A strange thing happened in online real estate last Friday. After three years of fierce competition and $100+ million in venture capital, TechCrunch’s Erick Schonfeld finally asked real estate websites the $24,000 question: who has the most homes for sale?
“The most important success factor for these sites,” Erick writes, “is how comprehensive they are.” By comprehensive Erick means within a market: nobody wants to see every listing in the U.S., just every listing wherever he or she wants to live.
So Erick published a study from Roost, a lead-generation site with a feed from the MLS — the database that, in nearly every market, all brokers use to share listings. (Redfin has MLS listings like Roost, but also for-sale-by-owner homes and bank-owned foreclosures not yet in the MLS.)
The study showed that on the strength of its MLS access, Roost has far more broker-listed properties than sites like Trulia, Yahoo and Google — which have to get their listings through one-by-one agreements with brokers.
Redfin wasn’t included in the study, and can’t even get a copy to assess its accuracy. But it was sad for us to see everything but the kitchen sink thrown at the study, from people who never denied its basic conclusion: that a site with MLS access has many more homes for sale in a market than one that doesn’t.
And while the debate in TechCrunch’s comments section raged over the quantity of listings, no one acknowledged the huge differences in quality: what brokers share with media sites is only a teaser photo with a few basic details, rather than the complete MLS listing shown by Redfin and Roost, with dozens of fields and photos, updated as transactions occur. The difference in quality is plain for anyone to see: compare Redfin’s Washington DC listing to what appears on media sites.
But since everyone focused on Swiftboating the quantity claim, let’s take a look at the arguments:
- The study was arbitrary. That’s true. The parameters were arbitrary: 3-beds, 2-bath homes between $400,000 – $450,000, in Miami, Dallas & San Diego. But to argue a study is skewed, don’t you have to say how it was skewed? Which parameters would have shown that Trulia, Yahoo or Google has more listings?
- Actually, “we have roughly 70% coverage in most major metros.” Trulia argued that its coverage was better than reported, at 70%. Setting aside that missing 1 in 4 listings is itself a calamity, we wondered 70% of what? Of MLS listings? The claim seems as arbitrary as the study Trulia was trying to rebut.
- Consumers care most about “filtering options,” not seeing all the homes for sale. Redfin has a dozen advanced filters but 94% of our searches are on the basics: price, beds, baths. One of the most common filters is no filter at all.
- Only 80% of the properties in the U.S. are sold via the MLS. Academic studies have found that even in Madison, Wisconsin, reputedly the nation’s capital of for-sale-by-owner homes, 86% of the properties were sold by a broker via the MLS. In other areas with an MLS, that percentage is much higher. Where did 80% come from?
- The MLS doesn’t include foreclosed homes, which comprise 31% of home sales in San Diego. But in fact foreclosures are likely already in the MLS, because banks hire brokers to put them there. Redfin obtains listings from the banks and directly from the MLS, so we know how the numbers break out. Here’s what we have as of this past weekend:
- 6,000+ MLS-listed properties in San Diego.
- 715 of those MLS listings in San Diego are bank-owned.
- 184 bank-owned properties in San Diego are not yet in the MLS; Redfin displays these listings by scanning bank sites directly, and comparing what we find to the MLS. We undoubtedly missed some banks’ listings, but it is very likely that most bank-owned properties are in the MLS.
- 120 for-sale-by-owner properties in San Diego are not listed on the MLS. An unknown number of sale-by-owner listings are available on Craigslist, but this doesn’t help anyone: Craigslist refuses to share its data with any real estate websites.
The suggestion that 31% of listings are not in the MLS because of foreclosures is off by an order of magnitude.
- The study was “silly.” It isn’t silly to worry about whether you’re seeing all the homes for sale. And trying to make a joke out of the whole issue by saying “I was thinking about commissioning a study saying that I’m a size 2 supermodel” implies that Roost is trying to prove something unimportant and obviously untrue, when in fact it is trying to establish, however artlessly, something important and almost undeniably true.
But here’s what’s great about TechCrunch. Erick didn’t just print the he-said she-said arguments between websites. He queried all the websites himself, and found that Redfin had slightly more listings (6,300) than Roost (6,036), and Roost had far more listings than Trulia (4,395).
Zillow, which had the lowest number of MLS listings in the Roost study, claimed the most listings of all, 7,661, but Erick couldn’t confirm this because Zillow’s site searches on the county of San Diego, not the city. Redfin gets listings from Zillow as well as the MLS, so any listings on Zillow that aren’t on Redfin should appear shortly.
Hats off to Erick for having done the research.
He shouldn’t have had to. The pledge of every new real estate site has been to bring transparency to real estate. But so far, most sites have been anything but transparent about what they have and what they don’t. Now Joseph Ferrara at Sellsius blog is asking us all to stop hiding the ball and say where our listings come from and what we’re missing. Since April 2008, Redfin has done just that. Trulia, Yahoo, Google, please step forward.
Photo credit: Roberdan on Flickr.