Tag Archives: Redfin

What do real estate industry people talk about?

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My 10-12 weeks of “blogging” have been quite interesting for me, in that for 15 years I mostly have talked about the real estate industry with other industry people, and talked about local real estate with my own clients and local agents. Blogging opens up talking to consumers generally about the industry, which is in and of itself, quite a revelation.

Given I will be attending the MIT dinner event tomorrow, I am contrasting the speakers of that event with the participant theories of my normal industry discussions. Tomorrow’s event will be “the newbies” Zillow and Redfin plus HouseValues, whom I wouldn’t call a “newbie”.

I am “lifting” this discussion of the past few days from the forum that has been around since 1995 or so, and I have participated in since 1998. I thought this particular discussion was a huge complement to whatever I may hear tomorrow night. For the benefit of those attending tomorrow night, you might want to read this beforehand for “balance”. I have removed the names, except mine, since I am “lifting” it out. I think at least Robbie’s interest will be peaked by that part of the discussion that suggests that the MLS may cease to exist as an end result to all of this.

*******************

Agent A says:

I would guess that there is not a large brokerage in the country that doesn’t have plans to withdraw from MLS depending on the outcome of the DOJ suit. I believe that many large brokers are considering withdrawing from MLS REGARDLESS of the outcome of the DOJ suit…

All across America, in every major city there are 3 or 4 large brokers who control around 80% of the inventory. If COURT mandated MLS rules don’t make competitive sense to those brokers MLS will END.

Even if you and Attorney Barry and the rest of the majority of the NAEBA are victorious your victory will be pyrrhic– MLS will be run YOUR way but it won’t contain enough listings to be a market force.

“Ardell” wrote:

What I am asking everyone one to focus in on is what “should be” as opposed to what “has been” since before buyer agency existed.

and

My major beef with the industry is that buyer agency was set into a system, parts of which should have been revised accordingly, and still need to be revised.

Agent B says…

Could it be that buyer agency will be given as the justification for the large brokers pulling out of the MLS? As Ardell notes, the whole system is a carry-over from a time before buyer agency. Does it really make sense to “cooperate” with other brokers in an adversarial relationship in the same way as when it was a subagency relationship?

One could argue that a listing agent is not truly acting in their seller’s best interest by making the property available to buyers working with their own agents until they have made every effort to find a buyer themselves. If a buyer agent is really going to save their buyer money, help them get more concessions, etc, isn’t it in the seller’s best interests for their agent to find an unrepresented buyer?

Consider this hypothetical situation:

Large brokerage with a state-of-the-art website and large advertising budget decides that they will take all of their listings as exclusive, non-MLS, non-cooperating listings for 45 days. No lockbox, the listing agency will conduct every showing, and there will be no showings to buyers who have not gotten a mortgage pre-approval. During this period, they will not do dual agency, and will attempt to find buyer customers for their listings. If they do not sell in 45 days, the listing will then be entered into the MLS. Their justification for this is that they believe that this maximizes the chances that the seller will get an offer that is in their best interests. Is there anything that would be illegal or unethical about this?

I think it is very easy to come up with scenarios in which the MLS becomes the dumping ground for the bottom of the barrel properties and over-priced dogs. It’s also easy to see scenarios in which MLS entries are very bare bones affairs with just enough info to generate a lead from Realtor.com, but not enough to be useful for other agents anymore. I find it very hard, though, to picture a scenario in which the large brokerages will just happily keep providing data-rich, picture-laden MLS entries for all of their listings, if they lose control over how and where these listings will be used and displayed.

I thought this might be food for thought for those who have not considered how the industry might change in order to counteract the events currently taking place with regard to mls access.

Something’s Afoot in the Real Estate Business – but what does it mean and where is it going?

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(Editor’s Note: I few weeks ago, I sat down with Chuck Reiling to discuss an MIT Enterprise Forum he is helping to organize that will feature leaders from some of the top real estate technology firms. His excitement at the idea of bring people from Zillow, Redfin and HouseValues together to discuss the future of real estate was obvious and contagious. Hence, I asked him if he would be willing to give some background on the project, which led directly to this post. Interestingly he’s not the only one who is excited about this forum as he the story was already picked up by both Robert Gray Smith and John Cook. Chuck and his wife are local RE/MAX agents.)

There’s been lots of local and national press lately about new online real estate offerings like Zillow and Redfin. With lots of investor money moving into the arena, we know there is change afoot. The question is, how much change, and for whom? Change for the consumer? Agents? Both?

As Ardell described recently in her “History of Real Estate” articles (Part 1, Part 2 and Part 3), the residential real estate business is always in a state of change. Ten years ago the online MLS systems caused a lot of change. The listing books got thrown away, and a few agents who couldn’t adapt went with them. Then the MLS derivative sites started appearing, with MLS download data becoming available to the public. People could start doing their own online searches without having to call an agent, or cruise the streets on Sunday afternoon looking for open houses. So change is ongoing, and maybe there are only a few real (no pun intended) points of stability.

My daddy and my uncle were both brokers years ago. The only points we still have in common with their businesses seem to be clients, agency law, and the For Sale sign in the yard; almost everything else has changed. For a long time, ‘public’ records in boxes in warehouses were not very publicly accessible for most of us, but government agencies (state, local and federal) are rapidly putting their public records information online to support their operations, and incidentally help us too. And new services like Redfin, Zillow and House Values make that data even easier to use in support of their own business models. As we see locally, the big four real estate companies, Windermere, Coldwell Banker, John L. Scott and RE/MAX are also exploiting that data in conjunction with MLS data on their sites. None of this has changed the basic business model of professionally assisted transactions with buyer and seller agent commissions. While the traditional model has been a subject of debate for a long time, and a lot of creative alternative business models and offerings have been tried, the industry is still seems to be running on business as usual.

However, there is also a lot of technology-driven change right now. Someone with a background in the high-tech industry might observe that real estate looks like just one more industry about to be disrupted by the Internet – changes caused by dramatically improved information availability, rapid communications and online business models. But residential real estate is still dominated by local interests, its product is both expensive (understatement) and unique, and there are a lot of local and national consumer protection laws on the books – some good, some bad, and more coming. So who is right, and what will happen next?

To try to pull together a picture of the impact of these changes, and where they might lead, a local organization called MIT Enterprise Forum is focusing one of its dinner programs on the topic of Online Real Estate (clever title). The Forum focuses on highlighting business issues and opportunities for tech-driven companies and entrepreneurs. The Online Real Estate program will be on Wednesday, March 15, at the Bellevue Hyatt Hotel. See www.mitwa.org for program details and reservations.

These MIT Forum events typically draw 200 to 400 attendees, and this one will probably be on the larger side. For better or worse, it seems like everyone is interested in real estate these days. The program will be panel-based, with a traditional real estate broker, a top online agent and execs from Redfin, Zillow and House Values, with an open Q&A session at the end. I’m on the program team that is pulling the program together, and I’d have to say I expect a very lively conversation on the stage that evening. 🙂

Forget tradition! The New World of Buying and Selling Real Estate

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I’ve been going to the MIT Forum’s dinner topics for years as a technology geek. Now that I’m in real estate, I’m still finding applicable topics. Let me put my plug in for the MIT Forum first — The Northwest Chapter of the MIT Forum hosts monthly dinner meetings with topics relating to business and technology. The topics cover the spectrum from computer technology, biotech, nano technology and yes…now real estate technology trends. Always interesting!!

Topic:

Transformation is afoot. Remember how Expedia revolutionized the travel industry? Now companies in our own backyard, including Redfin, HouseValues and Zillow, are offering online technologies that are transforming the real estate industry. From online valuations and lead generation to completing the legal transaction, these companies aim to exploit opportunities in the business of residential real estate. Home buyers, sellers and real estate agents are changing the way that they do business.

Panelists:

  • David Eraker, Founder, Redfin
  • Spencer Rascoff, CFO, Zillow, Inc.
  • Nikesh Parekh, VP of Corporate Development, HouseValues, Inc.
  • Gordon Stephenson, Co-Owner and Managing Broker, Real Property Associates, Inc., Director, Zillow, Inc

March 15, 5:30PM – Tickets are $50 at the door (less if you buy ahead of time). Visit http://www.mitwa.org for further details.

The 5:30 time is no-host cocktail with doors for dinner opening later. Come on by and join us.

Using the Internet to Buy Your New Home

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I have recently been enlightened on how grossly inadequate many of the home viewing sites are and how misleading they can be.

Maybe I should have known this before, but frankly, those sites rarely come into play in my everyday life. I use the mls and clients use me. I truly haven’t considered until recently how people use the internet in the home buying process and why they do that.

Now that I am viewing the world through your eyes a bit, with the help of my most recent clients, I would like to “give back

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

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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. 😉

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.

Climbing into bed with the competition

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I caught an investigative bug tonight, and I feel a strong need to post this speculation…

  • Fact 1 — Rob over at Your Seattle’ Neighborhood Specialist had some great commentary on Zillow in the months leading up to their beta release
  • Fact 2 — Rob has been silent since the release of Zillow
  • Fact 3 — Marlow Harris also noticed this, so I’m not the only one wondering what happened to Rob
  • Fact 4 — A reader pointed out to me that hourlyagents.com service is no longer available.
  • Fact 5 — Rob used to heavily promote the Hourly Agents site and his blog still has a link to it
  • Fact 6 — The hourly agents site now says “This Domain is For Sale — Please contact info@hourlyagents.com for details. — In the meantime, please join me at Redfin”

So when Marlow asks:

Where are you? Where are all your editorials and opinions? You were writing up a storm before, but now that Zillow has revealed itself, you’re silent.

Did you get that job there, after all? Did you sign some sort of oath of silence?

WHAT DO YOU THINK???”

I think the answer is worse than an oath of silence… I don’t think he’s working for Zillow (those people have definitely woken up to the idea of communicating!), but rather, I think he must have climbed into bed with the competition!

UPDATE 1: I just found out that Redfin started blogging one day before Zillow, but… it slipped past me as they haven’t shared any link love (yet!).

Update 2: Redfin added Rain City Guide to their sidepanel! Thanks you guys! Now all I need is for the HouseValues blog to add a link to Rain City Guide and I’ll have completed a Seattle Real Estate Technology Trifecta! 😉

Update 3: The Trifecta is complete!

You don't know the power of the dark side

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vaderAfter playing with Zillow for the past couple of days, the first words that come to mind are “Impressive, but you are not a Jedi yet”. I have a hunch the guys at HouseValues are going to get “Netscaped” if they don’t take their game to next level.

The Good
The UI is slick. The mapping isn’t quite Virtual Earth / Google maps slick but it’s close (if you add mouse wheel zoom, arrow key navigation support and resizeable maps, I’d put it in that league). Seeing all the lot boundaries displayed on the map is something that I haven’t seen done well before and is a feature that will be expensive or difficult for Zillow’s competitors to match. I like the fact that they partnered with GlobeXplorer, since I believe that will enable them to out map RedFin.

The Ugly
I find all the trash talk about uptime and availability amusing. As any experienced software engineer will tell you, the first days for any web based service that has had the anticipation & hype of Zillow are going be rough. After all, if the mighty Microsoft had troubles with X-Box Live when Halo 2 was launched a few years ago, the fact that Zillow’s first day had some minor troubles is hardly surprising. Besides, I’m sure Rich Barton and the boys will buy a few AMD Dual Core Athlons CPUs with the new WD Raptor drives during the next few days and cure that problem.

The Bad
I suspect biggest problem with Zestimates is the current lack of high quality data. (Gee, the same issue I keep complaining about). Any realtor will point out, doing an accurate completive market analysis house is a problem that involves many, many variables. I understand it’s a hard problem, but the fact that the Zetimates are so far off for my house (which I thought should be an easy case) is disappointing. I don’t expect accurate estimates for waterfront, hilltop views, high rise condos, Bill Gate’s house or rural properties. But my house is a cookie cutter house is suburbia (with lots of similar houses for sale). I would think my house would be an easy one to get right.

Just for kicks, I implemented a quick & dirty Compeitive Market Analysis feature for the Rain City Guide home search. I found it to be more accurate than Zillow for my house, and Dustin thought my estimate was right on the money for his home (after he entered the correct square footage). Anyway, play around with it and let us know how close to the “right” price it is for your area.

BTW – My version just goes against active NWMLS listings (so forget about trying it if don’t live in Washington). It’s pretty crude and it’s not as cool as Zillow, but then again, I hardly have $32 in venture capital (much less $32 million), so cut me some slack!

I think the nay sayer would be wise to recall the words my former boss once said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.” Zillow’s Zestimates may be off in Safeco Field right now, but I have no doubt they will get much better over time. And when they do get better (not if), you better be ready.

Well, I’m going to shut up now and let my code do the talking. I’m sure the engineers at Zillow are following suit.

Robbie
Caffeinated Software

Redfin – Something to think about.

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One of the “big stories” in yesterday’s Seattle Times, was the piece on Redfin written by Elizabeth Rhodes.

My response is this:

According to the article, Redfin has the ability to reduce the Buyer Agent Fee to 1% of the purchase price. They have an “agent” who never goes to see the property “write up” an offer online, and Redfin gets paid 1% to do that. That assumes that the Buyer Agent fee offered by the seller and the listing company exceeds 1%, which is at present generally the case.

If the buyer only wants to “pay” 1% for Buyer Agent services, if that is the trend, then why wouldn’t I just go out and list property with a 1% Buyer Agent offering in the first place? Why shouldn’t the seller offer 1% and pay only 2% or 3% total fees when he lists the property, with 1% or 2% to the listing agent and 1% to the buyer’s agent?

If the “agent” in Redfin’s backroom is writing an offer without seeing the property for 1%, why wouldn’t the buyer just have the Open House Agent or listing agent write it up for 1% while in the house? At least that agent has seen the house and will know what amenities to write in that might be unique to this property, even if not offered in the mls, like bar stools that match the decor.

Clearly a buyer who can pick a property off the internet, who needs no assistance other than writing an offer and following escrow to closing, can get a real live agent for 1% or even less. Why not use one you can talk with in person inside of the house? If you remove the “responsibility” to assist in property selection from the agent. If you further remove the “responsibility” of the agent to “take care of you” because you are a savvy and informed consumer and don’t need “hand holding”. Then clearly you can negotiate those terms with anyone and still retain the right to “upgrade” the service if needed during the transaction.

The public’s perception that all fees are carved in stone is erroneous. I am concerned that buyers go to less than full service companies, when they can clearly negotiate less than full services with any licensee. Pick the best agent for the job and negotiate the terms. This way if you need greater assistance during the transaction than you thought you might need at the beginning, you have the option to upgrade to what you need, no more and no less.

Real Estate Search Article

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Search Engine Watch has a real estate search tool write up. It’s mostly links, but some of them haven’t been mentioned here. I like to think that our write ups are a little more coherent.

Not mentioned is the much improved (aesthetically) Redfin (even in the last week or two – take a look!) and the still nascent ShackPrices.

-Galen
ShackPrices.com

John Cook Interviews Redfin CEO: Redfin is "crazy-good"

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Dustin pointed out that John Cook over at the Seattle PI just published an interesting interview of Redfin’s CEO, Glenn Kelman (Direct link to the mp3).

Before I jump in, I should point out that I run ShackPrices.com, a site that is faintly a Redfin competitor. That said, that both Redfin and ShackPrices are much more worried about our customers and competitors with lots of money than we are about each other. I’ll try my best to stay unbiased.

Up to this point, Dustin has been under the impression that Redfin is very insular (He’s even gone so far as to say “arrogant”). I get the impression that Redfin has some interesting technologies, but they are still looking for their path; Glenn is doing a big marketing push on a site that has only had cosmetic changes (to real estate buyers) in the last year. Throughout the interview he raves about his site. I think he says exciting ten times and “crazy-happy” or “crazy-love” at least three times. If you check Redfin.com, their news bar clearly shows that they’re on a marketing push (it also shows they still don’t have an interface person who can tell them to use that valuable space more effectively).

Glenn then talks about how addictive (crazy-addictive?) he finds the Redfin site. Personally, I get much more excited by the technologies behind PropSmart and Trulia. Those sites seem to have added to cool aerial photos with some real focus on the user interface. Redfin gives you great information about individual houses and even shows you the lot line, but it doesn’t give you any medium- to big-picture information. Neighborhood and city pricing information is worth much more than a single house’s historical sales (and this is coming from the dude who has only historical sales on his site).

I think it is interesting how an interview can really bring out the best and worst in somebody by just letting them talk. More articulately than anyone else I’ve heard from Redfin, Glenn describes the company’s lack of focus. For instance, he talks about how every state is different and national websites can’t accommodate that. Next, he talks about how he’s going to expand down the West Coast and all over the country. He talks about how cool the site is and how technology is changing, but gives digital photos of houses as an example of this trend (that was cool 5 years ago!). Even in vegan-city Seattle, I want to know where’s the meat to go with this fluff? When asked what’s driving traffic to Redfin, Glenn says “because it’s an awesome site.” I think I would have gone with “aerial imagery, property outlines and past sales data.” And if they don’t add to that list, they risk becoming just-another-mapping-site.

A while back, Anna wrote this article that showed how Redfin wants it both ways with real estate agents… and it is interesting that while Glenn is new to the staff (he started in September), he inarticulately describes this same conundrum that Redfin faces.

He says,

we’re not trying to serve the real estate agents… sell people out to real estate agents… what we’re trying to do instead is serve the consumer directly…

But when pressed by John about how Redfin makes money, he says

How do we make money now? People sign up for a real estate agent… The real estate agent and Redfin share the fruits of that.

Which essentially means “by selling customer names to agents.” I’ll give him credit – I hate the housevalues model and find it to be really sleazy and maybe there really is something to be said for waiting until someone requests an agent. However, they are not, as he says, “trying to do something totally different.” Redfin is just leaving more money on the table and, possibly generating higher-quality leads. I’m going to read into this, though, and say that they don’t plan on working with agents for long – note his question to himself “How do we make money now?”

Dustin says “it is not hard to read between the lines that he’d really like to squeeze those agents out of the business if only it wasn’t for those “great” relationships he’s built up with a few of them.” I agree. Late in the interview he emphasizes how he wants to balance the business model:

… balancing our business model. We’ve got real estate agents that are partners, that we still value enormously, but we want to make sure we keep the focus on the home buyer and seller who is the customer.”

Word to agents: now that we have funding, you are not a priority.

This is my favorite part:

If you walked into Redfin, all you would see are engineers and a customer support person.

-Galen
ShackPrices.com