NYT: 2 Web Sites Push Further Into Services Real Estate Agents Offer
am 10.02.2006 22:31:44 von kuacou241New York Times
February 8, 2006
2 Web Sites Push Further Into Services Real Estate Agents Offer
By DAMON DARLIN
Two real estate Web sites are starting to offer services that could
change the way real estate is bought and sold online.
One site, Zillow.com, which will be introduced today, will help
consumers obtain more accurate real estate sales information - to the
consternation of some real estate agents.
A smaller site, Redfin.com, introduced an unusual new service last week
that might be even more disruptive to the real estate industry: the
feature automates the process of bidding on a house online.
Zillow is attracting a lot of attention because it obtained $32 million
in venture capital financing and its chief executive, Rich Barton, was
a creator of Expedia, the online travel agency.
The new site provides data like previous sales prices and the prices of
similar properties on 60 million residential properties, information
that real estate agents do not display in the public multiple listing
service. The site also includes price appreciation (or depreciation)
data in a form that resembles stock charts. "It's a lot of data to make
you smarter," Mr. Barton said.
In addition, Zillow uses software to offer a free home-value estimator.
The "Zestimate" service tries to do what has been a primary function of
the real estate agent. And in contrast to many other real estate Web
sites, like Realtor.com, run by the National Association of Realtors,
or Home Pages.com, owned by Housevalues Inc., Zillow does not try to
connect its users with agents.
Many real estate agents worry that Zillow could be a first step in an
online evolution that could threaten their $60 billion commission-based
business, just as Expedia, Travelocity and other online sites disrupted
the business of travel agents.
Mr. Barton said it was not his intent to take part of the agent's
commission, which averages slightly less than 6 percent and is split
between the buyer's and seller's agents. Instead, Zillow is an
advertising-supported site.
Mr. Barton said he expected to sell advertising on the site because the
information there will create in nearly every American city a community
of people interested in real estate. New York City will be the notable
exclusion, because of the complexity of mapping multistory multiowner
condominiums.
Zillow's sizable capitalization is already causing anxiety among online
companies that match real estate listings with interactive maps and
other data. PropertyShark.com, a site that began with New York City
listings and has since expanded to 15 other cities, for instance, is
wary of Zillow because of its venture backing.
PropertyShark has no outside financing. "It is scary, and frustrating
and nerve-racking," said Matthew Haines, the site's founder. "It made
it quite clear that we are underfunded."
Redfin, though less well financed than Zillow, is perhaps even more
ambitious in its aim to take on the work of agents. The site, which
maps listings with other sources of real estate data for Seattle, added
a feature last week that allows a visitor to buy a property online.
A real estate agent is not cut out of the process; in fact, Redfin is
itself a real estate brokerage company. But the site automates the
paperwork of making a bid and then rebates to the buyer two-thirds of
the buyer's agent's commission, which is usually 3 percent. Redfin, as
the buyer's agent, takes only a 1 percent commission.
Redfin shows the potential savings on every listing. For instance, the
"direct savings" on a $699,000 house currently for sale in the Queen
Anne district in Seattle is $13,980. The buyer gets the money at
closing so it can be used for the down payment or to pass to the seller
if it was used to sweeten an offer.
Right below the description of that property are two buttons, one to
"see it" and the other to "buy it." A click on the see button helps the
potential buyer arrange a tour of the property. Clicking on the buy
button leads the visitor through online forms that generate the
paperwork for an offer.
"We won't replace the agent," said Glenn Kelman, Redfin's chief
executive. "We let people who are self-reliant do the legwork and gain
2 percent." Redfin has been financed with $1.25 million, with most of
that coming from the Madrona Venture Group of Seattle. The company said
it was seeking additional financing to expand to other cities.
All of these real estate sites are chipping away at the agent's
business of matching clients with a property and then negotiating a
deal. The Web is already displacing the initial contact that agents
have with customers. A recent National Association of Realtors survey
found that 77 percent of home buyers use the Internet to search for a
home. About 24 percent said they first learned of a home from the
Internet, up from 15 percent in a 2004 survey.
Mr. Barton does not exclude the possibility that the role of the agent,
and his site, may change.
"People want Realtors," he said. "But is it rational to pay Realtors
what they are paid?" He says he thinks they are overpaid because
customers are doing more of the work themselves.
Zillow, for instance, has a number of other features that do the work
of the agent. Someone wanting to compare properties can use pull-down
menus to estimate the value of remodeling projects that are not
reflected in the price. Because of the Internet, agents are spending
less time with clients, Mr. Barton said. "Agents have to ask, What kind
of value am I adding?"
Still, Mr. Barton said, "it is not our intent to dislocate the agent."
Mr. Kelman of Redfin said he recognized that change might be difficult.
"We are like the penguins on the edge of an iceberg when no one wants
to jump in first. Redfin is going in first," he said. "Maybe that isn't
such a good analogy. The first penguin in usually gets eaten by sharks
or something."