With a Gap This Big, It’s Sort of Hard Not to Say Something About It

First, the facts.

Windermere and Redfin just published a study showing that across 11 major U.S. cities, local broker sites such as Windermere.com, Redfin.com, and LongandFoster.com have about 20+% more agent-listed properties than two national portals, Zillow and Trulia.

The study found that broker sites display new listings 7 to 9 days faster, and that broker sites record sales faster too: almost 2 out of the 5 listings on Zillow and Trulia are actually no longer for sale, a problem with only 1 in 1,000 of the active listings on Redfin.

How much does this matter? Well, it’s hard to wait a week to see new listings when one in four is now under contract within 14 days of its debut. You can’t afford to miss 20% of the listings when the number of homes for sale is already down 29% since last year.

If Google Finance or Yahoo! Finance were missing one in five stocks, Wall Street would rumble about the quality of information being peddled to its clients. If two of the five stocks that the financial portals did show had been de-listed, Wall Street would riot.Yet this is the problem on Main Street with the most popular real estate websites, and more people shop for homes than follow stocks.

Is the Difference Really That Big? Yes, It Is
An independent real estate technology consulting firm conducted the study. Then Redfin hired a separate set of independent researchers to corroborate every discrepancy between the sites, record by record.

The researchers gave the portals every benefit of the doubt. Even when the portals displayed listings with the wrong price, or failed to recognize the difference between a house and a condo, we credited the portals with having an accurate listing. We focused only on completely missing listings, and sold listings that still appeared as active on the market.

No one in the real estate industry will be surprised by the findings. And anyone who is surprised can simply repeat the study and publish any differences in the results. Why argue when you can see for yourself? The entire methodology is available in the report; each of the 6,401 records analyzed is in a spreadsheet.

How Could the Brokers Have Such a Big Advantage Over the Portals?
The big difference is that Redfin and all the local brokers share listings via local Multiple Listing Services, which are cooperatives for listing agents to ensure everyone in the market can see all the homes for sales.

The portals don’t have their own real estate agents and don’t list properties; Zillow shows its own for-sale-by-owner listings but chooses not to share this data. With no data to contribute, the portals aren’t members of local MLSs. And because the portals’ business model runs counter to the MLSs’ charter as a cooperative, MLSs hesitate to require every agent to contribute to a media website that charges agents money.

Occasionally, the portals get partial access to a local MLS. Redfin has been in favor of broadening this access, but has asked only that the portals comply with local rules about share-and-share-alike, and about how participating websites make money from data on private homes, painstakingly collected by other people.

For now, most portals get their listings catch-as-catch-can, asking the agent or his brokerage to upload a listing to the portal after the listing has already been posted to the MLS. The process can be cumbersome for agents, so some listings are a week late. Many agents don’t want to or don’t remember to share the listings, so one in five aren’t even there. Once the home sells, the agent often neglects to tell the portals to take it down, which is why nearly two out of the five active listings on a portal aren’t actually for sale.

The problem is human nature: expecting half a million independent business-people to use a second-hand process for promoting listings has just always been a daunting challenge. It’s like trying to get the entire city of Seattle to take our vitamins every day. Some of us will, some won’t.

Nothing Personal
Redfin’s decision to publish these findings about listing search was not easy. Personally, I have enormous respect for the folks at both portal companies. And the portals have far more to offer than simple listing search: mortgage data, celebrity moves, national trends, price estimates, discussion forums and more.

We’ll all still get along after this study: the brokers and their agents are, after all, the source of virtually all the portals’ listing data and virtually all the portals’ revenues. Redfin sends millions of visitors to the portals by embedding their price estimates and mortgage quotes in our site; Redfin sends all of the properties listed by our own agents to the portals, even when the portals decided to stop sharing their own for-sale-by-owner listing data with us.

So Why Did We Do This Study Now?
The problem today is that we now get questions from our customers about homes they saw on the portals that aren’t really for sale. Lots of questions. Almost every consumer initially believes that the portals have complete MLS access, and because the portals include so many listings as active that already sold, many actually conclude the portals have more listings than we do.

This prompted Redfin Chief Technology Officer Sasha Aickin to call me earlier this year with one question: “how many listings could the portals be missing before you would be willing to say in public we’re better?”
“I don’t know,” I said.
“Just pick a big number then.”
There was a long pause.
“Do you have a number?” Sasha said.
“15%,” I said.
“It’s bigger than that,” Sasha shot back. “Do your job. Publish the facts.”

Haven’t Consumers Already Decided Who’s Best?
The portals may argue that whatever the facts may be, consumers have chosen the best listing search by popular acclaim: the portals get more traffic than any local brokerage site, even one like Redfin that covers nearly a third of the U.S. Bypassing local MLSs with their local rules and careful privacy constraints may have limited the portals’ data quality but it let those sites build a national brand, with a national following.

Fortunately for Redfin, popularity and quality aren’t always synonymous, for the same reason that the local trattoria, working with fresh, local ingredients, sometimes makes better pasta than the Olive Garden. There is certainly plenty of competition among the brokers to offer consumers the best technology, and the most candor. Redfin, for example, invented map-based real estate search. We were the first to publish all the available data about a listing, including its price history, days on market and agent commentary.

We were the first to show for-sale-by-owner listings alongside all the agent-listed properties. We built the top-rated mobile tools. We’ve expanded one market at a time, complying with the local rules so that we could show all the homes for sale in each market, and show all the locale-specific fields about those homes.

Why This Matters
What we have won from that effort is a business that is making real estate fundamentally better, not just on the web but through the whole terrifying, exhilarating, crazy process of buying and selling a home.

Many consumers may not care whether a broker  – or a portal that acts as a marketing channel for real estate agents — offers the best listing search. But you should. Offering our own search has let Redfin as a broker meet customers directly, focusing our agents on service not sales, and saving consumers nearly $100 million in fees over the past five years. If you really can see for yourself all the homes for sale, more should change than just the traffic ranking for real estate websites. And it will.