Where Real Estate Gets Its Dirt

Fear and why iBuyers Offers and Zestimates belong in your CMAs

Jay Thompson, writing on Inman News, Why iBuyers and Zestimates belong in your CMAs 

“Greg Robertson, W+R Studios co-founder, was attacked, called clueless, and challenged as to whether he had any industry experience (yes, almost three decades worth.) IBuyers, also highlighted in the headline, got one mention. Nothing else in the survey report was discussed. A few commenters waded into the fray showing understanding of why they at least look at Zestimates and sometimes mention them in listing presentations. The vast majority of commenters sounded off on the evils of Zillow and the Zestimate.”

I will say I am “clueless” about many, many things. My wife will tell you as much.

Sorry this post is a little long, but I think it touches on a lot of issues (not to mention a shameless plug for my company ????).

Jay, as you may know, is a former broker (The Phoenix Real Estate Guy) and worked at Zillow in Industry Relations for some time. His article is in response to an article published on Inman News about W+R Studios’ announcement of the results of their inaugural survey, 2020 Best Practices of CMAs and Listing Presentations.

Here’s more from Jay…

“No one, including Zillow, W+R Studios or me, is saying the Zestimate should be used as a comparable in your CMA. Of course it shouldn’t be, that’s not its intent or purpose. But to ignore it is to ignore something your clients are looking at and wondering about. Address it upfront, leave out your personal feelings about Zillow, and put any objections to rest early in the process. The listing presentation is the ideal time to address it with sellers, and the CMA is the perfect place to have it on record. “

Emphasis mine

Cloud CMA pioneered ways of including Zestimates to compare against actual sold prices from the MLS data as part of a Cloud CMA report. This has since been copied by other vendors. I was surprised by the amount of push-back we got when we introduced it. Many MLS organizations (after pushback from their members) made us turn the report page off by default, or in some cases, turned off altogether. But every time I sat down, one on one, with a broker or MLS executive and showed them how the report page worked, they understood, “wow this is great, agents are going to love it.”

This happens all the time. Many agents and brokers just hear/read “Zestimate” or “iBuyer” and begin to see red.

As we can see in the survey results and the comments on the article there is still a lot of fear out there. And as Mr. Hurbert once wrote, “fear, is the mind-killer”.

Flash forward to a little less than a year ago when W+R Studios introduced a way of including iBuyer Offers (with Opendoor) in Cloud CMA. We were met with the same type of fear and got a lot of push back and false claims.

“You’re going to put agents out of business!”
“Shame on you Cloud CMA!”

And those were the polite ones. I took these comments hard. We put many of our partner MLS organizations in a tough spot. They began to get calls from their members that “Cloud CMA was sending our CMAs to Opendoor!” (not true). The misinformation got so bad we had to create a document refuting some of the most outrages claims.

But we held firm because we knew, to paraphrase Jay, the listing presentation is an ideal time to address iBuyer Offers, and the CMA is a perfect place to have it on record.

Dan and I are always looking for new ways to innovate, and we are willing to take risks and keep our customers ahead of the curve. Even if these ideas seem crazy or counter-intuitive at the time.

The main thing that got us through the periods I wrote about above was, in the end, our customers (MLS organizations, brokers, and agents) trusted us.

In a recent “Friday Flash” blog post, titled “What are you saying” Brian Boero, CEO of 100watt wrote:

“Honestly, I am glad we have arrived at a point where there are no more red lines to transgress. I used to get revved up about this stuff too. Now, Zillow buys, owns and sells homes, Realtor.com charges referral fees, and yet good agents, teams and brokers continue to do their thing. “

Unlike Brian, I don’t think we are there yet. We still need to get over our fear of these new (old?) models, which as Rob Hahn and I discuss in recent Industry Relations podcast point out, keep turning more and more towards agent inclusion. We need to focus our energy on more positive things. We have a lot more to worry about than Zestimates and iBuyers.

I just hope the industry can take the advice of what a wise old hippie once said…

“You gotta let that shit go, man. Let it go.”

Realtor.com offers iBuying marketplace

Realtor.com® Now Gives You Options to Sell Your Home, Your Way

“Realtor.com® is the only national home search site to compare different selling options and enable consumers to determine the right fit with just a few clicks. Users simply provide basic information about their home and Seller’s Marketplace will present them with available options in their area. Homeowners will see side-by-side estimates for sale price, timeline and more with no upfront cost or commitment.”

Well, they certainly took their time but I think realtor.com implementation of side by side comparisons is a good one for consumers. Reminds me of the first implementation of Zillow’s “Instant Offers” before they took everything in-house.

This also represents a big shift from what I’ve seen/heard from larger iBuyers. Typically they have not wanted to participate in side by side comparisons. Companies that have offered services of aggregating iBuyer offers have been met with cease and desist letters. But with the current economic environment, things are changing quickly.

The other angle to this is what can be perceived as a “partnership” between realtor.com and Opendoor against Zillow.

“The enemy of my enemy is my friend”

Behind Opendoor’s layoffs

I think I’ve told this story before, but I attended a Proptech CEO Summit a couple of years ago put on by Pete Flint and Paul Levine. One of the speakers was Glenn Kelman, CEO of Redfin. During his interview, he commented that Opendoor was the first company he thought cared about operating margins as much as Redfin.

Opendoor’s culture is one of frugality. You have to deeply care about your margins if you are in the iBuyer market because, at this stage of the game, they are razor-thin. They even have a saying at Opendoor, “We eat BIPS for breakfast”. BIPs meaning basis points (BPS), meaning 1/100th of 1%. That’s the increments Opendoor lives in. Every little expense matters.

Flash forward a couple of years and I wasn’t surprised that Redfin had partnered with Opendoor.

Last week when I read the news about the Redfin layoffs I tweeted this.

A few people on Twitter thought I was referring to other brokerages or franchisors. But, knowing how similar Redfin and Opendoor operate my first thought was Opendoor. Cuts are coming, and they are going to be deep.

Haters are gonna hate. Just as many people were crowing that Redfin’s model of employee agents doesn’t work, many are already calling the death of iBuying. Pay no attention to the haters, they are wrong. What is happening now is unprecedented.

Mr. Kelman and Mr. Wu are fighting for the survival of their companies and sometimes that means you have to make tough decisions, you have to focus, and give it everything you got.

That’s what happens when you are in the arena.

The sky is not falling on iBuyers

Zillow suspends home buying due to COVID-19

“Zillow said Monday it will temporarily stop buying homes in all 24 markets where it operates in response to public health orders related to the COVID-19 pandemic, the latest real estate startup to shift how it operates as the disease caused by coronavirus continues to spread.”

TechCrunch

Zillow is the latest iBuyer to suspend buying homes. Redfin was the first to announce and Opendoor after. I believe Offerpad just announced something similar yesterday.

Here’s the thing, I’m hearing a lot of people say that this coronavirus could be the end of iBuying. But its important to remember right now nobody is buying. With “stay at home” and “shelter in place” orders being given it’s pretty hard for any broker, agent, appraiser, county recorder clerk to do any business.

I think there are several factors that will actually help iBuyers once we are out of this crisis. People will want more certainty in the transaction, and less human contact showing homes.

The important thing to remember is that we are all connected, and we are all in this together.

Industry Relations Episode 41: 10 Defining Moments & Trends in the Last Decade of Real Estate

On January 1, 2010, organized real estate was still reeling from the recession. Dale Stinton was steering the ship at NAR. Zillow was seen as the enemy of the MLS. Real estate software was meh. Agent teams were rare. Nearly all brokerages took a split. Selling your house online seemed outrageous. And we still signed documents in pen.

On this episode of Industry Relations, Rob and Greg are looking back at the last 10 years in real estate. They discuss the passing NAR’s MLS Statement 8.0 Clear Cooperation Policy, debating the significance of the office exclusives loophole and how it might lead to government involvement. Our hosts also express their disappointment around the Newsday investigation in Long Island, Testing the Divide, challenging brokerage leadership to make a strong statement against the egregious racism it uncovered. 

Greg and Rob go on to share their top 10 defining moments and trends with the biggest impact on the industry over the last decade, describing how the rise of agent teams, 100% commission brokerages, the iBuyer model and consolidation have transformed organized real estate. Listen in for insight into how NAR’s decision to fund RPR and Upstream changed the way the MLS saw Zillow and explore how the space has evolved from 2010 through the end of 2019.

Editor’s Note: We did record an Episode 40 that was never aired. It was about Policy 8.0 but wasn’t ready before the vote. After the vote passed we decided it didn’t add to anything to the issue.

What’s Discussed: 

NAR’s passing of the MLS Statement 8.0 Clear Cooperation Policy

Rob & Greg’s take on the Newsday investigation in Long Island

How the loophole in 8.0 could lead to government involvement

The 10 defining trends/events in the last decade of real estate

  1. The end of poorly designed software
  2. The rise and domination of agent teams
  3. The transition in leadership at NAR
  4. Opendoor pioneering the iBuyer model
  5. Zillow’s acquisition of Trulia
  6. 100% commission brokerages
  7. Consolidation and the influx of capital
  8. The practice of buying agents/agent teams
  9. The mainstreaming of digital signatures
  10. NAR’s decision to fund RPR + Upstream

Connect with Rob and Greg:

Rob’s Website

Greg’s Website

Resources:

MLS Clear Cooperation Policy

Compass Pre-Litigation Letter to Bright MLS

Bright’s Response to Compass

Newsday Documentary: Testing the Divide

Rob’s Blog on the Newsday Piece

1000watt Article on Real Estate Software

The Millionaire Real Estate Agent by Gary Keller with Dave Jenks and Jay Papasan

Ben Thompson Interview with Rich Barton

Our Sponsors:

Cloud MLX

The Red Dot

Webinar: What’s Behind Opendoor?

I’ve asked Tyler Hixson, director of Real Estate Partnerships & Strategy at Opendoor, to join me on a webinar on December 5th. On this webinar, I’m going to ask Tyler to explain how agents are using Opendoor to increase their real estate business, common misconceptions and other tough questions about where Opendoor sees the industry going.  We will have a Q&A session at the end.

Register for the webinar by clicking on the link below (Please feel free to share):

Registration => What’s Behind Opendoor?

P.S. Can’t make the live webinar? Register anyway and we’ll send you the recording.

Listing Bits Episode 54: Opportunities for Agents to Partner with Opendoor – with Shannon Fitzpatrick & Tyler Hixson

Many agents might view Opendoor as a competitor, yet another tech platform out to eliminate their jobs. But what if you could leverage the iBuyer as a partner to build your real estate business?

Shannon Fitzpatrick leads a team of 45 agents at Movoto Real Estate in Las Vegas and Henderson, Nevada, and Tyler Hixson serves as the Director of Real Estate Partnerships and Strategy at Opendoor. In this episode of Listing Bits, Tyler and Shannon explain how agents can leverage Opendoor as a tool to grow their business, bringing cash offers to prospects and tying multiple transactions together.

Shannon speaks to the value of going into a listing presentation with an Opendoor offer, describing how it allows him to do what’s best for the seller, and Tyler discusses why agents can get a stronger offer from the platform by articulating the property’s unique features. Listen in for insight into the misconceptions agents have about Opendoor and learn how to work WITH the iBuyer to serve your clients and generate more leads.

What’s Discussed: 

How Shannon uses Opendoor to bring a cash offer to prospects

Leveraging Opendoor to tie multiple transactions together

The value of going into a listing presentation with an Opendoor offer

Opendoor’s offer valuation process and associated service fees

How Opendoor passes its vendor discounts on to sellers

How Opendoor can serve as a powerful lead gen tool for agents

Why agents can get a stronger offer from Opendoor than sellers

How Opendoor works directly with agents through closing

How Shannon uses Opendoor as a recruiting tool at his brokerage

The advantage to sellers of working with an agent AND Opendoor

The misconceptions agents have about the Opendoor platform
-Quality of offer + fees
-Think it’s out to eliminate agents

Opendoor’s plans to expand to serve all customers, home types

Resources:

W+R Studios

Cloud CMA

Opendoor/CloudCMA

Connect with Tyler:

Opendoor’s Agent Partner Program

Connect with Shannon:
Movoto

Shannon’s Website

Shannon on Zillow

Opendoor partners with Cloud CMA

Cloud CMA will now include all cash offers from Opendoor

“Last year, W+R Studios unveiled a tool called iBuyer Connect, which allowed agents to incorporate all-cash offers from investors into their listing presentation. Robertson told Inman that most of the interest from investors at this point had been home flippers, but now adding Opendoor as a partner in the platform will allow agents using iBuyer Connect to present all-cash offers to owners of turnkey homes.

Agents who refer clients to Opendoor ultimately have two options. Negotiate a traditional listing agent commission with the seller – who will also be paying Opendoor a transaction fee that averages 7.1 percent – or forgo the listing agent commission and receive a 1 percent referral fee from Opendoor.”

We’ve been working on this for over a year. What I think is going to be transformational about this is the software integration between Cloud CMA and Opendoor.

The experience of creating a CMA and going right in to generating an offer is like nothing out there. It really gives agents the advantage in simplicity and speed. And its only going to get better.

Redfin and Opendoor – Wonder Twins Activate!

Teke Wiggin for Inman News:

“Hi-tech residential real estate brokerage Redfin is partnering with Opendoor, the private Silicon Valley startup that makes cash offers on homes directly over the internet, in a move that is likely to raise the eyebrows of many competitors in both the traditional real estate and fast-growing online cash offer (or “iBuying”) space.”

So smart. I just love these kind of partnerships. To me it also represents Opendoor fully embracing agents. And I hope it will help more agents to consider what a great tool/option iBuying can be for them and their clients.

“Redfin, which maintains a highly-trafficked home search portal that includes for-sale listings from numerous other brokerages, will also offer special marketing perks on the homes listed for sale by Opendoor that appear on Redfin’s site and apps. The companies will evaluate expanding the partnership to other markets outside of Phoenix and Atlanta.

The partnership looks like a bid by Redfin and Opendoor to jointly counter Zillow Offers, Zillow Group’s iBuyer program, which also lets customers request all-cash offers on their homes over the internet.”

I’ve written about this before. The war between Zillow and Opendoor is one of workflow vs. lead flow. Zillow is obviously winning on lead flow and catching up on workflow. This move by Opendoor (and I expect others) helps them on both sides. Lead flow by putting Opendoor’s “Get a Cash Offer” button on listings (lead flow), and “special marketing” for Opendoor’s own listings on Redfin’s site (work flow – getting homes sold quicker).

“Its integration with Opendoor, however, lets the high-tech brokerage extend instant offers to many sellers whose homes Redfin Now isn’t prepared to buy yet.


Opendoor operates in 20 markets nationwide, while Redfin Now is available in only a fraction as many. For example, Redfin Now currently isn’t buying any homes in Phoenix and Atlanta, the two markets where the Redfin-Opendoor partnership is going into effect.


“Just as traditional agents are our partner for brokered sales our own agents can’t handle, Opendoor is our partner for giving customers reliable, competitive offers on homes we ourselves can’t buy,” said Redfin CEO Glenn Kelman in a statement.”

Simpatico baby! Redfin also wins by expanding iBuying services in areas it doesn’t currently cover. I also think that by expanding the number of properties it can extend a cash offer helps them with seller leads as well.

“The partnership demonstrates striking synergies between Opendoor and Redfin that a merger could fully consummate.
Opendoor CEO Eric Wu had kind words for Redfin and wouldn’t rule out a future marriage.


“What I can share is that I’ve known Glenn for years, and I have a great deal of respect for him, and from my perspective, I’m a fan of the product, use the product that’s built, and so in this chapter, we’re focused on the success of this partnership, and we’ll look for ways to deepen our relationship if it’s successful,” he said.”

Inman News was really baiting both Kelman and Wu on this merger question. In my opinion I don’t think a merger would ever happen. We are all still in the first inning of this game.

As I said in the beginning, this to me is the first real deal representing iBuying going “main stream” in organized real estate. While Redfin isn’t your typical broker, it could be the sign of things to come.

The worry I would have at Redfin is if this move would jeopardize any current relationships, à la the RE/MAX kerfuffle around Redfin Direct.


Get off my lawn!!

When I see Gary Keller on stage trying to school Brad Inman, or brokers yelling at new companies complaining about their business models, you can deduce only one thing. They are scared shitless. They ought to be. The new entrants don’t give two shits about the old guard.

You think the hyperbole and lies are at an all-time high? I couldn’t agree with you more. Why? Well, I think it starts from the top. But hey, the economy, right?

But, I digress.

You are seeing this everywhere. Zillow vs. Opendoor. Corelogic vs. Remine. Traditional brokers vs. Compass, and anyone else who got a check from a V.C. The times they are a changing.

Arguing over percentage points, or throwing a bunch of props around on stage, is not going to change things. Things are going get bloody. Guarantee it.

My advice to the old guard, get over yourself. You gotta to find new ways to win. So quit complaining and get to work. I mean, how bad could it be?

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