Warning to Thurston County agents – and this goes for FSBO folks too…

February 25, 2008. The NWMLS has received information (Thurston County area) concerning a male individual who looked at homes with an agent — all of the information he provided about himself and his employment was false. He claims to be a buyer’s consultant with the Federal Government, a PhD in Physics, his wife a professor at the University of Washington and they live in Medina, WA. None of the information he provided, except his name, is correct.

The individual is a currently registered, Level 3 Sex Offender, male, about 54, white, 5’11″, about 220 pounds, gray/red hair, tattoos on each arm and may have a beard.

Other than providing false information during the preview of two homes, the individual did not demonstrate inappropriate behavior. Showing agent did not allow herself to be placed in a perilous situation. Individual has previously been a home inspector and appears to be familiar with the real estate industry.

Please be careful! If this man contacts you, contact your local authority.

This posting from the NWMLS came out a few days ago but I was out of town and didn’t see it till today. You can never be too safe when selling your home or acting as an agent to help someone buy or sell a house, so do be careful if you are contacted by a person matching this description.

Why FSBO without putting it in the MLS?


Last week, a Seattle-area woman contacted us out of the blue asking if we advertise FSBOs and FSBO open houses on ShackPrices (we don’t), which led to a back-and-forth exchange that went sort of like this:

Me: Out of curiosity, why don’t you list your home in the MLS for $400 and get a lot more exposure? If you’re worried about the 2% – 3% commission, just mark it up that much.

Her: It’s sort of an experiment.

Me: Ah.

Me (in my mind):A $400,000 experiment that will probably result in significantly less exposure for your home and probably result in a longer time to sell (and result in continued payments during that time!) at the very least? Skip the experiment, list it on the MLS and buy yourself a new (if inexpensive) car with the money you are likely going to lose!

Yesterday an even better solution for FSBOs popped up: IggysHouse.com lets you list your house on the MLS for free. Experiments aside, it makes a lot of sense if you’re a FSBOer to get your property in the system that almost every home buyer looks to for listing information.

Do not be offended, dear real estate agent reader. This free listing service, which is apparently a slap in the face of real estate agents, is actually a backhanded compliment. IggysHouse claims to be offering this just so FSBOers will consider their buyer agent service, but it’s clear that they are convinced they can sell those FSBOers on other products and services and that a decent percentage of their FSBO listers will be convinced to work with an agent when they don’t find success going alone or have trouble getting through the close or negotiating with someone who has done it 100 times before.

Update: Greg Swann thinks Iggy’s House will make money from mortgages.

Zillow's new way to spite your neighbor

Mix Zillow’s amazing capacity to quietly market itself and its new feature (list your home on Zillow, FSBO or FSBAgent) and you have a great new service for driving traffic… to your annoying neighbor’s house. List their house at 25% below Zillow’s estimated value and invite people to come by to see the place anytime after 8 on weekdays. You could alternately ‘claim’ their house and hold it until they decide to sell, at which point you get to choose the price, at least on Zillow. To be fair, listing someone’s house has always been possible on Craigslist, but you never had to send in proof of ownership to be able to reclaim your house from them.

More seriously, I’ve been expecting Zillow to launch a service like this for quite a while, but frankly I thought it would take them a little bit longer to get their act together and figure out exactly how it would work.

A few thoughts:

1. Zilllow is making it a pain to bulk upload listings, which gives FSBOs exactly the same capacity to list as the biggest companies. They’re doing this for two reasons: Individuals are more likely to list (and look at ads and puruse the site) if their agent doesn’t say “we automatically list so you don’t have to worry” AND because it makes it harder for competitors to get the same information. If they allowed bulk submit, third party websites would do most of the work posting listings to all the free listings sites on the web. (So Greg, I disagree with you here) Expect an API for listing if people aren’t listing in high numbers (see number 3).

2. Many consumers already believed that Zillow had houses for sale, so this revelation won’t surprise the real estate-casual public.

3. Zillow has the best shot at getting the chicken or the egg (you need one to get the other). Most non-MLS sites (Trulia, Propsmart, ForSaleByOwner, etc.) have had the nasty problem of beginning with no listings and no searchers (no chickens or eggs). Each has tried a novel and somewhat successful way of getting searchers or listings – crawling sites for listings, offering free listings, pay-per click ads to lure searchers, etc. None of them seem to have hit the point of no return: the point at which searchers start using the site exclusively, causing any remaining listers to clamor for inclusion. Based on the marketing buzz alone, Zillow may be the first to hit this point. Once (if?) they hit some critical number (70%? 80%? 90% of listings?), the tide will turn and nearly all holdouts will list themselves. They can always include an API to increase inclusion, but I think they’d rather have agents and consumers list manually and add more information to their Zillow listings.

4. Zillow almost has enough buzz to get the holy grail of online real estate listings – actual people listing their own homes en masse and actual searchers using a non-MLS based site. Uninformed home buyers will probably use it to search for homes until they realize that, at least in the short run, Zillow doesn’t have a bunch of the houses that are for sale.

5. Many local MLS systems will probably fall by the wayside as the primary places that agents and consumers go to search for houses. This is because most of them have too many rules and regulations for using their data, which binds the hands of innovators.

6. Is ‘Make Me Move’ basically a slow motion auction with no end date? You state a “buy it now” price and wait for bidders to inch up to that price? It seems like a surefire way to see get a bunch of homes, but you never know if you’ll find that gem in the rough. It certainly won’t work for commodity-like homes in suburban developments or condos unless the “buy it now” price is really close to the market price.

7. Agents, you’re kidding yourself if you believe that Zillow isn’t going to make your life harder. When anyone can list their home on the web without paying $500 to some brokerage, it’s time to offer real services or get out of the game. Also, if people know someone who has successfully done a FSBO, it’ll seem a lot easier for them to do the same.

Agents and brokers of the future, you’re also kidding yourself if you believe that Zillow is responsible for shrinking commissions (they’re coming) and a changing industry because it’s not: Zillow is just the product of the web’s relentless market and information opening power. We are leaving the time of the agent-leads-consumer model in the real estate industry and we are entering the time of the agent-coaches-consumer model. More on how I hope to participate in this change in the coming weeks and months.

Update: I suspect Zillow will allow for bulk uploads in the future no matter what, but it makes sense to take things like this slowly. They will need to be especially vigilant to keep out listing spammers who could use an API to upload dozens of false homes.

Zillow.com says "MAKE ME Move"

[photopress:logo.gif,thumb,alignright]LOL, it’s going to be one of those fun days on the Internet. It really has been way too quiet, except for Greg’s Bubble War, so I’m glad for a little excitement.

At 9 p.m. PST, Zillow is unveiling their newest major upgrade which allows both consumers and agents to upload their homes and listings…apparently, whether they are for sale…or not! This is going to be fun.

I’m planning to be one of the first to get a house in there before the East Coast wakes up. Let’s see how easy it is and whether or not it works yet.

There will be For Sale by Owners side by side with Agent Listings and a place for what we in the industry generally call “Pocket Listings”. People who might move, if you offered them a price that would make it worth their while to get out. That’s the fun part. Not that Zillow.com hasn’t already been a lot of fun as it is.

One interviewer today from L.A. asked me if the “Make Me move” category would really be of value to anyone who didn’t have a very expensive and unique property. I think it will be a great opportunity for people who cannot list their home for sale right now, but are planning to move sometime in the near future. People who are going to list their home in the Spring. People who are going to move when their child graduates from high school in June. People who will be listing their home when they reach their two year ownership requirement to avoid capital gains taxes. Pretty much anyone who is not quite ready to move right now, but would like to say to the public at large “Make Me move!” at x price, and then we’ll talk about when I’m willing to actually get out 🙂

So it should be a very exciting day. I’m off to see if I can upload a listing.

Does It Really Matter….?

Ardell’s recent post on FSBOs was courageous as you won’t see many agents talk about how one might sell a property without listing it. While it may be a bit counter intuitive to some agents, one reading the post should come away feeling that Ardell (and others like her) are not in the business of providing self-serving advice.

In her post, Ardell said, “[T]here are several companies that offer this service, and while it is true that some agents may boycott you and not show your house, if you have one of those houses that will “sell itself

Addiction to technology can be damaging to your mental health

Yesterday’s list of ten stories was fun to write… So in cleaning out the 400+ unread stories that had accumulated in my feed reader, I came up with these ten stories for today:

  1. I’ve had countless people ask me about how to set up a wordpress blog, so I was glad to see Matt point out that CNet now has a video that details the steps of setting up a WP blog. It’s a simple video, but that is appropriate since the instillation of WP is simple. However, if terms like “FTP”, “domain” and “web host” don’t mean anything to you, then skip over this video and go straight for a hosted blog like blogger or wordpress.com.
  2. Technology bloggers are so much more advanced in their blogging problems that they have to worry about things like the Echo Chamber. Since linking is still a novel enough concept in real estate, this is not really an issue within the real estate blogosphere. None the less, advice like “say something original once a day” is good stuff that we could all benefit from.
  3. I include the next article only for the last paragraph: ‘Employers provide programmes to help workers with chemical or substance addictions. ‘Addiction to technology can be equally damaging to a worker’s mental health’. (It’s one thirty in the morning as I type this, I obviously need help.)
  4. In an effort to separate addiction from hype, Seth Godin reminds us that “just because people know who you are doesn’t mean they’re going to buy what you sell… the best way to succeed is to have a really great product.”
  5. In relation to real estate technology, I can’t imagine why anyone with $17M would think that Reply.com is a good idea… How do they justify the business model that they are going to allow anyone to make an offer on any house? From their CEO: “every home in the country is for sale – for the right price!” The idea seems like a fun exercise for a graduate level economics course, but an actual product??? I don’t get it. Please feel free to let me know in the comments if I’m missing something…
  6. Also, Joel points out that Reply’s product is not likely to make Glenn very happy since he’s working on a similar service and even taken a patent out.
  7. More web technology that seems misguided to me: I can think of plenty of people who are in search of a good blog, but I can’t think of any other blogs that are in search of a good blogger
  8. And then sometimes, people take misguided to such a different level that I start to doubt my own sanity. How smart do you have to be to refuse $1M? (Really! What does he know that I don’t???)
  9. Barely on topic… There is an interesting house that was recently (re)listed in the NWMLS. Turns out the owners were not doing a good job showing the house from 1000 miles away, so they took it off the market while they reorganized their efforts. During that time, a friendly conversation on staging turned into a full-on listing for one RCG contributor. So far, the owners have been blown away by the difference that this one woman can make in preparing a listing for sale. If you saw the place before, please considering checking it out again because the changes are phenomenal. A neighbor said she barely recognized the inside of the house.
  10. On a related technology note, I found out that the previous listing was “live” again because it showed up in my feed reader based on a listing feed I created for my zip code from Robbie’s fantastic Zearch tool. Anyone in the Puget Sound area can use this tool to be easily updated every time a new listing shows up in their zip code, city, neighborhood, etc.

UPDATE: After playing with the service, Joel goes so far as to give Reply.com the 3-finger salute.

“Disguised” FSBO Market Share

Some big news happened last week in Texas which I discuss on my blog [link removed]. In a nutshell, the FTC obtained a Consent Order from the Austin Board of Realtors to eliminate a rule that treated Exclusive Agency Listings different from Exclusive Right to Sell Listings, at least with respect to the publishing of those listings on public web sites. Rules like these have been adopted to deal with flat fee listing brokers who did nothing more than insert the listing into the MLS database. In other words, these are “disguised” FSBOs where the owner has agreed to pay some selling office commission but usually receives little or no additional help from the listing broker.

In its investigation, the FTC found that, prior to the adoption of the rule, 18% of the listings in the Austin MLS were Exclusive Agency Listings. Once the rule was adopted, the number of Exclusive Agency Listings dropped to 2.5% of the total.

I have always heard that the FSBO rate was somewhere around 10-15% nationally. Since the 18% figure does not include what I might call “pure” FSBOs where the seller basically hammers up a sign and calls it good, the actual FSBO rate in Austin (before the rule adoption) was probably greater than 20%. Is this surprising? Do you think it reflects historical numbers or is some kind of trend? Any thoughts on where the 15.5% went after the rule was adopted?

FSBO will not take over the world

And with a title like that, I might just eat my words. There was an interesting story in New York Times story about FSBO yesterday. It describes a (ugly!) FSBO online service in Madison Wisconsin that has grown immensely over the past few years. I feel a little like a curmudgeon when I say this, but I agree with the sentiments of the real estate agents quoted – FSBO sites don’t directly threaten the real estate brokerage industry. That said, the real estate agents are just as wrong about their own business if they think that margins won’t drop and market conditions won’t dramatically change over the coming 10 years.

As I see it, this is a great illustration of a large scale change that the real estate industry (and many other industries) is undergoing right now. Consumers today have vastly more information available to them, which means they rely less and less on a realtor to guide them through the process. Imagine (as I must) what it was like 15 years ago as a home shopper; you either drove around the entire city to see what was for sale or asked a realtor to essentially do it for you. The realtor held the cards and had the computer system with all the information. You, as shopper, really couldn’t make a short list of 5-10 houses you were really interested in without the help of a realtor. Today sites are springing up left and right to give consumers lots of information.

Today, home shoppers can (but don’t necessarily) figure out exactly what they’re looking for, sellers can get an approximate value of their house with free tools (like by site, ShackPrices.com) and in the end, are real estate agents really do not provide the same service they once provided. Supporting my assertion is Steven Levitt’s research that shows the extra amount that real estate agents make on sales of their own home versus the homes of their clients has dropped over the past 10 or so years (which I maddeningly can’t find a link to now); customers today can much more accurately assess the value of their home without a real estate agent.

Ms. Miller and Ms. Murphy, however, built a separate and alternative listing service – a parallel market, much like the Nasdaq, which rose in recent decades to challenge the New York Stock Exchange’s dominance and sparked competition that eventually reduced transaction costs for all stock investors.

This is an interesting, but misleading comparison, at least for the time being. Consumers can look up Nasdaq and New York Stock Exchange quotes from the same place and can buy those stocks from the same people. In fact, your broker will be happy to sell you stocks from either market. My real estate agent will not be happy to sell me a FSBO property and I certainly can’t look them up on Windermere’s web site.

These cracked me up:

To real estate agents, “for sale by owner” conjures up some cranky tightwad trying to sell an overpriced, ramshackle house. Agents utter FSBO as if there was something foul stuck to the bottom of their shoe. “It’s a commission-avoidance scheme,” said Sheridan Glen, manager of the downtown Madison office for Wisconsin’s biggest real estate broker, the First Weber Group.

Kevin King, executive vice president of the local Realtors’ association, runs the multiple listing service but says he pays no attention to FsboMadison. “It’s not important; I don’t follow it,” he said. “I don’t even know the people.”

First – commission avoidance scheme!? That’s like saying the classifieds are a low trade-in value avoidance scheme for cars. This looks much more like a agents-aren’t-worth-six-percent scheme. The problem seems to be that even the discount brokers aren’t doing a good job at covering the market; Madison effectively has a (usually) 6% commission market and a no commission market. The future is probably somewhere between, with most agents working on a flat fee model (Steven Levitt agrees).

Agents swear up and down that they’re worth every dollar they charge, but is that usually the case? Here’s a scenario: A friend of mine moved to Seattle last year and decided he wanted to buy a home with his girlfriend. They looked at a few places and decided they would buy a townhouse that wasn’t yet finished. They picked the place they wanted after doing much research on their own and then hired an agent to do the paperwork and cover the details. They effectively worked out a flat-fee agreement, which the agent was happy to sign.

FYI: the NYT article really struck a chord and has been the most emailed story for the past two days now.