3 Oceans Real Estate, A Boutique Real Estate Brokerage Serving the San Francisco Bay Area header image 4

“Wisdom of Crowds” Meets Real Estate: Introducing My-Currency.com

February 1st, 2007 · 1 Comment

As noted by Altos Research and FOREM, there’s a new kid on the AVM block — My-Currency .com (don’t forget the “-” ) . For predictive firepower, it depends on the “Wisdom of Crowds” concept popularized by James Surowiecki in his eponymous book. The idea, as thought-provoking as it is controversial, is that if you create an appropriate bidding environment, in which market participants drive collective wisdom by “buying” and “selling,” that collective wisdom is often more accurate than the insights of any one expert.

Confused? My-Currency trades in real estate futures. It lists properties for sale — at this stage only a handful — and then challenges you to predict what the final selling price of that property will be. The aggregate of these predictions is the “CrowdValue.” Once the property sale consummates, the actual selling price gets compared against the predictions, and those who were best at estimating get paid in “reputation currency.”

I gave it a test spin and entered a local Palo Alto property, 359 Creekside in Palo Alto (link will be active only until the property sells). With the market here going crazy again, it’s pretty easy to predict that the final price will be above the list price, but unfortunately last year’s rule — final price is roughly 2% per bid above the list price — is no longer as trustworthy, so it’s anybody’s guess exactly how much the property will sell for. The property I entered is listed at just under $1.2M, and my estimate is a tad above $1.35M.


So, where’s the beef?

Simple, really. Those who are consistently more accurate than others in predicting property prices become neighborhood experts and get highlighted more. For real estate agents, that’s great publicity. For civilians, it just feels good. (Regular readers may remember that this very concept was my prediction #4 on what Zillow was releasing on December 6th. Zillow may not have heeded my hint, but perhaps Karim Tahawi, My-Currency’s CEO, did?)

How’s this going to play out? Very predictably, I suspect.

  • Once again, innovation in the real estate biz is consumer-focussed and is being driven by outsiders. What this means is that 95% of the market participants will be consumers, not real estate professionals. Those professionals who do participate, who most likely have seen the home and have a sense of its “unZillowables,” will likely have an edge.
  • There will be insider trading — almost a given in a market in which there is so much information asymmetry. Only local real estate professionals, and the civilians they were representing, for instance, know how many bids there were on the property I entered.
  • Zillow will resist the temptation to add a similar feature to its site. Already stung by industry criticism that its Zestimate is just a game, Zillow won’t want to increase the criticism by adding another feature that will look, at least as first, frivolous.
  • My-Currency will get sued within 3 months. Part of the financing for any savvy real-estate oriented service is a legal contingency fund, and I hope Karim doesn’t have to dig too far in to defend his otherwise brilliant idea. For what could he possibly be sued? Hey, come on, this is the real estate biz — it doesn’t have to be something substantive or real. Though temporarily pretending to play nice — due to the ever-entertaining DOJ vs. NAR carnival — the real estate industry will borrow from the RIAA playbook, and write a nasty legal letter, probably centering around the idea that My-Currency is “advertising listings without permission.” Karim, meet Glenn, another real estate entrepreneur whose great ideas often butt heads with the reality of the real estate business.
  • The next logical mashup? Karim, meet Lloyd Frink and Richard Barton. I’m sure somebody’s already working on a Zestimate-CrowdPrice combo.

Tags: , , , , , My-currency.com, , , ,

[

Tags: Glenn Kelman · James Surowiecki · Karim Tahawi · Knowledge markets · Lloyd Frink · My-currency.com · Prediction markets · Real estate · Richard Barton · Wisdom of Crowds

Pre (Inman) game commentary

January 6th, 2007 · 6 Comments

I’m flying out tomorrow to attend the Inman REConnect ‘07 conference in New York, and it looks to be a packed and informative time.  Heck, it looks downright entertaining!

The keynote address has a nice ring to it: Real Estate Debate — High Touch vs. High Tech.  As alliterative as the title may be, however, I’d say it suggests a false choice.  Is it really “High Touch” vs. “High Tech”?  Are the options for the future of our industry really two distinct paths — one of them the “High Touch” model of old and the other the “High Tech” model that’s causing so much angst?  I think not:  just ask my clients about the “High Tech, High Touch” approach I use.

More entertaining than the title is the thought of seeing Alan Dalton take on Glenn Kelman — now that’s bound to be a good show!  Regular readers may remember Alan Dalton’s bombastic performance at another conference a few months ago.  In the ring with him back then was Zillow’s Lloyd Frink, who may not have matched Dalton in flamboyance, but certainly bested him in substance.

Glenn, if you’re reading this as part of your pre-game preparation, here are my predictions of what Dalton’s going to throw at you:

  1. “I know Glenn Kelman is a decent man, an honorable man, who really really cares about Realtors, probably because most of his classmates at Berkeley became Realtors.”
  2. “I think it’s appropriate that Glenn is here with us near Times Square, the world capital of frivolous neon lights and entertainment, which is really all Redfin amounts to.”
  3. “I ask you, what is the real estate public really looking for — the full service value-added model of the traditional Realtor, or a scaled-down web-based half-baked coccamamie jumbo-mumbo service that leaves the consumer to fend for himself?”

Remember, Glenn, Dalton doesn’t dislike you personally — he’s just running scared of the innovation that Redfin represents.

Tags: , , , , , ,

[

Tags: Alan Dalton · Glenn Kelman · Inman Connect · Lloyd Frink · Real estate · Realtor.com · Redfin

Wow! You leave for an hour, and Zillow changes the world

December 7th, 2006 · 14 Comments

I stepped out for an hour….I came back…and the world, or at least my little piece of it, had changed, courtesy of Zillow’s upcoming product release.

Quoting Drew Meyer (Zillow PR), the new product release includes three components:

  1. Agents and owners can post homes for sales–for FREE.
  2. Added a real estate wiki that is seeded with over 100 articles–and opening it up to the community for improvement & expansion
  3. Make Me Move–now ANYONE can set a “dream” price for their home

Of my four predictions, only one turns out to be correct: community commentary, which is at least part of what the wiki concept seems to be. (Note to self: Keep remaining three predictions on file — maybe they’ll be part of Zillow’s next release!)

Thinking as a traditional Realtor, my thoughts on the three components above are, respectively:
Oh #!^%
Huh? again.

Putting on my consumer hat:

And now my Web 2.0 Realtor hat:
Brilliant (if I do it right)
Absolutely brilliant
Brilliant again.

1. Agents and owners can post homes for sales [sic] for FREE.

Traditional Realtor: “Damn them! First they stole our data, now they’re pulling the MLS rug out from under us, next they’re going to start selling us leads or doing the transaction themselves. I will never — never — advertise there, and I’ll take every opportunity I can to bad-mouth them.”

Consumer: “Very, very, very cool. I love how I can get quick-and-dirty estimates of my home’s value. I should let my neighbor John know about this new feature — he’s having a hard time selling his home, and his Realtor should definitely advertise the home on Zillow. I mean, it’s free, so why not? And Joe down the street, who’s also selling his home (but on his own without a Realtor) should also know about this.”

Web 2.0 Realtor: “Gotta play this right, but this could be big. I’m already advertising my listings on Craigslist, Google Base, and Trulia; I definitely need to add Zillow to the list and stop wasting my money on enhanced listings on Realtor.com. In neighborhoods I’m trying to break into, I definitely need to start buying some banner ads. If this is where my potential clients are hanging out online, I need to be there too. But…gotta be careful. If the Zestimate for this home is below where I’ve listed it, not sure Zillow is the best place to advertise it. Oh, and here’s another idea: I’ll buy ads in the neighborhoods in which my buyer clients want to move — an easy way of letting the FSBO’ers in that neighborhood know to call me since I may have a client for them.”

2. Added a real estate wiki that is seeded with over 100 articles–and opening it up to the community for improvement & expansion.

Traditional Realtor: “Wiki?”

Consumer: “Nice, very nice. I love Wikipedia, but I can’t always find the really local real estate information I’m looking for. What’s the market been doing in Barron Park lately? How many offers are typically coming in on homes in Palo Alto these days? Hmmm…looks like this 3oceans guy Kevin has some of the answers I’m looking for…maybe I’ll shoot him an email.”

Web 2.0 Realtor: “Not 100% certain how to play this, but hey, I’ve got all kinds of content on my blog that I can re-purpose into some interesting Wiki-type content, and this could get me some publicity — help me get known as the local expert on Eichler homes, or on the Fair Oaks neighborhood. Realbird just started something similar at Realki.com — maybe I’ll split my efforts between the two sites and see which gives me better results.”

3. Make Me Move–now ANYONE can set a “dream” price for their home.

Traditional Realtor: “Yeah, right. Now anybody with a crap Eichler worth $850,000 is gonna put it out there at $1,100,000 and cross their fingers. If it’s my listing, they’ll probably expect me to advertise it in the paper at that price, too, and waste months of my time and thousands of my dollars while they come to their senses.”

Consumer: “It’s a bit gimmicky, but also kind of entertaining. I know my home is only worth $800,000, but you know what? If somebody really wanted to offer me $900,000, I’d sell it in a heartbeat! Can’t hurt — I mean, it takes 2 minutes of my time to do it, right?”

Web 2.0 Realtor: “Gotta watch these numbers like a hawk. If there’s a home with an unreasonably low Zestimate, and a “Make Me Move” price above that, but below what I think market value is…that could be tasty. If there’s a home with a “Make Me Move” price above market value, but not too much so, might be worth contacting that homeowner and explaining my services.”

Now…time to head to the other blogs and see what their reaction has been…

Update: (12:41am PST, Thursday, December 7, 2006) — About an hour ago, Zillow President Lloyd Frink posted the announcement. Zillow’s site itself, however, is still not back on.

Update 2:  (9 minutes later)  — Zillow’s David G, in his inaugural post on Active Rain, addresses one of Web 2.0 Realtor’s above issues.  Apparently if a home is listed for sale on Zillow, the price that will appear is its list price, not its Zestimate.

Tags: , Google Base, , , , ,

[

Tags: Craigslist · Google Base · Lloyd Frink · Real estate · Realtor.com · Trulia · Zillow

Zillow’s holiday surprise

December 6th, 2006 · 8 Comments

Looks like the Zillow team has a little surprise in progress; this is what their home page says right now:

2006-12-06_20-27-07-015.png What could they be up to?  I have a number of ideas, but since I have to run to a sign-off, I’ll have to put them in bullet form instead of elaborating on them.

Zillow has made it clear they have no intention of being a one-trick pony; both Lloyd Frink and Spencer Rascoff have said in public that they’re primarily a media company, and Rascoff alluded in an interview with Robert Scoble that Zillow has more “shows” in the works.  Zillow is not a home price estimation site; that was simply its first hit show.
Here, then, are my quick predictions of what this surprise will be:

1) Community commentary — The ability for real estate agents (and perhaps civilians as well) to comment on neighborhoods, trends, homes, etc.

2) Neighborhood “experts” — For a fee, Realtors will be able to “own” a neighborhood and be the only ones to provide commentary on it.

3) Online billboard ads — While you’re looking at a map, you’ll see ads in the form of online billboards hovering over certain neighborhoods.  Hey — another opportunity to put our mug shots up in public!

4) Price predictions — Realtors, and again perhaps civilians, will be able to put in predictions of what price certain properties will fetch, giving them an opportunity to go head-to-head with the Zestimate and establish credibility as the neighborhood expert.

What do you think is up?

Tags: , , Spencer Rascoff,

[

Tags: Lloyd Frink · Real estate · Spencer Rascoff · Zillow

The real reason Realtor.com is critical of Zillow…

November 8th, 2006 · 3 Comments

With New Orleans already alive with NardiGras, I’m expecting some more choice outtakes of Realtor.com’s Alan Dalton criticizing Zillow to come out soon.

Why is he so against Zillow? Is it, in fact, out of some sort of principled commitment to the way online real estate should be conducted?

I think it has more to do with what Lloyd Frink of Zillow says in this clip from a recent CAR convention.

Quite simply, Realtor.com is running scared. In 6 short months, Zillow has made rapid gains and is now in contention to become the leading real estate destination on the Web, along with all the ad revenue that implies.

Tags: , , , , , , , , ,

[

Tags: Alan Dalton · California Association of Realtors · Lloyd Frink · National Association of Realtors · Real estate · Realtor.com · Zillow


October 31st, 2006 · 2 Comments

You know why many Realtors feel so threatened by Zillow? Because at first glance, it looks like yet another attempt to cut us out of the business. In fact, second and third glances could lead you to the same conclusion:

  • Second glance: Zillow’s founders cut their teeth at Expedia.com, one of several sites that let to the demise of the travel agent business.
  • Third glance: Zillow initially considered pursuing that business model…until they figured out, and apparently pretty quickly, that the real estate business ain’t the travel agent business, and they could make far more money by becoming an advertising-driven media company instead.

Listen to Lloyd Frink, Zillow President, at a recent convention of the California Association of Realtors. [Note: For some reason during much of Lloyd's presentation, the camera showed a still of him instead of a live shot.]

Money quote for paranoid Realtors:

At Zillow, we quickly realized that you can’t replace Realtors with people over the phone…a much better business model for us is to NOT be part of the transaction, but to build something that is very, very compelling to consumers, and if we get enough of them to come to our web site, then we can attract people like you to come and advertise.

Tags: , , ,

[

Tags: California Association of Realtors · Lloyd Frink · Real estate · Zillow

Zillow maintains composure

October 31st, 2006 · No Comments

After Alan Dalton’s Hugo-Chavez-esque attack, Zillow’s Lloyd Frink responded in a surprisingly low-key fashion, choosing substance over style. I’m not sure I would have been able to resist shooting back. No, wait a minute — I would have shot back, no question.

Unsolicited advice to Lloyd:

Never use the words “spreadsheet” and “valuation” with a Realtor audience. Coming from a consulting background, I made the same mistake when I got into the business. Instead of “valuation”, say “estimate.” Instead of “spreadsheet” — well, just don’t use that word. Period. “Spreadsheet” connotes too mathematical an approach to estimating the value of something as emotionally charged as a home. Never mind that a common quick-and-dirty approach to a first cut of home valuation used by Realtors is a simple price-per-sq-ft analysis — a great task for a spreadsheet if there ever was one.

Tags: , , , , ,

[

Tags: Alan Dalton · California Association of Realtors · Lloyd Frink · Real estate · Realtor.com · Zillow

We’ve seen the fireworks; now let’s see the substance…

October 30th, 2006 · No Comments

Lest I give the impression that Alan Dalton is all bombast and no substance, consider the following clips, also from his recent address to the home crowd at the California Association of Realtors.

Dalton gets the Internet in a way that many senior real estate executives don’t. He understands that the transparency promoted by the Internet is a good thing.

The problem is, his hands are tied. Without the suffocating restrictions on the display of online data recommended by the National Association of Realtors, and implemented by many MLS’s, I have no doubt that Realtor.com would have a much richer treasure trove of data with which to tempt the public — though it would probably still have a less-than-mediocre interface. Dalton is a capable executive, of that I have no doubt. It’s difficult for him to compete against the sites that aren’t beholden to NAR — like Zillow — so he cloaks his frustration by calling on red herring higher principles.

Classic. He challenges Zillow to do something, and then promises to implement it as well on Realtor.com. That “something”? Displaying “what homes have sold for” instead of “what homes are worth.”

The problem? Many MLS’s, including our own in Silicon Valley, REIL, prohibit the display of sold listings. Realtor.com has had access to sold data for eons but, bound by NAR’s paranoid “keep the data under lock and key” restrictions, it hasn’t been able to…until recently…and then only by disingenuous subterfuge.

Tags: , , , , , ,

[

Tags: Alan Dalton · California Association of Realtors · Lloyd Frink · National Association of Realtors · Real estate · Realtor.com · Zillow

Quick! Somebody get this guy some Ritalin!

October 30th, 2006 · 6 Comments

I finally had a chance to view the video of the Realtor.com (Alan Dalton) vs. Zillow (Lloyd Frink) confrontation a few weeks ago, and though Dalton is still a few credits short of graduating from the Hugo Chavez School of Rhetoric, it was clear he hadn’t taken his Ritalin that day.

You can see the whole thing for yourself here (Quicktime version) or here (Windows Media version) [CAR membership possibly required], or read my non-chronological review — starting in this post and continuing for several days — which is equal parts commentary, unsolicited advice for Alan Dalton and Lloyd Frink, and entertainment.

After a fairly lengthy talk by Joel Singer, Executive Vice President of the California Association of Realtors (CAR), Lloyd Frink gave a pretty low-key introduction to Zillow.

Then came Dalton’s turn at the podium, and he has, shall we say, a different personality. He started by pandering to his California audience…

…and then came out swinging at Zillow in general and Lloyd Frink in particular. [Several clips spliced together]

Tags: , , , , , , ,

[

Tags: Alan Dalton · California Association of Realtors · Joel Singer · Lloyd Frink · Real estate · Realtor.com · Zillow

Realtor.com vs. Zillow dustup video finally released

October 27th, 2006 · 1 Comment

Thanks to RIS Media for pointing this out

A video of the fabled dustup between Zillow’s Lloyd Frink and Realtor.com’s Alan Dalton is finally online at the web site of the California Association of Realtors.

I’m at a cafe with really slow Internet access right now, so I’m having a hard time viewing it. Is somebody going to upload this to Youtube?

Update:  It’s a 100MB+ file, and presumably copyrighted, so I’ll take a pass on uploading it to you Tube.  Why CAR hasn’t done so is completely beyond me.

Tags: , , , , , ,

[

Tags: Alan Dalton · California Association of Realtors · Lloyd Frink · Real estate · Realtor.com · Technology · Zillow