Archive for January, 2008
January 31, 2008
A gorgeous new version of Redfin.com just went online. The premise of the release is Freakish Depth: to update our website with up-to-the-minute data on every new listing and to provide more information about each listing and its neighborhood than any other website. We still have a long ways to go.
But look how far we’ve come! Some of the big changes aren’t easy to see. The first order of business in this release was to increase the frequency with which we draw data from ten Multiple Listing Services (MLSs) in San Francisco, Los Angeles, Orange County and San Diego (we have always had high-frequency updates in markets like Washington DC and Seattle), so that we now check as often as every fifteen minutes for new listings. It took us months to sort through all the feeds.
Just as importantly, we increased the amount of information we display about each listing. Beyond all the MLS-provided details and photos of the property, the county tax records and the Zestimate, we now add:
–> a set of similar listings and recently sold properties,
–> a complete history of any price changes since the listing became active,
–> a second market value estimate from eppraisal.com,
–> local Redfin blog and message board conversations,
–> a detailed overhead image of the lot outline, and
–> photographic bird’s-eye views of the property.
And our favorite feature may be the neighborhood outlines that now set the boundaries of map-based searches. This allows you to analyze the median price, square footage and days on market for your neighborhood, and now too you can download that data to Excel, where you can really go hogwild with formulas and charts. This is an idea we took from one of our user groups.
There are a bunch of little things too, like showing condo icons, and favorites on the map, and unit numbers, and actually making address search work. And because we finished swapping out MySQL in favor of Postgres, which features geospatial indexing, the whole site is screaming fast. What all this means for the true real estate freak is one of the deepest, fastest, most addictive highs on the Internet.
AND DID I MENTION THAT, AT LONG LAST, WE SUPPORT THE SAFARI BROWSER! Or, as a matter of interest, that Safari 3.0 is by a wide margin the browser that renders our site most quickly?
Hats off to Shahaf, Jamie, Arthur, Sasha, Matt, Jane, Dan, Navtej, Michael, Leo, Jeff, Llewellyn, Mose, Bryan, Mike and the rest of the Redfin team for all their awesome work, and to all the customers who helped us too! And even though we complain a lot, we’re grateful too to the Microsoft Virtual Earth team that worked with us on Safari support.
If you have any thoughts on the new site, or suggestions for what we should do next, please just leave a comment!
See the TechCrunch post on Redfin’s new release.
January 29, 2008
I had an egg sandwich this weekend with an oncologist who asked for a meeting so he could roll out a dozen ways to revolutionize the real estate industry. Just as the conversation was drifting toward other topics, including my love for beagles and their role in his medical experiments, he made one final proposal: web-controlled lockboxes for self-service home tours.
A traditional lockbox is how real estate agents access properties for sale, entering a code issued by the Multiple Listing Service. This lockbox is the main problem with an online business model, as it is expensive for us to hire field agents who can open the lockbox just to show the property, and we would rather have those folks focusing on what Redfin agents do best, guiding customers through decisions, negotiations, contingencies, and escrow.
The oncologist’s idea was to provide an online forum where a prospective buyer could present credentials (bank statements, credit card number, criminal record, photo, property access history) to the seller. The seller could then decide to schedule a time when the buyer could access the property, whereupon the website would issue a temporary code for opening the web-controlled lockbox. Armed with the code at the designated time, the buyer could access the property on her own.
This lockbox would be available to any seller, in addition to the traditional agent lockbox; homes with the self-service lockbox would be identified with a special marker on our map. Of course many homes would not have this self-service lockbox, and many buyers will always prefer to meet a friendly, knowledgeable Redfin field agent to introduce them to Redfin and guide them through the first steps of buying a home.
And yet this idea is intriguing. The oncologist presented his idea with fiendish intensity, anticipating objections, proposing manufacturing schemes, suggesting variations (fingerprint recognition, hidden surveillance cameras). His wife, a former real estate agent, nodded carefully.
“But someone could hide in the house,” I said. “Someone could get hurt.”
“I’m an oncologist,” he said, smiling. “I know someone is being hurt right now.”
The cafe had become quiet. Outside it had just begun to snow. The oncologist stood up.
“No one will be hurt,” he said. We talked about how other sites facilitated transactions and even meetings between total strangers: match.com, eBay, craigslist. He reminded me that the Internet depended on trust, and that the seller could decide for himself who could see the property. For the first time in my life, I felt cautious, and somehow cowed.
How do you feel about this idea? I promised the oncologist I would ask via this blog, and he promised to monitor the comments. The title of this post was of course his idea, too…
Picture courtesy of chotda. Bonus link from a Friend of Redfin …
January 24, 2008
One of the best real estate blog posts we have seen in a long time cropped up on the Seattle Bubble Blog as the real estate consumer’s wish list. In it Tim Kane argues for being treated like a partner rather than a lead, for being able to choose the services you pay for, for getting accurate information instantly, for wanting to work with an experienced agent who can collaborate with all the parties in a transaction.
Over and over again, Tim emphasizes the importance of trust, tracing that issue back to a transparent compensation model for the agent and the mortgage broker. Many of the ideas are consistent with the real estate consumer’s bill of rights, but with a personal voice that is more eloquent and persuasive than our own. Now the article is making the rounds among Redfin’s agents and engineers. Way to go Tim!
We also wanted to let all the Redfin fanatics know about a fun Facebook group, Addicted to Redfin, which was created by one of our loyal fans, and has since been swamped by enthusiastic employees too. Thank you Susie Naficy and Negar Partovi for getting the party started!
Bonus Link I, from the Washington Post via a Friend of Redfin, which describes Sylvester Stallone’s press conference for Rambo IV: “The chairs are filled with Rambo reporters, some wearing Rambo bandannas, Rambo T-shirts, Rambo fatigues. It will not be a tough crowd…” There is also a Rambo slideshow.
Bonus Link II, from the Wall Street Journal, which provides a comprehensive, city-by-city update on the real estate slump, with Redfin quoted on the Seattle market.
January 24, 2008
I almost left technology because I worried I would run out of ideas, which is really to say that I would stop lucking into situations where a great idea presented itself. So it seemed as if some pseudo-innocent, deeply cunning force had hit upon my deepest fears when the University of Washington invited me to speak at a business plan competition about where ideas come from. To get ready, I studied the blogs of the Great Paul Graham and the Great Fred Wilson.
But all I could really think of was my failures, not my successes, and the miserable, hapless feeling my friends and I all had staring at each other in my apartment while we tried to think of The Next Big Thing. After great effort, a few practical suggestions came to mind, too.
If you’d like to hear them, just swing by The HUB, room 200 ABC on the UW campus, from 6:oo - 7:30 tonight. It’s the keynote kickoff for a week of speeches about how to start and run early-stage companies, and I’m honored to be able to present.
The photo is from Flickr, courtesy of Mark Boucher.
January 23, 2008
There used to be a tagline on Technorati that went, “55 million blogs, some of them have to be good.” We were somewhat comforted by that statement as we began to expand Sweet Digs, our local real estate blog, from Seattle to the Bay Area to Los Angeles, Orange County and San Diego. In only a year and a half, Sweet Digs had produced over 4,500 posts covering the West Coast. Some of them had to be good – and they were (so our readers tell us). Now we’re bringing Sweet Digs clear across the country to see if some of that New England win streak rubs off on us.
So we’ve hired a motley crew of real estate addicts to start covering Boston and Washington, D.C. neighborhoods. They are IT professionals, college professors, and broadcast journalists who moonlight as Redfin bloggers so they can write about whether prices have gotten out of hand or not.
One blogger is certain that when it comes to neighborhoods, up-and-coming is preferable to old-money-stagnant. I mean, who would want to live next to John Kerry or Jack Welch?
Another blogger beckons, no, dares you to abandon D.C.’s city life for the suburbs of Maryland.
It’s a good start and we promise it will get better. Get Sweet Digs delivered to your inbox by subscribing to the newsletter. If you have any feedback for us or tips on properties that you’d like our bloggers to cover send a message to tips(at)redfin(dot)com. We can even promote your open house on our blog, whether you’re a Redfin customer or not.
January 22, 2008
What do you make of this: The New York Times reports today that a San Diego couple, the Ummels, is suing their real estate agent for allegedly failing to protect them from overpaying for a $1.2 million Carlsbad home in August 2005.
The lead plaintiff is a 60-year-old university fundraiser who describes herself as “114 pounds of absolute perseverance.” She spent the past year picketing the agent’s office. With shoot-from-the-hip media-savvy, her former agent says “the lady’s a nut job.”
And of course, the suit is just the kind that drives conservatives nuts, too. Why can’t people take responsibility for their decisions?
But wait. The only problem with blaming the buyers for overpaying is that the rationale for traditional buyer agents’ fees has been to protect buyers from overpaying. As the Times observes, the Ummels’ lawsuit is new in part because the buyer agent is fairly new, too — in the last downturn, agents represented only sellers and so buyers had only themselves to blame.
This time around, no one expects a buyer agent to have a crystal ball. The suit isn’t charging that Ms. Ummel’s agent should have foreseen a future downturn, only that he failed to guide his clients on current market conditions. Two nearly identical houses in the same, nearly new development sold at almost the exact same time for $105,000 and $175,000 less.
And even then, no one expects a real estate agent to be an appraiser either: the plaintiffs’ beef is that the agent withheld an independent appraisal they had requested, which would have notified them before their own closing of at least one of the nearby sales. Since the Ummels had already scotched two deals, it seems reasonable to think that the appraisal would have scotched a third.
Now we could argue endlessly that price comparisons are odoriferous and no two homes are the same, even in Southern California, but that misses the point. For the purposes of this discussion let’s just take a flying leap and assume that the Ummels overpaid, so we can focus on the interesting, difficult question of whether an agent can ever be liable for his clients’ overpaying.
Once a buyer’s agent begins making representations about price, it seems possible for him to make negligent representations about price. This doesn’t mean an agent can’t make representations about price, and can’t be wrong when he does. He just can’t be negligently wrong, by withholding material information that a reasonable person would want to see. If the Ummels’ agent did that, he should pay for it.
Of course, since we have no idea from our seat in the peanut gallery what really happened between Ms. Ummel and her agent, the whole debate is academic. The only undeniable fact is that the lawsuit that Ms. Ummel is pursuing, at greater cost than she is likely to recoup, must be like all other forms of revenge, a hopeless attempt to regain what she lost: her sense of trust and self-reliance.
In this respect, the case just illustrates the perils to both parties when a client outsources her brain to a real estate agent, or a stock-broker, or anyone else trying to sell something. It is why we dislike the paternalistic mindset occasionally used to justify brokerage fees, in which talk of “hand holding” is not seen as condescending, fears about “the single biggest purchase in your life” are stoked, and agent attempts to be persuasive during tense, personal moments are seen as heroic.
That’s messed up. It seems like most clients would prefer a partnership, carefully constructed to avoid conflicts of interest, in which agents provide information, professional judgment and support so as to empower the client to make a few big decisions: Is this the house you want? Does it have anything wrong with it that you didn’t notice? Could you get it (or one like it) for less money?
It is still possible — though we think less likely — that the Ummels could have taken this approach and still paid as much as they did for their house, but somehow I doubt Ms. Ummel would have wasted a year of her life afterwards feeling, rightly or wrongly, like a sucker.
(And no, we don’t think the behavior the Ummels attributed to their agent is at all typical, and we aren’t trying to make any claims against the industry beyond arguing for a different approach to customer service.)
January 14, 2008
This month’s issue of The Atlantic reports on research by Cornell University’s Manoj Thomas and his colleagues which found that consumers perceive round prices, such as $390,000, as being higher than prices such as $391,534. Round prices were in turn found to be correlated with a lower final sales price. Professor Thomas’s research, posted to the Web last week, validated findings first reported by Redfin in March 2007, based on an analysis of more than 30,000 2006 homes sales in Seattle, Washington. We would have included our March 2007 findings in our original Real Estate Scientist report, but worried that our data lacked a plausible rationale.
The Cornell study, which evaluated empirical data for 27,000 home sales in Florida and Long Island but also included a controlled trial, took the next step to understand the consumer behavior behind the numbers: when researchers presented 90 college undergraduates with a hypothetical home for sale at different prices and asked if the home were overpriced, the subjects were more likely to say that a home was overpriced if the asking price was a round number. Professor Thomas and his colleagues posited that consumers associate round prices with high-priced items such as a car, and precise prices with low-priced items such as a pair of jeans.
It seems like his findings could help plenty of people: despite the conclusion that a round price is associated with an unfavorable result, Professor Thomas found that more than 63% of homes sold in Long Island and Florida had an asking price ending in three zeros. Of course, since real estate is a competitive marketplace, if everybody took this advice, it wouldn’t help anybody.
It is interesting to compare the Redfin study with the Cornell research:
- Redfin organized home sales into different buckets according to the last three digits of the asking price, and found that homes with an asking price ending in -500, such as $391,500, had the highest sales price-to-asking-price ratio. By contrast, Professor Thomas found that every zero in the final three digits was correlated with a lower final price.
- In Redfin’s study, the size of the effect for the last three digits of a house price was never greater than a .58%, whereas in the Cornell study, the effect was as great as .72%. In either case, the effect is significant: .58% of a $500,000 home is $2,900
Unlike Redfin, Professor Thomas excluded transactions from his consideration with an asking price ending in $-999, as this price invites a specific, already well-studied consumer reaction. Professor Thomas also studied houses and condos together, whereas Redfin published separate numbers for each. Neither Redfin nor Professor Thomas evaluated Kevin Boer’s excellent suggestion for Pacific Rim sellers, of ending a price in 8s to appeal to superstitious Chinese buyers.
We’ll add Professor Thomas’s research — and perhaps our own, too — to our summary of practical, data-driven advice for home-sellers. Thanks to a Friend of Redfin for bringing this new research to our attention, and also for submitting our bonus link for today.
January 7, 2008
Pay Green Bay Packer Brett Favre’s salary for the year – what I woul
dn’t give to get him on the Seattle Seahawks’ payroll for Saturday’s showdown. Take a spin in the General Lee – admit it, you’ve practiced the smooth, window-entry move like Bo and Luke Duke. Spend a night (and a half) together with the Rolling Stones – maybe Mick will tell you just how he gets into those tight pants.
At Redfin, we decided the money was better spent on more important things. Actually, more than 1,000 more important things such as weddings, renovations, larger homes and new furniture for our customers.
By the end of 2007, we refunded more than $10 million in commissions to home buyers nationwide. Since the launch of the home-buying service in February 2006, we have helped more than 1,000 people buy a home, with an average refund of $10,106. Since September 2006, we also worked with nearly 300 home sellers saving them more than $3 million in commissions, for an average savings of more than $12,142.
Did we make the right choice? We sure think so. But we couldn’t have done it without you, our customers and best critics. So, thank you for your support and feedback.
The $10-million-refund milestone caps a busy year for Redfin. We expanded from San Francisco and Seattle to Baltimore, Boston, Los Angeles, Orange County, San Diego and Washington, D.C. Redfin also was the first brokerage to offer online forums for consumers to communicate with one another about the home-buying and -selling process and about the quality of their service from Redfin.
We also launched three major initiatives:
- The Redfin Advantage: a one-year study showing that Redfin clients not only get a commission refund but also a negotiating advantage in excess of $4,000 over clients of traditional brokerages;
- The Real Estate Scientist: data-driven guidance for home buyers and sellers to get better results, based on Redfin and academic studies; and
- The Real Estate Consumer Bill of Rights: a set of reforms for ensuring that consumers are well-informed, supported by more than 25 real estate businesses.
Keep your eyes on Redfin in 2008. We have a lot of exciting things in the works.
Bonus link: The programmer dress code. Redfin’s dev team already is top-notch, but should we mandate beards, long hair and dressing like a slob? It seems to work for all these guys.
