Where Real Estate Gets Its Dirt

Industry Relations Episode 28: Predicting the Winners in Real Estate by Way of Research—with Brad Safalow

We can all agree that the real estate industry is evolving quickly. Is there any way to predict who the winners in the space will be over the next few years? Brad Safalow has done nine years of research surveying hundreds of real estate agents on the housing market in general, online lead generation, marketing and technology. Curious what all that data might tell us about the future of industry players like Zillow, Redfin and Realogy? What about the potential market share of the growing iBuyer model? Or how independent brokerages might respond to the competition?

Brad is the founder of Please Act Accordingly Research, an independent research firm providing investment ideas to professional money managers and high-net-worth individuals. He began his career in the leveraged finance group at JPMorgan before joining RiverEdge Capital, a global equity hedge fund, where he specialized in small/mid cap stocks and short idea generation. Brad has been serving clients through PAA since 2009, generating 6+ action-oriented investment ideas annually, with high absolute return potential.

Today, Brad joins Rob and Greg to share a high-level overview of his report on the real estate industry. Brad shares his take on the challenges Zillow is facing with the backlash against Premier Agent 4 and its foray into the iBuyer market. Rob highlights the concentration of power in real estate and its influence on Zillow’s continued success, and Greg asks about the pros and cons of the iBuyer model and its potential share of the marketplace moving forward. Brad also shares his experience working with Redfin versus a traditional brokerage, and they offer insight around how Redfin’s national ad campaign might prove to be a seminal moment in the industry. Listen in to understand how independent brokerages like Keller Williams and Realogy are responding to the iBuyer threat and a potential shift in commission structure—and get Brad, Rob and Greg’s predictions around the winners and losers in the space over the next three years.

 

What’s Discussed:

The PAA annual survey of real estate agents

A high-level overview of Brad’s report

The reasons why Zillow’s stock is taking a hit

How Zillow’s growth depends on agent teams

Why Zillow launched Premier Agent 4

How Zillow responded to backlash against PA4

The concentration of power in the industry

Why Zillow is pursuing the iBuyer model

The iBuyer’s potential share of the market

How Zillow may profit as a mortgage business

Efforts to improve the consumer experience

Redfin vs. the traditional brokerage experience

The impact of Redfin’s national ad campaign

The effects a shift in commission structure

The fear/panic among independent brokerages

Gary Keller’s understanding of the iBuyer threat

Realogy’s doubling down on traditional strategy

 

Resources:

 

The Red Dot Report

Cloud Agent Suite

W+R Studios

 

Connect with Brad:

 

PAA Research

PAA on Twitter

 

Connect with Rob and Greg:

 

Rob’s Website

Greg’s Website

 

 

Marilyn Wilson asks a great question

Marilyn Wilson on the WAV Group Blog…

Why are MLSs making it SO hard to innovate?

“We have made it REALLY hard for the smart 16 year old in her garage to build the next big thing for a brokerage. Frankly, even well-established tech companies have major challenges working with more than 600 organizations. Refer to my commonapp article for more on that topic.

Let’s put ourselves in the shoes of a tech start-up. They have built something interesting. They find a broker that wants to try it out. The broker says go to the MLS and apply for a data license. They are not aware of the differences between an IDX, VOW or Back Office Feed. Most don’t even know what an IDX, VOW or Back Office feed IS! They don’t know that IDX feeds can include actives, actives, pendings and solds or just actives and solds. They have no clue what a non-disclosure state is, what that means and how it affects their product in those states. They don’t know what a “RESO” is or the benefits of using a feed that is RESO Data Dictionary compliant. They may know how to leverage API’s, but don’t know the difference between a RESO Web API and one offered by another group.

The start-up diligently follows the advice of the broker. They set out on a path to get a data feed.

Here’s what happens…or more accurately what DOESN’T happen, on most MLS websites. We make it REALLY difficult for someone new to the industry to figure out how to get that data feed the broker has asked the start-up to go after.”

This whole post is so damn good. Go read it now.

A Vegas Christmas Carol

A Christmas Carol by Charles Dickens…

For the first time the hand appeared to shake.
“Good Spirit,” he pursued, as down upon the ground he fell before it: “your nature intercedes for me, and pities me. Assure me that I yet may change these shadows you have shown me by an altered life?” The kind hand trembled.

“I will honour Christmas in my heart, and try to keep it all the year. I will live in the Past, the Present, and the Future. The Spirits of all Three shall strive within me. I will not shut out the lessons that they teach. Oh, tell me I may sponge away the writing on this stone!”

The quote above is from the last few pages of Mr. Dickens’ famous novel. In which that last spirit, the spirit of death, is pointing at Scrooge’s tombstone in a deserted churchyard, and showing what will happen if he doesn’t change his ways.

Okay, so what does this have to do with Greater Las Vegas Association of REALTORS recent reversal to end listing distribution to portals like Zillow?

Work with me here…


One group that at first I found humorous, but now annoying, are the “Zillow Haters”. These agents and brokers begin to see red when the subject of Zillow is brought up. This fear, and yes its mostly fear, can make the comments section of any Zillow article on Inman News look like a Trump rally.

Now, I’m not saying Zillow is perfect. They can be heavy handed and a bit tone deaf to organized real estate.

But, I also see many MLS organizations have to deal with these “haters” with their leadership. And sometimes it just takes one director. When the subject of Zillow comes up at the next board meeting the hater’s blood begins to boil and any rational business decision making abilities go right out the window.

The haters don’t want to hear facts. Such as, they (the broker) can remove listings from Zillow at anytime, many of their agents find value in working with Zillow, one of the first things a Seller does now a days is check Zillow to make sure their house is listed on the site, etc.

But none of these facts matter to the hater, they just want to “stop sending listings to Zillow!”. They may as well be shouting to shut down the internet.

But, no matter how many emails are sent, no matter how many special board meetings are convened, the haters simply refuses to understand that they can remove their listings from Zillow at anytime. So what do you do if you’re an MLS?

This is where Dickens come in. You need to show the haters the future. And I think that’s exactly what GLVAR has done. They have given the haters what they want by announcing they were indeed shutting down MLS feeds to Zillow. And look what happen, people were now paying attention. Facts began to matter and GLVAR announced they were “reversing” their decision.

My guess this wasn’t a “reversal” at all. This was exactly what GLVAR wanted to have happen. It’s a Christmas Miracle!

Happy Thanksgiving!

I was going to write something about what I’m thankful for this year (a lot!), but Brian Boero over at 1000watt took the wind out of my sails by writing such an eloquent post. So go read that right now, it’s called, “For Home”.

But I do have something that might make you smile. Here’s a video W+R Studios put together just in time for Thanksgiving.

Happy Thanksgiving everyone!

GLVAR reverses decision, now will continue to syndicate to Zillow and other third parties.


GLVAR to continue syndicating its MLS data to third parties

“After what GLVAR President Chris Bishop called months of “careful consideration and discussion,” board members of GLVAR and its MLS voted recently to end agreements with all such portals, effective at the conclusion of each contractual term, with Zillow ending in January 2019 and ListHub in June 2019.

But after hearing concerns this month from many of its members, Bishop said GLVAR has reconsidered and will now continue to share its MLS data as it has been while it explores other options.

I hate being right all the time.

Lone Wolf and CREA ink deal

Lone Wolf and CREA Announce Major Transaction Management Deal

The new CREA WEBForms® will be powered by Lone Wolf’s TransactionDesk®, an industry-leading document and transaction management system. The new CREA WEBForms® includes unlimited document storage, forms, MLS® integration and agent-level transaction management.

“Our members’ business needs have changed since the creation of CREA WEBForms® and they continue to evolve,” stated Michael Bourque, CREA’s CEO. “CREA WEBForms® needs to adapt to changing needs in a timely fashion, integrate with board and association MLS® Systems and other third-party tools used by members across the country.”

If I’m reading this right it sounds like Lone Wolf just site licensed a whole country. Nice work!

TRIBUS to send agent-sold data to Zillow immediately after a closing

Finally, Zillow will automatically update agent sales data

In a move that could significantly reduce manual data entry, real estate technology vendor TRIBUS on Thursday announced it will automatically send updated sales data through its brokerage platform to Zillow following a closing.

TRIBUS – which boasts a portfolio of clients that includes RE/MAX Results, Zephyr Real Estate and Climb Real Estate – provides brokerages with custom platforms, brokerage websites, company intranet and other tech products.

The new partnership will allow agents to bypass hours of manually entering home sales data into Zillow, executives said in a statement.

“We’re excited to work with TRIBUS on behalf of our mutual broker partners to automate the publishing of a broker’s sold data to Zillow Group sites,” Sara Bonert, Zillow’s vice president of broker services, said in a statement. “This means their data will get to our sites faster and more accurately, eliminating the need for public records and manual data entry.”

This is a vast improvement over the manual process. Big Kudos to Zillow for working with TRIBUS on making this happen. TRIBUS has been really hustling the past few years and its great to see that work pay off. Congrats to Eric, Katie and the rest of the TRIBUS team.

T3 Sixty releases “scorecards” for real estate technology companies

Comprehensive scorecards for real estate tech companies

“The T3 Tech Scorecards consist of an independent, standardized survey of each company’s users, an analysis of the company’s products with a detailing of the pros and cons, a description of the ideal customer for each product and best practices for effective agent adoption. Additionally, an overall description of the product and the company is included as well as an actual scorecard grade.

According to Jack Miller, President and Chief Technology Officer of T3 Sixty, these are but the first four T3 Tech Scorecards and they will be followed by at least one new assessment every month “until we’ve reviewed and analyzed all meaningful quality technology offerings in the market that brokers and agents should consider.”

Here’s a link to a scorecard they did for BombBomb ====> BombBomb – Tech Satisfaction Report – Scorecard – August

Nice data viz on the results.

You can see more scorecards at http://t360.com/scorecards

Eric Wu has a plan

From Inman News…

Opendoor CEO wants to make homebuying and selling free

On Monday, Wu outlined his vision during a panel session at the Techonomy 18 technology conference in Half Moon Bay, California, at a hotel perched on an oceanside bluff.

In his opening statement on the panel, Wu said Opendoor wanted to make real estate transactions both “frictionless” and “over time, a free experience.” He repeated this goal later on and added that it “requires patience and requires time.”

This reminds me of the recent adage, “When something online is free, you’re not the customer, you’re the product.”

Ebby Halliday finds success with Buyside

Ebby Halliday Real Estate, Inc. Reports Early Success Generating New Listings Following Brokerage-wide Launch of Buyside

“Ebby Halliday Real Estate Inc, one of the largest brokerage firms in the country, is reporting strong initial results after a brokerage-wide launch of Buyside this summer. Buyside, a data-driven marketing solution, aggregates buyer data from the brokerage’s own website and other major real estate portals, helping agents show prospective sellers the real-time demand for their home. After just over 60 days on the platform, Ebby Halliday is reporting positive results with Buyside, including hundreds of seller-leads generated and listings signed.”

I’ve always thought Buyside’s value proposition was simple yet extremely powerful.

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