Your Seattle Neighborhood Specialist

As you have probably noticed, I recently redirected all my efforts to a new project. Earlier this year I joined the team at Redfin to help them build and roll out what I think will be a large component of the future of real estate–electronic transaction processing.

Last week we launched our new program, Redfin Direct. Redfin Direct is an online service for buyers to make an offer on a home and save money. This program is designed for buyers who found the house that they want to purchase by doing the house hunting legwork on their own using resources like Redfin and public open houses. The Redfin Direct program provides an online application called the Offer Wizard, expert telephone support to ensure that your offer is the most competitive, and support for every step of the closing process. The Redfin Direct program refunds two-thirds of the buyer’s agent’s commission to the home buyer.

The recent articles in the Seattle Times and New York Times provide a good overview of our new product.

Similar to the hourly and fee-for-service approach I employed, this service is not for everyone. This program is geared towards the DIY crowd that is already doing all their own legwork and research on the house of their dreams. There is and always will be a need for full service real estate agents and we have a high quality and carefully managed network of full service partner agents too assist those clients that would prefer a more traditional approach to buying or selling a home. Our goal is to help people buy and sell real estate by allowing them to choose a program that best suits their needs.

I knew Redfin Direct was going to be a success from conception, but even I was surprised to receive our first offer within hours of launching the program! I see Redfin Direct as one small step for Redfin one giant leap for consumers.

I will leave this blog up for posterity, but you can follow my future posts at the Redfin blog.

Regardless of what Inman says, I think I nailed the Zillow guessing game by five-nines!

Zat’s all folks!
–Rob

John Cook’s latest article on Zillow covers the news about the $32m they raised and even gives a nod to this blog.

Maybe I have been wrong all along and option 4. An online real estate dating service is the correct answer.

contest

Inman reports that Richard Barton, the CEO of Zillow, will be speaking at Inman News’ Real Estate Connect in New York. Although Zillow was present at last summer’s Inman Connect in SF (see my post here ) they did not give us any indication about what we could expect from their product and/or service.

This announcement combined with the launch of Spencer Rascoff’s blog (Zillow CFO) makes me think we are going to see what Zillow is all about sooner than later.

I hope everyone is enjoying the holiday season. It has been a very busy month and I have not had enough time to dedicate to the Zillow Files.

The CFO and VP Marketing of Zillow, Spencer Rascoff, just started a blog called the “Startup Guy” which is geared towards supporting the startup community.

So far the only post is an interesting piece called “Comparing Zillow with Hotwire.” Unfortunately he doesn’t disclose any more information than other employees. Mr. Rascoff is the only Zillow employee I know about that has an active blog that even comments on Zillow. The Chinpokomon blog by Ryan discussed Zillow prior to his job interview, but after he accepted a job offer he has been radio silent except for a few pictures of the amazing view out of his downtown Seattle Zillow office.

I jumped the gun on my last posting. Although Zillow may have patents pending for the concepts we discussed last time, I misinterpreted my sources. A reader, Ron, pointed out that what I was referring to where Zillow’s filings at the USPTO for trademarks, NOT patents. After reviewing my news sources (Inman, Seattle PI, and several other blogs), the wording is specifically “registrations with the patent and trademark office.” Both a patent and a trademark application would count as a “registration” with the USPTO, but there is no way to know if there is a patent application until either the patent is approved or the applicant advertises the fact that their discovery is patent pending. So we are still in the dark as to whether or not Zillow has patents pending and if they do we do not have any specifics, but what we do have is their recent trademark information.

There are six Trademark entries tied to Zillow in the USPTO. Most of them cover the items we discussed in the “Zillow Patent Pending” article; however, there is an outlier that is worth discussing. Zestimate (created on September 22, 2005) is what appears to be an online real time real property estimation tool. The official description of the goods and services provided is “Real estate consultancy, appraisal and valuation services; financial valuation of real property and real estate.”

In order for the “Zillow Marketplace” to be complete it will need some sort of market valuation tool, but to what extent? The USPTO filing makes it sounds like Zestimate is more of a service that will employ real live people to perform the CMA and property valuations rather than an automated system. While I believe a computer will never be able to assess true market value no matter how much data it has access to, I also would find it hard to believe that Zillow and its army of programmers isn’t putting together such a tool, especially since there are already rudimentary versions out there.

You can currently get a CMA from anyone with access to prior sales data, matter of fact most real estate agents use the “Free CMA” as a bait tactic to bring in clients. I recently blogged about a new real time CMA service through BOFA that provided you with instant feedback on the approximate value of your house. I also speculated on several other features that would be needed in order to create a real time, online CMA tool that would be worth using. Maybe I should be the one running to the USPTO.

I hope everyone had a happy and healthy Thanksgiving holiday.

We had a great response from last week’s posts about the concept that Zillow is creating a real estate parcel database of every parcel in the US and maybe even beyond. This week we are going to look at Zillow’s patent applications.

I was recently in contact with Jessica Swesey, Managing Editor of Inman News regarding Zillow. She offered some additional insight in her recent article “Zillow will shake up real estate industry.” Unfortunately the article is only available to Inman Subscribers. In her article, Jessica pursued the patents that Zillow recently filed.

The first patent she discussed is for “some kind of online marketplace for real estate listings,” which comes as no surprise as the Zillow webpage reads “At Zillow.com we are working hard to develop a new kind of online real estate service — one that will give you an edge in the home buying and selling process.” So far, the buzzword “marketplace,” has not been specifically attached to Zillow; however, interestingly enough it is the tagline for Redfin.

What is an “online marketplace for real estate listings” and what differentiates that from the currently available tools? There are already thousands of websites with real estate listings ranging from your neighborhood real estate broker to realtor.com. We are all familiar with Amazon and ebay as online marketplaces. Matter of fact, you can already buy and sell real estate on ebay

Outside of ebay there is not really an online real estate marketplace–a place where you can actually buy and sell real estate with the click of a mouse. Sure you can go to all kinds of great websites like Redfin.com, Realtor.com, Homepages.com, Windermere.com, etc, but you can’t complete a transaction. The best you can do is to enter your personal information and have it be passed along to a real estate agent as a “lead.” There is still this huge disconnect between online real estate search and completing the transaction. This is the gap I see Zillow setting their sights on.

Jessica notes that the patent filing “drops hints of plans for an Internet auction business for real estate.” It wouldn’t be worth the effort filling out the patent application if they are planning to recreate ebay, nor would it be likely that the patent would be granted if business is already conducted in that manner, but then again a patent was granted for swinging sideways.

All kidding aside, the Zillow team is very talented and I bet their concept of a marketplace is more along the lines of Amazon than ebay. Although I am sure the auction concept will be part of the marketplace, it will not be the marketplace. I envision the Zillow marketplace as a place where anyone (buyer, seller, agent) can go to view all real estate information including: current listings, tax information, previous sales (both tax and listings), other data attached to that property, reviews and ratings of the property from previous owners, current owners, people that have visited the house, people that have worked on the house, etc (like Amazon and Netflix), and after all it is a marketplace so the ability to buy it. This marketplace would also work for inactive (not for sale) properties just like inactive listings at Amazon. The parcel database would still retain all the data. Similar to Netflix, there could be an option “queue” up an unlisted house. When the house finally gets listed you become notified, or more likely once there is serious interest (buyer is willing to put up earnest money) in a property the owners are notified that they have a potential buyer. This will either streamline the sales process or launch a whole new “do not call registry.”

Please feel free to post your thoughts or comments.

With Thanksgiving just around the corner, the Wall Street Journal just did a hilarious article about what would happen if you called in management consultants and asked them to re-engineer Thanksgiving dinner. What followed were five reports full of the buzzwords you would expect in the boardroom, not the dining room. You will probably just laugh, but you may learn a few tricks to optimize trimming your turkey this holiday.

Word of warning, the above link is only good for seven days unless your are a WSJ.com subscriber.

After my last post, I found this great article from the King5 website , unfortunately you need to login to get the story. It was an interview with Zillow’s Director of Public Relations, Amy Bohutinsky. Amy says “At this point no one knows what we’re doing, and that’s intentional.” Which is the whole reason why this and several other blogs are working so hard to figure out what is going on over there…the best advertising is free advertising!

The reason I mention this article is because of what Bohutinsky goes on to say about what Zillow might be:

“There’s really going to be a consumer focus. In this industry there aren’t a lot of companies that focus on making the process easier for consumers”

We couldn’t agree more! Here is a post we did back in August about the outcomes of the Inman conference.

Bohutinsky said Zillow will not depend on information from Multiple Listing Services, nationwide databases where real estate brokers share listing agreements, but she said, “It’s a service everyone involved in the real estate industry will be able to use in some way.”

I believe Bohutinsky’s comment regarding the data not being dependant on the MLS reinforces the entire concept of my last post that Zillow is building some sort of parcel database that will be able to accept sale data from multiple sources including but not limited to MLS. Secondly if Zillow is building a tool that “Everyone involved in the real estate industry will be able to use in some way,” that also points to a parcel database that real estate agents across the country can use to research and compare properties.

In our last installment we discussed the technical aspect of how we believe Zillow will be implementing their on-line real estate service. This installment will examine the next layer of their infrastructure, the resources that will be used to house their “multi-terabyte OLTP databases.”

We know Zillow has and/or plans on storing and processing large quantities of data. Not only have we repeatedly seen the references to “multi-terabyte OLTP databases” in their job postings, but it is also clear that Zillow plans on launching their service nation wide which would quickly add up to terabytes of data. For instance, the current active listings in the NWMLS add up to over 25MB and that is just the text-based portion of the listing. Factor in up to 15 photographs per listing and your 25MB could easily increase by an order of magnitude or two. Toss in the NWMLS inactive listings and you are at 500MB for just the text-based portion. Now expand this across the county or just California and you have the makings for a big database!

So where is Zillow getting their data? Probably the same place every other real estate search site is getting their MLS type data, some sort of IDX feed. For example look at the nation wide data available at Realtor.com . Or better yet, look at the
$100 Million that just got pumped into Realtor.com. Is this a serious threat to Zillow or does Barton have something up his sleeve? We will come back to this conspiracy theory in our next installment. For now, back to the data…

Does Zillow have any data?

Two months ago at the five minute jobbing event, I spent some time talking with one of Zillow’s operations managers. The event was shortly after Hurricane Katrina and the running commentary of the evening was that there were going to be a lot of records being dropped from Orleans County. Unfortunately that was as much information as they were willing to divulge on that topic, but that was enough to put a few more pieces of the puzzle together.

First it demonstrates that they have some sort of data feed and it has been in place for some time. It would be obvious to assume the data feed was from an IDX feed of active real estate listings, but from the way they were talking about the database records it didn’t sound like they were just going to be cancelled listings. It sounded more like the dropped records were going to be due to that particular parcel no longer existed. Which gives additional depth to the “multi-terabyte OLTP databases” we keep hearing about. My hunch is that they are building a database of every tax parcel in the US (North America, World, etc). Once they have a placeholder for every tax parcel, they can start attaching data to that parcel. For instance they can begin to track all previous sale information, historical photos, events that happened at that address (some people won’t buy houses where someone died), etc. Once the infrastructure is in place, the possibilities are endless. You can just as easily join an IDX feed of all the MLS listings or a FSBO feed with the parcel data and have a very powerful tool. This is a great idea, but is already being done on a smaller scale by Redfin .

Who is going to win the nationwide online real estate search sales challenge? I sure hope Zillow can make it out of the gate before the winner is crowned.