier.

Robbie
Caffeinated Software

Zillow's Impact On Day 1

Despite the fact that the Zillow site spent most of the day gasping and sighing, a ton of digital ink was spilled discussing their service (or lack thereof). Here are the articles I found most interesting from Day 1:

By the way, if you scrol through this Technorati search, you’ll notice that not only was I the first blogger to break the story, but I announced Zillowblog an hour before it went live!)