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A Perfect Example Of Co-opetition: The Real Estate Industry … Barry Nalebuff Would Be Proud

May 6th, 2008 · 3 Comments

Maybe it’s the frustrated business school professor in me, or the memories of sitting in Professor Barry Nalebuff’s classes during business school, but what has fascinated me the most about the ongoing debate about Trulia’s no-follow outbound listings links (started here by Galen Ward, then continued here, here, here, and here) is not the arcana of the no-follow tag, not the dissection of SEO intricacies, and not really even the question of what is or is not appropriate to do with listings online.

No, what really fascinates me about this debate is how it accentuates co-opetition in the real estate industry.  Co-opetition is simply the notion that companies compete and co-operate simultaneously.  Arch-rivals Northrup Grumman and Boeing go mano-a-mano to get a lucrative government contract … and the winner often subcontracts part of the project to its rival.  Microsoft and Oracle have competing database platforms but often sell eachother’s products.

In our industry, co-opetition reaches nearly incestuous levels.  For instance:

  • Brokers John and Betty compete for the listing at 123 Main Street.  Betty wins and puts the property on the MLS.  The very next week John brings potential buyer clients to the property.  Sure, he would rather have won the listing, but that’s in the past.  Now he’s working with Betty to consummate the transaction.  No hard feelings.
  • Realtor Bob hangs his license with ABC Realty.  He puts an ABC Realty sign on the front lawn of all his listings, and the ABC Realty logo is prominent in all his media ads.  He’s co-operating with his real estate brokerage to promote their brand, and he in turn benefits from that brand awareness.  Co-operation.  A phone call from a prospective buyer of one of Bob’s listings, however, may well go through to the agent on “floor duty.”  That agent turns this phone call into a client, who goes on to buy a different listing, not Bob’s.  That’s competition — Bob would have loved to get that phone call and turn it into another client, but his competitor — the other agent, and to some extent his own broker — snagged that client.  Co-operation plus competition = co-opetition.
  • A thousand local brokers — each fierce competitors — co-operate to run a local MLS.  They put their competing listings up on the MLS, and they compete to bring buyers to each of the listings.  At the close of each transaction, we again have co-opetition — competing parties co-operating for the sake of the deal.
  • Broker Tom snags a listing and puts it on the MLS.  Via the wonders of IDX, that listing spreads its tentacles onto a thousand other sites, including that of arch-rival Broker Sarah.  As long as Broker Sarah indicates that Tom is the broker of record, it’s all good.  Her site is much better than Tom’s, so she gets more traffic and hence more clients online.  The fodder that draws in those visitors?  Listings … not only her own, but also Tom’s.
  • Broker Rachel gets the listing at 789 Elm Street and puts it on the MLS.  She also puts it on Trulia, which, like the MLS itself, exposes the listing to a much broader audience than she could reach on her own.  She benefits from the increased exposure, and Trulia gets more inventory to display.  It’s a win-win — co-operation at its finest.  The next day, a prospective homebuyer passes 789 Elm Street and Googles the address to find out more.  Who’s on the top page?  Trulia and Broker Rachel’s listing site.  Now they’re competing — for web traffic.

There really is nothing new under the sun.   This business has always been a co-opetitive one, and we’ve always simultaneously co-operated with and competed against not only every other broker, but many of the third-party advertisers, aggregators, and media companies.

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Tags: * Export · Barry Nalebuff · Industry · MLS · Real estate · Trulia

What Eliot Spitzer Can Teach You About Listing Photos

March 17th, 2008 · 6 Comments

Unlike Hollywood, sex scandal is not a career launcher for politicians like Eliot Spitzer, now former New York Governor and someone who had single-handedly tanked his own career.

First of all, he is no Paris Hilton. People don’t want to link him with a sex scandal. Second of all, there is a drastic difference between his political image & persona comparing to his exposed image, unlike Paris Hilton who has at least been very consistent in her image as a party girl. So it was not a huge shock that Paris made a sex tape somewhere.
Eliot Spitzer, right, apologised to his family

Eliot Spitzer, right, apologised to his family for “private failings” [AFP]

What does Spitzer have to do with Real Estate & Listing Photos?

Like someone in the limelight, your listing needs to present a consistent image front and back, inside and out. In a competitive market, your buyers are critical and they will be picking your listing apart. Also with the ease of internet shopping, it is very easy to overlook your listing while someone else’s looks much nicer and easier on the eye.

I see many MLS photos that present an inconsistent story that does not tell the story of the house.

Let’s look at some real MLS photos I recently pulled off the web:

It’s too dark to see anything. How big is the room, what is the purpose of this room, can you see? The room also has the “Titanic Effect” where everything is tilted to one side.
What’s the selling point of this kitchen? More importantly, where is the counter? Does this image say “I am a good seller who takes care of my house?”
Ah I get it, your listing has a floor.

What an interesting splash pattern on the floor, was there a dead body?

Am I looking at your floral arrangements or at your house?

Are you trying to sell me this house or this giant cabinet? I see I can fit, oh just about 1/3 of the bed into the room.

Are you advertising for your listings or its neighborhood vendors? Shockingly I see this very often in MLS photos where people show signs of local shops, etc. where there are less than 10 pictures of the home itself. In real estate photos, quantity does NOT equal to quality. As buyers, we want to see quality photos that represent the home well.
Are we selling the seller’s interesting collections or the house?

Now you see why photos are important? The MLS photos is a tool for you to tell the story of the house that you are selling. Leverage it well will bring you success in driving traffic to the open house and showing. We all know a photo is worth a 1,000 words, so let your pictures do the talking.

As the listing agent, you have a tremendous power and control over how you can present and market your listing in the best light. After all, presenting a listing is like presenting your single friend to the dating market — your single friend is gotta look good out there! So let’s make a pack together: us stagers will provide the nice staged home effects ready for show and you the agents will present wonderful and well-shot photographs on the MLS!

Happy selling,

Cindy

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Tags: Home selling

Stale Tuna And Resetting The “Days On Market” — Chicanery And A Public Health Risk, Or Just Plain Old Good Salesmanship?

January 31st, 2008 · 10 Comments

Alex over at theFrontSteps has a lively debate going on about the ethics of “DOM trickery.” (For non-industry folks, “DOM” means “Days on Market” and it refers to how long a property has been on the MLS.) Is it duplicitous or just good marketing to reset the DOM number — often just by classifying the listing as “withdrawn” and then re-entering it minutes later — to make a property look fresher than it is?

One of the earliest articles in the 3 oceans blog was on precisely that topic.

Resetting the DOM on a listing is akin to changing the sell by date on a can of tunaI look at resetting the DOM figure as akin to a grocer scratching out the sell-by date on a can of tuna and replacing it with a later date: it smells funny.

Our local MLS has a very clear policy on DOM resets: if an agent takes the property off the market, it has to stay off the market for a full month and the seller needs to sign a new listing contract. Then, and only then, will the clock reset.

Seems like a reasonable policy to me. Back to the tuna example — if the grocer were to take the tuna to a lab, open up the can, test it for all the bad stuff, and, if it cleared muster, re-package it with a new sell-by date — fine!

As the commenters in Alex’s article note, a with-it buyer’s agent will know what the real DOM number is. “8 days on market for 123 Main Street? You’ve got to be kidding me! Joe Smith had that overpriced dog on the market for nearly 9 months. Now he’s changed the carpeting, increased the price, redone the brochures…and voila — he calls it a new listing!”

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Tags: Consumer · Industry

Do We Really Need Yet Another Real Estate Search Site?

January 28th, 2008 · 15 Comments

Dothomes LogoInsomniac Dustin Luther couldn’t quite stay up late enough last night to witness the launch of the US version of Dothomes.com. But here it is, yet another real estate search site: dothomes.com, already live in South Africa and the UK.

I commented yesterday that recent property search entrant Roost.com’s business model is clever, unique, and possibly illegal non-MLS-complaint.  [1/30/08 update:  I’ve been thinking about my choice of words, and “illegal” is definitely not the word I should have used.  “Illegal” is mugging somebody, or stealing something.  What Roost is doing is 100% legal and above-board.  It may — and I emphasize may — be viewed by some as being non-MLS-compliant.]

A first glance at Dothomes suggests a similar, though unfortunately more damning verdict: extremely clever, very unique, and definitely illegal non-MLS complaint.  [1/30/08 update:  What Dothomes is doing is absolutely 100% legal, but again may be interpreted by some as being non-MLS compliant.]

The clever and unique part is easy to see: they’ve managed to pull off what Google Base real estate could have been, and may well still become: a Google-ish type search experience — with a whimsical “I’m feeling wealthy” instead of “I’m feeling lucky” button — where instead of choosing your criteria from input boxes or sliders, you simply type in what you’re looking for.

Right-oh then, let’s give it a try, shall we?

dothomes-search-2.png

And, as the Brits would say, “Bob’s your uncle!”

dothomes-search-3.png

A quick glance at the 99 results confirmed that they all had 3 bedrooms and were under $850K. Pretty slick! (As a sidenote, many of the results were in South San Francisco, an entirely different city. But I’ll cut them some slack on what is, after all, a pretty new product.)

So that’s the clever and unique part. Here’s the (tragically) illegal non-compliant part: per their own FAQ/blog, they get their data from either a feed that a broker sets up or by crawling the broker’s site.

From a feed the broker sets up: So far, so good…as long as it’s only that broker’s listings.

By crawling that broker’s site: At most MLS’s this is strictly verboten.

Most of the first few pages contained only listings from Realogy brands Coldwell Banker and Century 21. Since Realogy has been fairly open of late with distributing their inventory online — e.g. with Trulia — it is possible that Dothomes has an agreement with Realogy, though I have not heard such news.

A few pages later I see a few listings from my ex-Broker Alain Pinel Realtors. Now the warning bells sound. Unless things have changed dramatically since I left a few months ago, Alain Pinel would never ever distribute its listings to a non-IDX site — Trulia being the exception (probably because Sami is such a sweet talker!)

My prediction: tragically, Dothomes will be forced fairly quickly to adopt an alternate and legal listings acquisition strategy: either MLS-by-MLS, or broker-by-broker.

Further commentary:

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Tags: * Export · Business models · Industry · MLS

Roost Levels The Playing Field Between Listing And Buy-side Brokers, But (Speaking From Personal Experience!) How Long Before An MLS Strangles It?

January 27th, 2008 · 11 Comments

Trulia! Zillow! … and now Roost! Where do they come up with these names?

roost-logo.gifRoost, a new startup in the increasingly crowded real estate search space, launched last week to a cacophony of commentary from the re.net. Joel Burslem covered its feature set, its performance, and noted that Roost has the complete MLS inventory because it gets its listings from MLS’s, albeit indirectly. Greg Swann fawned over its business model and complete inventory.

If I understand Roost’s business model correctly, it intends to make money in a way that’s clever, unique, and possibly illegal non-MLS-compliant.  [1/30/08 update:  I've been thinking about my choice of words, and "illegal" is definitely not the word I should have used.  "Illegal" is mugging somebody, or stealing something.  What Roost is doing is 100% legal and above-board.  It may -- and I emphasize may -- be viewed by some as being non-MLS-compliant.]

The unique aspect of its business plan: it offers brokerages the opportunity to sponsor search results and get the resulting click-throughs to their own site. A search in Sacramento, for instance, reveals that the current sponsor is Sacramento heavyweight Lyon Real Estate.

roost1.png

The first three listings I see are from VM Group, Gold Financial Services, and Prudential CA Realty, all clearly identified in compliance with Sacramento’s Metrolist MLS services.

roost3.png

Here’s the tricky bit…if you want more information, you click on “View Details on Featured Broker’s Site.” When you do that for, say, the Prudential listing, you get information about the Prudential listing on the Lyon Real Estate site:

roost4.png

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This sleight-of-hand is accomplished through a too-clever-by-half url manipulation, much to subtle to be noticed by the average consumer, but apparently kosher enough to pass muster from the Sacramento MLS — at least for now. What if Prudential gets upset that the click-through on one of their listings on a public MLS-ish site goes through to one of its competitors?

Here’s how (I believe) Roost and Lyon defend themselves: Look at the url. When you search in Sacramento, you’re not actually using the Roost site at all; you’re actually using the Lyon site (GoLyon.com). For as long as Lyon is the sponsoring broker, the search is being conducted at golyon.roost.com — a (sub)domain under the control of Lyon Real Estate — and hence in compliance with those silly old arcane MLS rules.

Watch what happens when you go back to the site. In my case, I ran another search, and this one was sponsored by Intero. Same results, same look and feel, but the search is now running at InteroRealEstateIDX.com…and sure enough, the click-through goes to Intero’s own site.

Very, very clever. I really like this part of their business model, for reasons I’ve explained before: The current real estate business model heavily favors the listing side of the equation, and I’ve been clamoring to the likes of Zillow and Trulia to think about buy-side advertising offerings. If I’m a small brokerage in Sacramento, and I currently only have, say, 5 listings, I could decide to spend, say, $5000 sponsoring X number of real estate searches in that market. The number one bait that still seems to draw eyeballs in real estate is listings, listings, listings, and if I don’t have many of my own, why not leverage those of my competitors?

Now for the questions of MLS legality compliance …without going into all the details, I tried something like this trick about 2 years ago. It involved subtle manipulation of a url so that searches on a heavily-trafficked site were done — technically — using a url that was under my control. A good lawyer could easily have argued that this was in strict compliance with all the MLS rules. No dice. Within hours I got slapped down — not just by the MLS, but by my own broker!

I certainly wish Roost all the best, but I’m afraid they’d better put a sign on their front door that says, “Couriers please deliver cease and desist letters here.” Any business model that requires MLS compliance involves by definition an order of magnitude more headache. Why do you think Trulia and Zillow decided to get their listing feeds straight from the brokers?

Further commentary:

And still more commentary:

* At the last Inman, Brian and I finally answered that great conundrum: Did his ancestors add on “o” or did mine drop an “o” at Ellis Island? The answer: neither. His ancestors are Italian, and mine Dutch. So no, we’re not related — except of course, through Lucy.

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Tags: * Export · Consumer · MLS · Roost · Trulia · Zillow

Lies, Damn Lies, And Statistics: What Mark Twain and Benjamin Disraeli Would Say About Menlo Park’s Median Price Numbers

January 16th, 2008 · 7 Comments

Mark Twain, it seems, merely popularized, but did not actually coin the phrase Lies, Damn Lies, and Statistics.  That honor belongs to none other than the British statesman Benjamin Disraeli, the first Earl of Beaconsfield, KG, PC, FRS.  (With all these acronyms after his name, one wonders if he may have been the first Realtor!)

I’ve ranted not infrequently about how real estate is local, local, local.  What nationwide, statewide, or countywide prices are doing may or may not reflect your city.  The overall trends in your city may not be a good indicator of your particular neighborhood.

And that’s where Benjamin Disraeli’s famous quote come in.  You can make numbers tell whatever story your bias prefers.

The story I’m about to tell is hyperlocal if ever there was one.  If you’re not in this immediate area, the lesson for you is not in these specific numbers, but in the notion that you have to understand your local market.

Here, for instance, is a pretty bad story to tell, and it appears that the story, as told by the great numerical storytellers of Altos Research, is quite simple:  home prices in Menlo Park are in freefall, with the median having dropped from an all-time high of $1.65M in mid-2005 to a current $875K-ish.  2007 prices have — apparently — dropped by 30%:

Median Home Prices in Menlo Park CA

That story just doesn’t make sense to me, however.  The marquee towns up and down the Peninsula — those with good schools and their associated high prices — have actually done quite well over the last year.  Why would Menlo Park be any different?

Palo Alto:  Median prices mostly up last year, with a retreat in the latter part of the year, and signs of another season upsurge upon us…

Median Home Prices in Palo Alto CA 

Los Altos:  An incredible run-up in prices, again with a dip last year, and again with a sign of a revival this year…

Los Altos CA Median Home Prices 

Los Gatos:  A rise last year, though not as much as the other towns, and a pullback in prices in the latter part of the year…

Los Gatos CA Median Home Prices

You get the picture.  Why then is Menlo Park so different?  Have prices really dropped by 30%?

The answer?  Most emphatically not!

In fact, take a look at these numbers, pulled from our local MLS.  Of the twelve Menlo Park neighborhoods, only two of them had median prices go down in 2007 — and then only by 2-3%.  Other neighborhoods saw medians rise from 5.6% (Flood Park) to 35.6% (Alpine Road Area.)  The following graph shows the percentage change in median prices from 2006 to 2007.

Median Price Trends for Menlo Park neighborhoods

How can both of the following two facts be true?

  • Median home prices in Menlo Park have dropped by 30%
  • Median home prices in 10 of 12 Menlo Park neighborhoods have risen, while median home prices in the remaining 2 neighborhoods have fallen, but only modestly.

The answer, Mssrs. Disraeli and Twain, lies in a different statistic:  the amount of inventory on the market.  Take a look at the story told in this graph, which shows the number of homes sold per year by neighborhood:

Number of sales of homes by neighborhood in Menlo Park CA 

The sheer amount of data in this graph, and its size, makes it hard to read.  The key points:  the number of home sales in Menlo Park in 2007 was just over 400 — significantly lower than the wild years of 1999, 2004, and 2005.  The number of homes in the “East of US 101″ neighborhood — the least expensive one – however, increased dramatically.  The average number of annual sales in that neighborhood is 36, but last year there were fully 69 — just about double — the number of sales.  In the higher-priced neighborhoods, on the other hand, there were fewer sales than normal.

Another graph…this one showing how many sales typically happen in a year in each neighborhood, followed by how many sales happened in 2007:

 Menlo Park home sales by neighborhood

The lowest-priced neighborhood — East of 101 — had a dramatic increase in the number of transactions; almost every other neighborhood — in particular the expensive ones had fewer sales.

So this, ladies gentlemen is the key story that Mssrs. Disraeli and Twain — not to mention my stats professors — would want us to understand:

  • The median price of homes in Menlo Park has indeed dropped in 2007.
  • The price of most individual homes in Menlo Park, however, has actually increased in 2007:  that is, most homes were worth more at the end of 2007 than they were at the end of 2006.
  • The anomoly between the above two points is explained simply by the mix of the homes that were sold:  2007 saw a much higher than normal proportion of less expensive homes.

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Tags: Consumer · Industry · Menlo Park · Palo Alto

Today’s sign that the apocalypse is nigh…

November 8th, 2006 · 1 Comment

apocalypse3a1.jpgI doubt I caused this, but I’m shocked nonetheless.REIL, our local MLS, has just announced a rule change to its long-standing prohibition against displaying “sold” listings on a web site:

Over the past year, REIL’s Board of Directors, its Data Use Policy Committee, and REIL staff have researched data policy issues. From this research and following in the groundbreaking footsteps of Northwest MLS’ sold-data policies, RE InfoLink’s Board of Directors has adopted a new data use policy that addresses these trends. The policy:

  • Allows more types of information on IDX websites such as:
  • Search and display of SOLD listings
  • Automated valuations
  • Statistical analyses (only allowed when data is obtained through a datafeed and custom analyzed – does not include reprinting statistics published on REIL.com)

What does this mean, and why should you care?

If you’re a Realtor, there’s bad news and good news. First, the bad: prospective clients will no longer need to call you to get information about properties that have recently sold. The good news: prospective clients weren’t actually calling you anyways, since they could get this information from various online sources (e.g. Zillow et. al) Now you finally get to compete with Zillow as an information source for sold properties. (Hint: If this rule had been changed, say, 3 years ago, Zillow probably wouldn’t exist today.)
If you’re a member of the public, it means the old contemptuous way our industry used to treat you — “we’re the guardians of the information, and you must come through us to get it” — is continuing to change. As an industry, we’re finally acknowledging that our value-add isn’t and shouldn’t be access to information.

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Tags: MLS · REIL · Real estate · Technology

Part 2: The nice thing about making the rules is … you get to break them!

October 25th, 2006 · 2 Comments

My previous post about Realtor.com displaying sold listings led to a stimulating converation with a reader named “Endtable20″, who challenged me on my assertion that Realtor.com is going against our local MLS rules in doing so. I’ll be the first to admit I could be wrong, but here’s more evidence. You decide!

The “Internet Display Guidelines” document starts as follows:

I know from personal experience that “Guidelines” is not the right word. I tried to bend the rules myself once and got roundly called to task within a few hours. :(

Further in the document we get this: [yellow shading mine]

“Authorized User” refers to someone with whom the MLS has an agreement, be it a broker or a 3rd party like Realtor.com. “Electronic Clients” are people who view this information online.

It’s pretty clear that displaying “sold listings” is prohibited.

The final shaded text says that the Authorized User may “augment” the MLS data with “additional data not otherwise prohibited from display so long as the source of such data is clearly identified.”

Realtor.com follows the rule about identifying the source of the other data…

…but that’s a moot point because the data being displayed (sold listings) is clearly prohibited.

Therre are only two ways I can see that would make this ok:

  1. The agreement that REIL has with Realtor.com is a different agreement than REIL has with every other “Authorized User.”
  2. Creative legal reasoning that says the data being displayed is not “sold listings” but “sold homes.”

By a similar argument, I could get around the prohibition on displaying “sellers’ or occupants’ names, phone numbers or email addresses” by

  1. identifying the non-MLS source from which I got that data and
  2. referring to “sellers’ or occupants’ names, phone numbers or email addresses” as “owners’ or renters’ personal information“? Something like this, perhaps:

Seems pretty clear to me. Am I missing something?

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Tags: MLS · REIL · Real estate · Realtor.com · Technology

The nice thing about making the rules is … you get to interpret them the way you want!

October 22nd, 2006 · 10 Comments

Late Friday afternoon, I heard back from our local MLS about realtor.com’s displaying of sold data on their web site. Their interpretation is that Realtor.com is not breaking any rules after all because…their sold data comes from a 3rd party aggregator, not the MLS.

So let’s follow a home’s journey on realtor.com from when it’s first listed to after it’s sold. The following simple diagram will help:

2006-10-20_15-45-48-359.png

  1. The listing agent uploads the property into the local MLS, which in turn feeds the property into Realtor.com.
  2. The property sells. Poof! The listing disappears (temporarily) from Realtor.com because it’s not allowed to display sold listings if the source is the MLS.
  3. When the property closes escrow, the escrow officer submits the paperwork to the county.
  4. A county employee enters the data into its system.
  5. Onboard, a real estate services provider, sucks the data in from the county records.
  6. Realtor.com sucks the data in from Onboard. Voila! The property appears again.

Hmm…let’s look at the rules again. Our local MLS has the following regulation [sic]:

[I assume the first line is supposed to say, "No one may display the following...]
2006-10-20_13-53-51-453.png
So if the data on a sold listing comes from some place other than the MLS, then it’s no longer considered a sold listing? Seems kind of shady to me…

Again, don’t get me wrong. I think the prohibition on displaying sold data is a silly anachronism, and I certainly don’t begrudge Realtor.com a little bit of enterpreneurialism. I just think it should be a level playing field for everyone. Based on my past experience, if I were to bend the rules like that, I suspect I’d be called to task pretty quickly.

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Tags: MLS · Real estate · Real estate data · Realtor.com

Arms dealers, mercenaries, and keys to the castle

September 16th, 2006 · No Comments

It’s already a minefield of metaphors run amok, but the ever-insightful Rain City Guide blog has a brilliant discussion going on about MLS systems, their regulations, data feeds, etc. Why should you care?If you’re an agent, you need to know what’s happening and what’s not happening with your listing data once you enter it into the MLS.If you’re not an agent, you need to know why it’s so difficult for you to find out basic information about properties, like how long they’ve been on the market.

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Tags: MLS · Real estate · Real estate data · Technology