8 ms·

The real estate market is huge and inefficient, a ripe opportunity for technologists to capitalize on. But I don't understand what Zillow brings to the table.

by j10t 12y ago

The real estate market is huge and inefficient, a ripe opportunity for technologists to capitalize on. But I don't understand what Zillow brings to the table. Do they have any plan beyond their current business model (advertising)? As a consumer, I think I should oppose Zillow. They seem to just take public data, present it nicely, and slather it with advertisements. Real estate agents play the same heavy-handed role they always have, except now they have to give some of their profits to Zillow else lose visibility to their competitors. I'm more excited about Redfin. Redfin makes shopping for a home closer to the self-service experience it should be, with agents dealing in higher volume with lower margins playing a lighter role. Unlike Zillow, Redfin seems to make that market more efficient, and I think that's the bigger opportunity for capitalization.

meritt 12y ago
Zillow and Trulia make the majority of their revenue selling preferential placement of realtor profiles and selling consumer leads to these realtors. For Zillow 2014 Q1 it was $46.2M realtor revenue, $7.1M mortgage leads and $12.9M display advertising. Only about 20% of their revenue comes from ads.
- j10t 12y ago
  I would label any form of "selling leads" as advertising.
wpietri 12y ago
Trulia and Zillow definitely provided a step forward. 15 years ago, the market was intentionally opaque. Local boards of realtors controlled the flow of information on available properties, making it very hard for people to buy property without giving a 6-7% commission to agents and brokers. That doesn't mean the market can't get still more efficient, but having a nice presentation of public data is definitely worth appreciating. I'd also add that real estate agents can provide substantial value. Many don't, of course. But buying a house is an enormously complicated transaction, with a lot of legal, financial, and material complexity. Buying a business is even more tricky. To me it's similar to having a lawyer: there are good ones and bad ones, and sometimes you might not need one at all. But they're not pure waste.
- henrikschroder 12y ago
  > But buying a house is an enormously complicated transaction Why? Where I'm from, buying a home is a few pages at most. You need to put down the buyer, the seller, the object, the price, the down-payment and the date. Same for getting a mortgage from a bank, it's a page of contract, and a page of terms and disclaimers. You need the buyer, the object, the mortgage amount, the date, and the type of mortgage. (The trick, of course, is that where I'm from, the general proceedings of buying a home is regulated by law, so the only thing that needs to go on a contract is the specifics and deviations from the norm.)
  - timjahn 12y ago
    I'm assuming you're not from the United States?
    - joeframbach 12y ago
      Either not from the United States, or doesn't know what they're talking about.
  - smackfu 12y ago
    You don't have to do home inspections (and consequent repairs), radon testing, title searches, etc.? That's the junk that makes it complicated.
    - henrikschroder 12y ago
      > home inspections House is sold as-is. Buyer is responsible for finding all visible issues. Seller is responsible for X years (3 I think?) for hidden issues. Done. > radon testing Buyer is responsible for testing. The city can tell you if a certain area is at-risk. Sellers usually provide long-term testing results. You can add a clause to the contract stipulating that if radon level is higher than X within Y years, cost of fixing is split between seller and buyer by Z. > title searches What is that? googles Oh. No, we have good public record-keeping, you don't need to pay third parties to trawl decentralized piles of unorganized records.
zyxley 12y ago
> But I don't understand what Zillow brings to the table. As an end user (albeit a window shopper so far), the map-based searching on both Zillow and Trulia is really nice. Map-based searching on Redfin feels kind of clunky and slow by comparison.
- jwcooper 12y ago
  Problem is the data is so sketchy on Trulia and Zillow. I'd be interested in a house only to find out it already had a contingent offer accepted. They need to figure out how to get realtime data from the MLS systems. Trulia and Zillow do have the best meta-data on houses though. School info, crime, purchase history, walk scores, etc.
  - davepeck 12y ago
    (A lot of the metadata data is provided through third parties. For example, walk scores are provided via... well, Walk Score, a Seattle startup. http://www.walkscore.com/professional/walk-score-apis.php http://www.walkscore.com/professional/walk-score-apis.php)
  - smackfu 12y ago
    Honestly, this depends totally on whether you are in a hot real estate market or not. If homes tend to be on the market 30 days, scraping MLS data is OK. If homes tend to be on the market 3 days, not so much.
alwaysdoit 12y ago
Information is certainly useful as a potential buyer. I was able to find open houses that matched what I was looking for much more quickly on Zillow. I was also able to get updates for those properties to see what they actually ended up selling for.
ssharp 12y ago
The MLS and agent-based system is the real culprit. Until Zillow and Trulia came around and really captured attention, that data was accessed on a few larger sites, like Realtor.com, but also a massive amount of smaller agent sites. While Zillow is ultimately doing the same thing, I think they can eventually position themselves strong enough to start wedging agents out of the process. One of the huge issues is that the MLS listings are the go-to source for information. If you want to buy a house that's in MLS, or want to list your house for sale in MLS, you gotta play ball with agents. Since MLS is such a dominant marketing tool, they're able to maintain the archaic, but profitable, agent system. If Zillow, minus the MLS, becomes a strong enough marketplace for homes, you'll have viable competition to MLS. There are already flat-fee MLS agents out there, where you control the commission on the buyer-side and pay a flat fee on the seller-side to get into the MLS listings. That's a decent hack for sellers right now, but it's still just a small improvement on a crappy system.
- golovast 12y ago
  This is definitely on point. I've worked for a fairly large regional MLS at one point and interacted with a fair number of other MLS's and what I've found out about this business was pretty mind boggling. Vast majority of them are stuck in the past (think 1990s) and their only competitive advantage is restricting access to information. A typical real estate agent (with very few exceptions, I'd guess <5%) is adding little to no value to the transaction and is simply taking a middle-man fee. They are in general petrified of places like Redfin, Zillow and Trulia and they do anything in their power to maintain the current business model. Generally it involves limiting access to "their" data and coming up with whatever legal roadblocks they can use to defend against other sites. The agents However, they are sitting on an absolute treasure trove of data which would be amazing in the hands of the right people.
- graham1776 12y ago
  What if a Seller paid a broker (super small fee)just to get on the MLS, but not handle the ins and outs of the transaction? Is this possible?
  - 12y ago
uptown 12y ago
If you're excited by Redfin, take a look at Keith Rabois's new startup: http://www.opendoor.com/ http://www.opendoor.com/ They're looking to flatten the home-selling process and cut out inefficiencies. More here from one of the co-founders: http://www.quora.com/What-can-be-said-about-Keith-Raboiss-new-venture-named-Homerun/answer/Jd-Ross http://www.quora.com/What-can-be-said-about-Keith-Raboiss-ne...
thefreeman 12y ago
As someone who has worked in a closely related industry to real estate, I can confirm that technologically the industry is at least 10 years behind. Example: Most of these companies are still using giant XML files pushed around via FTP to send data to each other.
andbberger 12y ago
Dwellaware[1] is worth a mention - we're not in bed with any real estate agents and not afraid to tell the truth [1] https://www.dwellaware.com/ https://www.dwellaware.com/
EverSF 12y ago
"They seem to just take public data, present it nicely." Worked for Google.

by j10t 12y ago

meritt 12y ago

Zillow and Trulia make the majority of their revenue selling preferential placement of realtor profiles and selling consumer leads to these realtors. For Zillow 2014 Q1 it was $46.2M realtor revenue, $7.1M mortgage leads and $12.9M display advertising. Only about 20% of their revenue comes from ads.

j10t 12y ago
I would label any form of "selling leads" as advertising.

wpietri 12y ago

Trulia and Zillow definitely provided a step forward. 15 years ago, the market was intentionally opaque. Local boards of realtors controlled the flow of information on available properties, making it very hard for people to buy property without giving a 6-7% commission to agents and brokers. That doesn't mean the market can't get still more efficient, but having a nice presentation of public data is definitely worth appreciating. I'd also add that real estate agents can provide substantial value. Many don't, of course. But buying a house is an enormously complicated transaction, with a lot of legal, financial, and material complexity. Buying a business is even more tricky. To me it's similar to having a lawyer: there are good ones and bad ones, and sometimes you might not need one at all. But they're not pure waste.

henrikschroder 12y ago
> But buying a house is an enormously complicated transaction Why? Where I'm from, buying a home is a few pages at most. You need to put down the buyer, the seller, the object, the price, the down-payment and the date. Same for getting a mortgage from a bank, it's a page of contract, and a page of terms and disclaimers. You need the buyer, the object, the mortgage amount, the date, and the type of mortgage. (The trick, of course, is that where I'm from, the general proceedings of buying a home is regulated by law, so the only thing that needs to go on a contract is the specifics and deviations from the norm.)
- timjahn 12y ago
  I'm assuming you're not from the United States?
  - joeframbach 12y ago
    Either not from the United States, or doesn't know what they're talking about.
- smackfu 12y ago
  You don't have to do home inspections (and consequent repairs), radon testing, title searches, etc.? That's the junk that makes it complicated.
  - henrikschroder 12y ago
    > home inspections House is sold as-is. Buyer is responsible for finding all visible issues. Seller is responsible for X years (3 I think?) for hidden issues. Done. > radon testing Buyer is responsible for testing. The city can tell you if a certain area is at-risk. Sellers usually provide long-term testing results. You can add a clause to the contract stipulating that if radon level is higher than X within Y years, cost of fixing is split between seller and buyer by Z. > title searches What is that? googles Oh. No, we have good public record-keeping, you don't need to pay third parties to trawl decentralized piles of unorganized records.

zyxley 12y ago

> But I don't understand what Zillow brings to the table. As an end user (albeit a window shopper so far), the map-based searching on both Zillow and Trulia is really nice. Map-based searching on Redfin feels kind of clunky and slow by comparison.

jwcooper 12y ago
Problem is the data is so sketchy on Trulia and Zillow. I'd be interested in a house only to find out it already had a contingent offer accepted. They need to figure out how to get realtime data from the MLS systems. Trulia and Zillow do have the best meta-data on houses though. School info, crime, purchase history, walk scores, etc.
- davepeck 12y ago
  (A lot of the metadata data is provided through third parties. For example, walk scores are provided via... well, Walk Score, a Seattle startup. http://www.walkscore.com/professional/walk-score-apis.php http://www.walkscore.com/professional/walk-score-apis.php)
- smackfu 12y ago
  Honestly, this depends totally on whether you are in a hot real estate market or not. If homes tend to be on the market 30 days, scraping MLS data is OK. If homes tend to be on the market 3 days, not so much.

alwaysdoit 12y ago

Information is certainly useful as a potential buyer. I was able to find open houses that matched what I was looking for much more quickly on Zillow. I was also able to get updates for those properties to see what they actually ended up selling for.

ssharp 12y ago

The MLS and agent-based system is the real culprit. Until Zillow and Trulia came around and really captured attention, that data was accessed on a few larger sites, like Realtor.com, but also a massive amount of smaller agent sites. While Zillow is ultimately doing the same thing, I think they can eventually position themselves strong enough to start wedging agents out of the process. One of the huge issues is that the MLS listings are the go-to source for information. If you want to buy a house that's in MLS, or want to list your house for sale in MLS, you gotta play ball with agents. Since MLS is such a dominant marketing tool, they're able to maintain the archaic, but profitable, agent system. If Zillow, minus the MLS, becomes a strong enough marketplace for homes, you'll have viable competition to MLS. There are already flat-fee MLS agents out there, where you control the commission on the buyer-side and pay a flat fee on the seller-side to get into the MLS listings. That's a decent hack for sellers right now, but it's still just a small improvement on a crappy system.

golovast 12y ago
This is definitely on point. I've worked for a fairly large regional MLS at one point and interacted with a fair number of other MLS's and what I've found out about this business was pretty mind boggling. Vast majority of them are stuck in the past (think 1990s) and their only competitive advantage is restricting access to information. A typical real estate agent (with very few exceptions, I'd guess <5%) is adding little to no value to the transaction and is simply taking a middle-man fee. They are in general petrified of places like Redfin, Zillow and Trulia and they do anything in their power to maintain the current business model. Generally it involves limiting access to "their" data and coming up with whatever legal roadblocks they can use to defend against other sites. The agents However, they are sitting on an absolute treasure trove of data which would be amazing in the hands of the right people.
graham1776 12y ago
What if a Seller paid a broker (super small fee)just to get on the MLS, but not handle the ins and outs of the transaction? Is this possible?
- 12y ago

uptown 12y ago

If you're excited by Redfin, take a look at Keith Rabois's new startup: http://www.opendoor.com/ http://www.opendoor.com/ They're looking to flatten the home-selling process and cut out inefficiencies. More here from one of the co-founders: http://www.quora.com/What-can-be-said-about-Keith-Raboiss-new-venture-named-Homerun/answer/Jd-Ross http://www.quora.com/What-can-be-said-about-Keith-Raboiss-ne...

thefreeman 12y ago

As someone who has worked in a closely related industry to real estate, I can confirm that technologically the industry is at least 10 years behind. Example: Most of these companies are still using giant XML files pushed around via FTP to send data to each other.

andbberger 12y ago

Dwellaware[1] is worth a mention - we're not in bed with any real estate agents and not afraid to tell the truth [1] https://www.dwellaware.com/ https://www.dwellaware.com/

EverSF 12y ago

"They seem to just take public data, present it nicely." Worked for Google.