Is there a real estate revolution available, beyond just a fancy new MLS website?
Zip Realty has blazed the trail. They offer:
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Their own search website
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Rebates
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Phone Apps
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Salaries to agents
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Catchy name, and national exposure
Their website is of particular interest. They mention:
Our ZAP technology also includes a customer relationship management system that identifies and analyzes user behavior on our website allowing us to provide more relevant information and service to clients and a business management system that allows our managers to monitor the activities of our ZipAgents to verify a high level of client service.
They monitor your usage of their website. They track the houses you’ve viewed on-line, and how long you spend looking at each house – figuring the longer you look, the more you like it. Then they send a report to your designated Zip agent.
It sounds a little creepy, but from the agent/broker perspective, it is a very effective way to identify the clients who are motivated, and keep the agents focused on productivity.
If you were thinking about how you might create more than just a fancy website, and wanted to change the business, you’d admire Zip’s model. Redfin is another company that publicly set out to revolutionize the business with a very popular website and rebates. How is it working in San Diego?
| Agency | # of SD agents | 2010 Sales YTD |
| Zip | ||
| Redfin | ||
| JtR |
Zip Realty started in 1999, so you’d think by now they would be gaining traction, but in 1Q10 they lost $6.2 million. Redfin is privately-held, but according to wiki they’ve poured $20 million of venture capital into their company.
Yet based on the number of sales, neither has been able to revolutionize the real estate world as we know it, at least not in San Diego. There have been 12,320 detached, attached and 2-4 unit sales in 2010, year-to-date.
Why? Because the more-experienced agents are able to beat the others to the punch – they recognize the best buys faster, their clients tend to be better qualified, and the respect/camaraderie between the veteran agents will trump the less-experienced agents in a close race.
Any revolution would have to embrace the more-experienced agents, or over-run them. A company like Google would have to set up an auction house with full transparency to topple the old guard.
P.S. I have never had a bad experience with any Zip or Redfin agents, and I mention my stats as a middle-of-the-road example – there are agents who sell a lot more houses than I do. Because it’s been mentioned here several times that the sales history of each agent should be out in the open to assist consumers with evaluating realtors, let it start with me.
I like JTR’s 13 sales per agent stat!
sorta off topic, but time for a checkup on the CA cheese:
As of | Estimated Total First-Time Buyer Applications Received | 57% of Estimated Requested Credit
05/04/10 | 430 | $ 2,351,000
05/11/10 | 2,470 | $ 13,283,000
05/18/10 | 4,830 | $ 25,473,000
This is going slower than I thought, thats for sure.
ziprealty is a great online search tool. I used it extensively especially when I was blogging.
actually used ziprealty for the purchase and the sale of our condo prior to moving down to SD. it was during the bubble’s climb, we were writing up offers left and right, finally getting a condo in a betting war. as for the sale, the market was at peak, we were able to get a buyer for top dollar within a week, no open house, and we got some rebate money as well. as far as we were concerned, the agent did minimum work when we sold.
things are a bit different now, with a temperamental schizophrenic market, if I have to sell, I doubt I would use ziprealty or redfin.
2 sales per agent per year? wow…
The way I see it, there is very little price discovery in houses or agents. I hear Jim talk about bringing down comps, etc. Who cares? Put the house on the market for “$1 or best offer”. Publish the best offer at the end of each day, sell to highest bidder after 30 days. Done. Maybe there’s a law that says you can’t do that or other issues. To me, that’s the best way to sell a house.
I hope those Redfin agents have another job on the side.
My 2 cents
For anything to work, the agents would have to embrace it. The more of a sellers market it is, the less the market will embrace transparency. Right now, agents are enjoying the lack of information flow and gaming the portion of the market that could be lucrative for buyers (REO’s, short sales, etc.).
As a buyer, the best part about sdlookup, is the users comments section where you can follow the history of a given property and see the games that are being played by the agents (DOM, NOD’s, playing with price, make believe contingent offers, etc.). At this point in time, I doubt if agents would embrace a site that tracked all the funny stuff going on.
Somehow, you’d have to make it financially attractive for agents to use your site above and beyond MLS, by either compensating them or bringing them more and better qualified leads.
Buyers will use anything that helps them track their particular market segment, but buyers won’t pay for that tool, so you have to get a majority of the agents on board.
JTR – Perhaps the best place to start is to understand what ‘value’ you feel you provide to sellers and buyers that translates into a good fee.
In essence, what part of your job truly commands the $$$?
It obviously isn’t access to mls listings, driving people to the listings, etc? A law firm/advisor could handle contracts and paperwork to remain compliant very cheaply as a % of the sale.
You have to realize a good portion of americans are financially incompetent.I can see where a good agent has some value to those folks.
tweeter – I fully agree that good agents are very valuable. My post is to ask Jim to distill his wide range of duties and identify specifically where the value is generated.
I guarantee you that about 10% of his efforts are generating about 90% of the client value…the rest is unnecessary energy he’s forced to expend dealing with the static generously provided by today’s realtor environment.
Identify the core of his ‘value’ build the new model around that concept.
“For anything to work, the agents would have to embrace it.”
I disagree. For something to work, the PUBLIC must embrace it. I don’t care what the agents think. They embrace the current abomination, so for something new to work it would most likely have to be something agents DON’T embrace. All it takes is for one agent/businessperson/company to start doing things differently.
With all due respect, comparing Redfin and Zip’s stats to JTR is interesting, though irrelevant. JTR is a long-time successful realtor, so of course he will cream the newbies with new models. The more important comparison is how Redfin and Zip’s sales compare to last year and the years before. Or even better; how do their market shares compare to previous years?
Revolutions don’t happen overnight.
Any revolution would have to embrace the more-experienced agents, or over-run them. A company like Google would have to set up an auction house with full transparency to topple the old guard.
My sentiments exactly.
Thanks for your support, I appreciate the help!
Redfin does have a great rule – they won’t show buyers any short sales!
redfin is great as a website to look at houses. Don’t know if they can pull off making money though, but they may be better off selling advertising instead.