Pre-empted by the high action spectator sport of world class poker........... Come-on KING5!

Zillow is an interesting site to browse and possibly even for preliminary research when considering buying a home. However, I wouldn't recommend going much further than that, unless you are a licensed real estate agent. Zillow makes the assumption that everything about a property can be ascertained by public records, when actually, public record is only the tip of the iceberg. Many people don't record improvements made, also public record does nothing for neighborhood changes, location or amenities. Finally, purchasing a home is probably the biggest purchase you will ever make and there are so many ways that you could lose it all. Improperly completed paperwork, missed deadlines or miscommunication could cost a home buyer thousands. Realtors are still very much needed and will for some time.

I friend of mine is being swindled out of 80k-100k worth of equity from his duplex, even though the attorney says he was drinking (he's an acoholic) It probably won't hold up in court. He wasn't represented by a realtor and didn't know what is duplex was worth, also the buyer said to him that since it is in forclosure He needs to close on the purchase and sale agreement or lose everything.A forclosure sale date had not been set.
I'm surprized that a very large realtor agency (W) would let this happen, it gives investors and realtors a bad name.

I guess there is more to your story of your friend that we don't know. Sounds as if the buyer is using an agent and the seller didn't? And that you feel the agent (who by law has to work in the best interests of their client - the buyer) should have protected the seller from making a very bad decision? There must be more here cause it seems like a no-brainer.

I know what it costs to run a profitable real estate company and when the Redfin company runs out of money it will be back to the drawing board. I really don't think that buying business is all that revolutionary anyway.

I think real estate agents are a dying breed. With the technology that is available to us today what can a real estate agent provide that I can't find myself? I've sold a condo and bought a house without the aid of a real estate agent and now I'm using Redfin to sell another house - saving me money.

The traditional real estate broker is a dinosaur and the six percent broker commission deal is history. All the information a home buyer needs to make an intelligent buy decision is now online and easily accessible.

Brokers add very little value to the transaction overall. In fact, in my experience, broker's actions have often been a hinderance to a successful close. Two years from now the sale transaction costs for residential real estate will be uniformly less than one percent.

Good riddance traditional real estate broker, hello Redfin and Zillow.

Yes, there is a place for both the traditional agent and the .coms. It's all in the level of service that a buyer or seller wants. If the buyer or seller wants to take the risks of representing themselves, that is fine. Nordstrom hasn't closed down because of online stores. Real estate is a people business. It's unfortunate that people have had bad experiences with their traditional real estate agents, but don't throw away the baby with the bath water. Both level of service can survive side-by-side. Let's not abuse each other. It's not right for a buyer to use a traditional agent to spend their money and gas to take them around, show them homes, ask for advice then use redfin to write up the offer when that was their intent all along. That's abusive behavior.

I find these discussions always entertaining. I find new business models interesting and am excited about the changes - but saying that traditional Brokers are dying is based on supposition only. Yes there is tons of information/data available - and yes you can sell yourself just like always.

Using redfin/mls4owners to sell MAY indeed sell your property. Let me share some FACTS though.
In King county for 2006 - if you sold your home in the MLS - using ANY agent, discount, traditional, virtual, unrepresented (mls4owners etc) - you sold on average in 30 days at a median price of 100.24% of asking price. These numbers include ALL business models.

If you sold using redfin - it took 42 days, you sold for 97.78% of asking AND they only closed 61% of their listings. Summary - it COST you an additional 2.46% over the average (which INCLUDES discount or non-traditional agents).

Add to that a 39% chance of not selling at all. Not a very good selling proposition. Lets see, we take longer, net you less profit, and increase your chance of failure. I have yet to see anyone selling those figures.
MLS4owners is even worse. Average days on market - 78. Median selling price 96.83% (3.41% below mls wide median) - Chance of actually selling 53%. MLS4owners quite often (not all the time) pay a full commission to the agent that brings a buyer. For example, if they paid 3% to the selling agent - then they didn't save money - it actually cost them .41% to do all the work by themselves.

Again, I love new business models and I see a future for internet enabled professionals who see that the client is and should be informed. I'd much prefer a by-the-hour billable pricing with pass through billing on a retainer. Those agents that want to charge $40/hour can - those that want to charge $250/hour can - and they draw the clientele based purely on their ability.

The press (and bloggers) seem to think Realtors make unfair income by holding the public hostage. The reality is, it is an industry where people can be very entrepreunaral and charge whatever they want. In 2006 the average income was 47,700 (not a huge number by professional standards). Those who've been in the business for two years or less earned a median of $15,300.

I do say the proof is in the numbers. I have run these stats time and time again - different counties, different price ranges, different time frames, different brokers. The "discount" or virtual or FSBO models ALWAYS come out costing more.

"Sale transactions costing less than 1% in two years. " Bold statement. Not sure what facts this is based on. I would be happy to give you 2 to 1 odds on that bet. I'd sell my house to bet the farm with those odds.
Bottom line is not all real estate transactions are simple. Matter of fact, most have lots of bumps that an experienced broker can navigate while minimizing their clients risks. Yes I agree not everyone in the profession is top-shelf. It is very easy to become an agent. I fully endorse raising the bar.

While your post seems to impart a sense of knowledge and understanding, your FACTS are just plain wrong. Redfin conducted a study recently (which has been commonly accepted as methodologically correct and statistically sound) showing that the average gross sales price generated through Redfin was no less than through the MLS overall using any agent. Add to this the fact that the NET proceeds to the Redfin seller are higher because the seller is not paying a seller's agent commission of 3% (rather, a flat fee of $3,000) and the customer comes out way ahead. For most mid-income folks this amounts to greater net proceeds of $10,000-12,000 more. I'd say that's material and creating a load of value for the customer. How do you like them apples?

On the listing side, my experience has been that traditional real estate brokers say they are "marketing" the home for the customer and thereby reasonably earn that 3%. Let's cut through the bs - they put up a sign post, make up some flyers (often failing to keep these stocked), get the data on the MLS and maybe, just maybe, put something on craigslist. That's the extent of it. That's worth maybe $1,000.

On the buying side my experience has been that the realtor often doesn't pay attention to the criteria set by the customer, waste a bunch of time taking the customer to homes that aren't within the criteria, and, oh guess what.....they take the customer to homes for which they are also the listing agent (so 3% now becomes 6%)! Very convenient.

The argument is also made that the broker handles all the negotiations and applies expertise such that the outcome is more favorable for the customer. The reality is often somewhat different - many brokers have poor negotiating skills, frequently inject confusion and misunderstanding in the dialog and act in a manner for their own individual benefit, not the benefit of the customer. For example, it is economically better for the broker to ensure than some deal gets done...any deal at all...rather than the best deal for the customer as they will get a sizable commission regardless of whether it was a favorable outcome for the customer. That is simply wrong.

Net, the traditional real estate broker is often plagued by poor business ethics and modest at best business skills.

These aren't "new" business models. They're here now and have been around for a while. They have been selling homes with great success for some time and saving money for the customer and providing a high satisfaction.

I think the most telling sign of traditional brokers realizing their fundamental economics are changing (in a really bad way for them) is the pathetic attempts at the state and national level to legislatively ban these "new business models" through powerful lobbying activity. So called "minimum service laws" and anti-rebate laws are harmful to the consumer and the Justice Department isn't going to stand for that bs.

I say good luck to the proponents of the traditional 6% model - they're going to need it.

ps. Rob, I do have appreciation for your well thought out comments above - you obviously have a keen understanding of the changing dynamics. I think it's simply one of those situations where smart people can reasonably disagree and nobody is obviously crazy. I suspect time will tell all.

Thanks Cliff,
Although I'm very sorry, my FACTS are exactly that. The study conducted by Redfin was about their numbers on the buyers side. A VERY simple export of raw data on redfin quickly produces this sellers data which you appear to not have access to. I did not make it up. It came from the MLS sales data and calculations came from excel. If you think I am making this up, I will email you raw data and you can analyze it and prove me wrong. On the information that redfin did go public with, they neglected to publish that the homes they acted as buyers agents by in large were on the market MUCH longer than typical. They homes purchased using a redfin buyers agent were on the market for 57 days on average (without price reduction) – we might think of that as rotted fruit that was maybe overpriced to begin with? Again this was 2006 data when market times were VERY short by in large and HOT properties sold very quickly with multiple offers. Those that did not have an experienced agent in their corner did not get these “hot” or desirable properties – they tended to be stuck with the leftover undesirable ones.
Sorry if I referred to "new" business models and that offended you. I was simply trying to acknowledge there are other ways of doing business, some are "new" in that they are enabling information to the customer and utilize technology in new and exciting ways.
I agree that any attempts to legislatively ban "new business models" is wrong. I say, bring it on. Can we please make sure we let the customer know what they are buying before we sell it to them? A better educated public is all I ask for – both in data/information about homes and in the service they are potentially paying for when working with an agent.
If my experience on the listing side and buying side would have been as bad as yours.. I would probably be as bitter. Sounds like you have never been introduced to a good agent. It may be easy to say there are none, but your statistical sample (you) is not quite big enough to represent all. Again I do believe there is LOTS of variability in service and not all agents do earn what they are being paid. A listing agent that does the things you claim (put up a sign, flyers, post in mls and maybe craigslist) SHOULD BE FIRED and probably only deserves to earn the average of $15,000 a year (minus expenses, taxes, health insurance – thereby bringing them to at or near zero). I AGREE! On the buying side, agents acting as dual agent (where they are the listing agent also) is highly frowned upon, is becoming much more rare – and always ends up in a discussion of how much the agent will give up anyway. I doubt you have empirical evidence to support this statement as to the amount of times it happens.
On the 3% vs 3k argument with redfin. It is FACT that homes closed for 2.46% below the median for all agents combined. Yes they “saved” $12,000 over a traditional agent commission – but it cost them $12,300 in lost revenue (for a 500,000 house). By my math that isn’t way ahead, that is slightly behind – and it took them longer to get there. If that makes you feel better by thinking you “saved” then I say great! I’ve heard of some CEO’s thinking they saved money by firing the sales department – they are no longer here btw..
And you are correct, time will tell. As I said in my first post – I relish new models, ways of servicing the customer and ways agents can or may add value. Not everyone is there.
Are you not taking me up on your bet that the commissions will be a total of 1% in two years. I really want that action….seriously – or were you just kidding???
In closing, I THOUGHT it was smart people reasonably disagreeing, but you are telling me my numbers are FALSE. And I know where they came from . If you want to again say “you are wrong rob” “your numbers are false” – please leave me an email address, I will email you RAW data, you can jam it into excel, hit average() & median() then report back on how I am fabricating data. Again I say, bring it on. Numbers are numbers. I suspect you would rather just quote some other blogger or redfin themselves. It is a lot easier.

Cliff,

You're posts are fascinating! It seems as though you have dealt with quite a poor excuse for an agent. Believe me, there are agents out there who truly want to work for you. I have purchased AND sold over 7 homes in the last 3 years. I would say I am quite adept at the process and would, under NO circumstances, NOT use an agent. It is not worth my time, aggravation, patience nor sanity to deal with buyers and sellers on their own. Real estate websites such as Redfin.com and Zillow.com have made the buying and/or selling process much harder for those of us who choose to use professionals to handle our transactions. Websites that claim to give accurate information via the internet can be just plain false. For example, Zillow.com lists the value of my personal home at $250,000 LESS than the actual appraised value. Yes! $250,000 LESS! As a consumer, you should always do your research and I, personally, would have to spend countless hours on the internet and in the region in which I buy/sell homes before I could make any move. Not only do I not have that kind of time, I would trust a professional Realtor far better with that valuable information than any other person/website that purports to give me accurate information. I suggest you find yourself a Realtor you can trust before attempting to buy/sell your next home.

Rob makes some good points but anyone who knows anything about statistics knows that you can find statistical support for just about any position. Just because factually SPECIFIC data is provided doesn't mean that it is factually CORRECT and certainly not definitive to the exclusion of other data. You might give Cliff the courtesy of friendly debate and allow that other data could contradict yours.

I'm pretty sure Rob is a real estate agent so perhaps his perspective (and data) isn't quite balanced in this particular debate...

It's clear that companies like Redfin offer a compelling alternative to many home sellers and buyers and can save them a lot of money if they're willing to do just a little driving around on the internet.

Monica,

You make a good point...you can find statistics on anything you want to. But that also holds true for sites such as Redfin. They can get statistics that work for them, as well. While it is possible that Rob is an agent, I can say that you could find the majority of the statistics online...for anyone. And that is where consumers make mistakes. They read what they want when it works for them. Using a Realtor is the only way to be sure you have someone truly working for you. I cannot stress enough, with the work I do in real estate, I would NEVER do it myself!!

Hi jennifer, I can certainly understand and respect your perspective and opinion. Glad to hear you've had good experiences with real estate agents. Personally, I have bought and sold a lot of real estate myself without an agent and found it to be, in contrast, more efficient, less expensive and overall a more pleasant experience. I feel adequately equipped to prospect on the buy side and market on the sell side and then negotiate terms for myself. I believe I can drive a harder/better bargain without an agent (in addition to not having to pay a commission on the selling side) adding a further layer of translation and communication delay. Said another way, for me it is more efficient and economically advantageous to not use an agent. Finally, in so doing I'm in control of outcomes and prefer not to depend on an agent to interpret my words or intentions (however inelegantly conveyed by me). Thanks for the advice but I'll continue doing what I'm doing as it works well for me.

I believe Redfin conceeds that, for the moment, their process isn't for everyone - typically it is the urban and semi-urban types who are internet savvy, comfortable negotiating on their own behalf, and who really appreciate the savings that are attracted to their model. I basically fit within this demographic so it works for me, but, like I said to Rob, everyone is different and and smart people can reasonably disagree over these things without anyone looking crazy in the head.

Hi Cliff!

Not agents, only one I always use. And I think that is the difference here. I think it is great that you feel so comfortable negotiating on your own behalf. I just don't have the time nor desire. Not only that, but it does concern me that so many people rely on those internet sites solely for their information. I just wish everyone could understand that there is more to it. Like I said before, if I listed my house at its actual, appraised market value and a consumer, on their own, looked it up on Zillow, they would laugh at me!

Monica,
I love friendly debate. I am encouraging Cliff to support his claims with data. I would LOVE to see someone deliver data that contradicts mine. I’m waiting. Again, the redfin published stats are only about their buyers. Wonder why?

The only "position" I was originally quoting is that redfin takes longer to sell a home, has a much higher failure rate, and ends up costing the seller more in lost revenue than if they had hired a professional. If that isn't compelling I'm not sure what you are looking. I would LOVE a friendly debate - just make sure everyone is quoting facts instead of hyperbole.

I take insult that you say my data isn't balanced. Sorry, it isn't my data, it is in the MLS and was typed in there by redfin. I included ALL transactions in 2006. Not really sure how I could manipulate the data. All I did was calculate down a column of all the data the average and median. Sorry. I encourage ANYONE to do this exercise and correct me!

You love to say my perspective is skewed (so my numbers must also?)- so how come no one here says the same about redfin publishing their own numbers? Clearly they must be liars according to you.

And to your last point – Redfin, on average, doesn’t save money for their sellers – if you look at the bottom line that is (see above for the math). Again you are saying “redfin… can save them a lot of money if they're willing to…”. PLEASE support this with fact instead of an empty statement. I have supported ALL my statements with fact and data. I do not apologize for having access to the data, or the knowledge of how to use excel to calculate median() and average().

PLEASE someone step up and correct me with facts instead of criticizing or saying I must be lying because I have perspective and specific knowledge and experience.

Jennifer, I thinks it's great that you would never NOT use an agent and I think there are people out there that agree with you and prefer an agent. However, there are a lot of people who do not want to use an agent and agents shouldn't have the ability to monopolize and prevent those people to having access to doing things themselves or using businesses such as Redfin, HelpUSell, etc. Did you see the 60 Minutes piece the other night? Check out 60 Minutes online and see the Leslie Stahl interview she did with Redfin and a local Seattle agent.
I just believe that anyone should be able to have the choice to use whichever means they prefer to buy or sell a house/condo without the red tape and limiting legislative initiatives that are being proposed in many states.

Sylvia,

No doubt it should be all about choice. My point is simple: RESEARCH everything!! With anyone and everyone you possibly can. And beware. Read my earlier post regarding Zillow.com's value of my house. What an amazing wrong turn I would have made without MY agent!

Rob, it would be great to keep the debate civil and not call anyone a "liar" - as said before, smart people can reasonably disagree here.

Your data simply isn't compelling to me personally. I won't call you a liar as there's no need to make it personal or be antagonistic.

I'll keep it simple - when I sell my house through Redfin and pay a flat $3,000 instead of $18,000 (3%) I have saved money. My house will sell in roughly the same amount of time and the sales price will be the same. No need to recite data here in response on days-on-the-market or sales price - like I said, your data is not convincing to me and I ain't interested.

Similarly, on the buy side, when I buy a house through Redfin and get a sizable rebate check, again, I've saved a substantial amount of money. No statistics necessary thanks.

You obviously have a keen understanding for the changing dynamics in the industry and have studied some of this mathematically so you're an informed commentor here richening the perspective. But please respect that others can reasonably disagree and not be convinced by your particular set of data points.

And, I realize it's none of my business but it would be interesting to know if you happen to be a realtor (not working for a Redfin/MLSonline/HelpUSell/et al). I share that I'm not a realtor, don't work for Redfin or any similar business - I'm just a consumer and home owner looking for a better and cheaper way to buy/sell real estate.

Rob, You seem to be stuck on your statistics! If I'm selling my house and I can save 3% on the transaction OR Redfin will give me money back for using them - that's CASH in my pocket NOW and any statistics won't change my mind. I sold my condo without a broker - granted it took me time to make flyers, post on craigslist and show the place but I sold it in 2 weeks and your telling me your statistics shows that I MIGHT have been able to sell it in 1 week or I could have gotten a higher price??? I recommended Redfin to a friend and her daughter had her house sold in 1 day! I'm not saying that Redfin made it any faster BUT I don't think there would have been much difference with an agent. I think the bottom line here is $$$. It seems that agents are scared of losing that 6% they make. I agree with Jennifer that there are people who will use and need an agent. They don't have the time and that's fine. Good night everyone - maybe we'll continue this tomorrow night.

Sylvia,

I doubt they are scared of losing their 6%. The problem they face is people not trusting them because of false advertising, bad websites, etc. I have seen it over and over again with media and websites purporting to have better knowledge than the industries themselves. Real estate isn't the first industry to suffer this. I think it is great that people want to do it on their own...but again, beware. Many of you feel you have the knowledge...I think that is great. And I am sure you do. I have it, but find it unnecessary to use it.

I appreciate you not calling me a liar. I guess I took offence to Monica saying my data was skewed. For clarification, I also did not call anyone a liar, I simply restated Monicas statements about those that quote statistics have a vested interest in the numbers.

It is totally your prerogative to not be compelled by this data or any data. If you want to believe that your home will sell faster and for more money that other redfin users, you have every right. Since my data are averages, you can easily be the curve breaker. Go for it.

Another point of clarification. I never intended this to be a redfin bashing thread. I was quoting results from several brokerages that are limited service or fsbo companies. I have no problem with redfin or their business model. I find it fascinating. I just prefer that if people are going to quote “how much they can save”, I always encourage people to look at revenue BEFORE looking at expense. In any business it is ALL about bottom line. That was really my only point.

I DO respect that others can reasonably disagree, but you started out this conversation by saying that my “FACTS are just plain wrong” That is entirely different from you not finding these facts compelling or just that you “ain’t interested”. I respect that position a whole lot more. Thanks for clarifying.

I’m not here to try an browbeat anyone into submission that my position is the only one. I merely started this by trying to illuminate some facts on statements that were made prior to mine. Specifically: “agents add very little value”…”sale transaction costs will be uniformly less than one percent”…”I’m using redfin to sell another house – saving me money”. I felt that no one was sharing facts to support these statements and thought I could add someone value here.

Again, I still would love to put some money on your statement about sales costs at 1% in 2 years. You stated it as fact. Maybe you were just kidding?

And Sylvia… good for you. Don’t let facts, statistics, or a particular companies previous performance ruin the fact that you want to save money – you definitely can reduce your costs – I agree. I don’t believe that agents are scared of losing a % (whatever that might be) – They take offense to being insulted and told they have no value, that they are shysters, only think about the commission and will do anything to get it – at the expense of their client. I do believe that every service industry professional (plumber, attorney, financial consultants, house cleaners) wants to deliver good service to their clients and earn a reasonable living doing so. Most also realize that long term staying power is through repeat business and value their clients for the long haul – rather than the immediate short term gain – as would be implicated by freakonomics.

Cliff, I do make a living investing in real estate – which gives me access to data that I thought I would share – that’s all. I know for a fact that every Realtor is different and not everyone has a great experience, I think that is a shame. I think the training, experience, dedication, and knowledge for all agents should be higher. I support increasing the requirements for people to get a license before they begin helping people with typically the largest financial investment in their portfolio. (btw the State of Washington is in the process of increasing these requirements a bit as we type – it’s a start in the right direction).

FASCINATING FACT: It takes only 60 hours of education and a simple memorization test in the state of Washington before an agent can hang their license and charge to buy/sell homes. Did you know it takes 1800 hours of education, training and supervised work before someone can get a license to cut hair? And Hair grows Back! Well most of the time ;)
POINT?? It can be very easy to work with someone who maybe doesn't bring all the right long-term skills to the table.

Here's one to discuss.
We get plenty of e-mail, and this man obviously got so angry at our report, he turned it off before we got to the appraiser and the controversy over the Zestimate. But I'll pass along this e-mail because it illustrates the frustrations of appraisers.
Robert

Regarding your spot on 'Zillow' on Up Front, 05/12/2007. I found your reporting to be far below your typical performance and standards. It is obvious that in your researching the 'Zillow' topic that you did not contact anyone who really knows more about the topic than anyone else.
Namely... Appraisers! I have not had contact with any Appraiser that thought Zillow has any credibility what so ever. The old computer adage, garbage in - garbage out! That fits Zillow to a tee! All it is good for is to confuse the marketplace and cause a higher degree of chaos that wasn't there before its conception. I have been accosted by many borrowers/lenders for coming in below what they think is their "value"
based on a "Zestimate". There are times as well, although fewer, that the "Zestimate" is below market value.

Let me enlighten you to just a few of the many shortcomings of this "Zillow" web site from an Appraisers point of view. Zillow:

1) Does not take into consideration neighborhood boundaries. As Appraisers we know that there are geographical areas that in some cases, Sand Point for one, Mt. Baker for another, that housing values differ literally across a street. There are these imaginary "buffer" zones that are not taken into consideration.
2) Bases its information on County records entered into its data base by someone who doesn't know doddly squat about how the system works. A perfect example is Snohomish County and even Pierce County. Unless you know just how square footage is entered on to these sites by the County, you won't get an accurate indication. For some reason there are two sets of figures there. A recent appraisal I performed in the Everett area had the borrower/lender thinking their home was worth one thing based on a "Zestimate". The neighborhood is unique unto itself and venturing outside its boundaries would result in skewed figures due to all the new construction and other variations too detailed to educate a lay person on at this time. The big thing about what the Counties do, is they present data for a 1 story with a basement, split entry, tri level, basically anything with a below grade area, with only the above grade data. In other words, half of the comparable's square footage is not reported on Zillow. My subject was a 2 story home about 1600 sq ft.
After looking at Zillow's "Zestimate's" it was found that 4 of the 6 comparable's were actually 800 sq to 1600 sq ft larger than the subject.
Therefore houses that had a much greater living area were stated as being the same size as the subject. Two other comparable's used by Zillow were new construction, outside the immediate market area, and also had an inaccurate square footage. Do you see any kind of problem with that?
3) Does not take condition into consideration nor does it address distressed sales. Condition is a big thing. You would not believe the number of times that on interviewing a homeowner on the phone to gather data about a subject I am told that the home in good condition. When I get there I find roof's ready to collapse, ripped vinyl flooring, ragged carpets, missing exterior siding...the list goes on. In the eyes of the homeowner, it's in good condition as everything is relative and every mans home is their castle. Distress sales. death, divorce, foreclosure.
Not taken into consideration.
4) Doesn't take into consideration the Zoning or Land Use Codes. That's an 8 hour class if you want to learn about that.
5) Does not address site utility or view. You think a site without a view is worth what a site with a view is, hey have I got a property for you!!
6) Etc., Etc., Etc., ...

I could go on, but I think you get the general message. Robert, I found your piece totally misleading by only giving a one sided view of your subject. I am appalled at the amount you, as well as every reporter at every station in the area, use a Real Estate Agent as an "expert"!! Not once have I ever seen an Appraiser given our due justice. I was a Realtor. 120 clock hours and Bang Slam...you are licensed. It's a bit different for Appraisers. As a Certified appraiser I had to spend a minimum of 2 years doing appraisals, 2500 hours at 12 hours for a full appraisal. No credit is given to "drive by' products, only interior inspections and 120 clock hours of appraisal specific class room teaching. It took me 3 years to earn, that's right, EARN my Certification. As of 01/01/2008, the requirements go way up to include having to have a 4 year degree to be Certified and a 2 year degree to be merely Licensed. There are also those in the industry who go the extra mileage and get a General License\se and/or their SRA designations.
Again, YEARS not weeks of extra assignments and class room learning.

So shame on you for your one sided and inaccurately portrayed picture of our current housing market and for not utilizing the most valuable and highly educated people in the entire Real Estate Industry when doing a report on our current Real Estate market. APPRAISERS!

I think maybe he didn't watch the whole segment. I thought the information provided was balanced AND zillow was quite upfront that they are not trying to supply appraised value, market value or selling price. They have been quite clear that they are about attracting eyeballs and advertisers not about replacing appraisers, appraisals or agents. They, as a software analysis of the data they have access to, absolutely do NOT have the ability to give a number and do NOT have any idea what is going on with a property or what side of the street it is, or if it still have asbestos or LP siding…

A self declared error of +-7.2% (which I understood to mean a total of 14.4% bandwidth?) and a self declared accuracy of within 10% on 70% of all sales. Those are not numbers to write home about. It is a very interesting mathematical equation and statistical analysis that can serve as the beginning of a conversation only. But it is fun to look up your boss…

If appraisers, or the dreaded real estate agents mispriced a house by 14% it would not go unnoticed. I have often heard a goal of 2% margin of error as a maximum (only heard this - never seen it as gospel) for real estate agents to hit a target price for what a home will sell at. I do know that if a home is > 2% overpriced, it will typically not see any real offers and become stagnant. A sure sign the "market" has spoken.

The man is correct regarding confusion by the public, but my experience is people are becoming VERY quickly savvy as to the accuracy of this tool. I heard of several people last year that tried for 8 months to buy a home. Every time they found one they liked (every couple weeks), they would write and offer for not a penny more than what zillow said it was worth. Their agent was unable to overcome this misunderstanding of value and tried her best to coach them on trying to buy their first home. After 8 months, they had chased the market and ended up paying 50k more than they had started out the year because of this delayed understanding (for an equivalent property).

Although it becomes a pain to justify your professional opinion against a computer equation that does not have this level of expertise, I would be SHOCKED, if banks ever would turn to Zillow to eliminate the appraiser industry. Appraisers are their safety net and they are all about managing their risk (as they should be). I doubt a banker or finance actuarial would allow the use of a tool that was > 5% off market value (personal opinion not based on knowledge or fact)

My friend has a house in Bellevue that is listed in Zillow for a lot more money than the rest of the houses around her? Why? Because she bought her house in the last 5 years which brings the value up by taking into consideration the sell of the property. She said the other people in the neighborhood have been living there for a long time and haven't moved which accounts for the decreased value since Zillow uses last sell data etc. (I'm not sure of all the data they use). My point is they don't take into consideration view, recent upgrades etc. which is what I think they discussed on Upfront.
I do think there are people who will use real estate agents, those that are:
1.) too busy
2.) have very high end properties
3.) not internet savvy
4.) out of town folks who don't know the area
Probably some more that I haven't thought of and not all of the above will always use an agent. The agents that will be around are those that are seasoned, well liked, smart etc. There are a ton of agents out there looking for buyers/sellers right now and it's going to get even tougher with companies like Redfin around.
Rob, I know there are good agents out there who try to do good for their customers. You sound like you might be one of them. :)

I am writing to correct this false and misleading statement about MLS4owners.com: "MLS4owners is even worse. Average days on market - 78. Median selling price 96.83% (3.41% below mls wide median) - Chance of actually selling 53%."

MLS4owners.com publishes its results and detailed studies of those results at http://www.mls4owners.com/P39.cfm. For the King County market for residential, condo and land properties, here are the actual results according to what has been entered into Northwest Multiple Listing Service records:

In 2006 our customers closed 262 sales worth $127 million in King County with a median marketing time of 21 days and a median price of $434,500. The median list price of those homes was $439,000 (99% of list price).

Historically, of our customers who completed a sale, 85% completed the sale as our customer, and 15% chose to switch to a full service brokerage. Here is a link to a detailed study conducted in 2005 - http://www.mls4owners.com/P66.cfm . It shows not only the success of our customers but also what happened to customers who chose to use another brokerage. In almost all cases, those sellers were not able to sell their home at or above the price they were asking through MLS4owners.com. Many agents offer excellent value to their clients, and there are good reasons to use a full service brokerage; however, the results experienced by our customers is not one of them.

I would be very interested in seeing the data Rob used. As they say, there are lies, damn lies, and statistics. At the risk of contributing to the problem, I would be happy to provide a PDF copy of the 2006 sales results to anybody who would like to verify them.

Ken Whitney
General Manager
MLS4owners.com

Just reading the comments by everyone shows that there is an overabundance of error and controversy among the "smart" buyers and sellers.All buyers want to be "smart" and all sellers want to be the 'smartest ever'and prove the necessity of a Realtor false. It amazes me that anyone would treat the process flippantly. Definitely the blogs show the difference in a Realtor , and a real estate agent. It reminds me of the haughtiness of contestants on "Are you smarter than a 5th grader?" There are many tools to assist us, Zillow, being one of them. I wouldn't put my weight on any one tool. We, Realtors, do so much more than open a door. It's about weighing the inherent risks, weighing the value of the buyer's and seller's investments, weighing the ethics involved in the process. And hopefully sparing the agony of financial loss to our clients. Just yesterday, I dealt with an issue regarding fire walls in a condo unit someone was buying. After making 12 calls to dig down to the person who actually knew if fire walls existed, the deal closed anyway. Did the insurance agent care? ,did the escrow company care?, did the Title company care?,did the condo management company care? Did the contractor care? did the developer care? Nope. The Realtor cared and made sure that the buyer has proper coverage and will take action to see that the proper 'fire walls' are constructed to protect her life and home. Did the 'smart' intelligent, internet savvy buyer care? She didn't know which questions to ask. The Realtor did.

I don't think it's a matter of stating that agents don't provide a service. I think they provide a good service and care about their seller/buyer. With the average King county home being around $450,000, is that service really worth $13,000+ dollars? I don't think so; not to me anyway.
On another note, what is up with the Washington Realtors association trying to sway the local and state government to create more housing for residents? Are they going to close neighborhood parks and put up condos instead??? That will piss a lot of people off.

Anyone who thinks they can value property over the Internet is kidding themselves. While Zillow values are tpically +-10% of the real value, there are a good percentage of properties where they are off by 30%. Even with the additional tools an agent has to gather information about a property, you cannot properly value the property without stepping foot inside.

As to Redfin, for some it's all that's needed, for others it's not. Unfortunately, the average person doesn't know which group they're in.

I was looking at the value of a particular home on Zillow that I am thinking about buying direct from the owner. Between Friday and this morning, it increased in value by $150,000. So what number is correct? Did they have the right value on Friday? Or do they have the right number now? My guess is neither. Even if it is a FSBO I'll be hiring a real estate agent to help me price it, negotiate it, inspect it and close it.

As for redfin, I fall smack dab into their quoted prime demographic. I have done enough business with a great agent, I would NEVER want less expertise, advise and service - he has earned every penny he has gotten from me.

I'll say up front that I am a licensed real estate broker, and a member of the National Association of Realtors (so no one needs to speculate). Everyone has their experiences, but one person's opinion shouldn't paint a whole industry. I do like to see people sticking up for their Realtors - because it shows that there are many Realtors out there doing what they're supposed to do. Unfortunately, as in ANY industry, there are those who should look for a different line of work.

Just a thought for those who say they'll never work with an agent because of a previous bad experience: Ever had bad service at a restaurant? Did it stop you from going out to eat for the rest of your life?

One reliable fact is that there is a place for each business model in our business. I am a full-service agent, and my own clients need the work that I do. Some people don't need that level of work and experience, and may, in fact, be better candidates for the limited service brokerages. I say good for them, and more power to them. But here's another point to think about -

When your car breaks down, you can go to the auto parts store, buy a manual, parts, and tools, and have everything you need to fix the car... in theory. In theory, anyone CAN fix a car, but not everyone SHOULD try to. That's why most of us pay someone else to do it, even though mechanics often rank with (dare I say it) real estate agents on people's "low trust" list. As with any industry, the bad apples get a lot more attention that the good guys, because doing what is expected of you is not news.

Similarly, most of us have car insurance (as mandated by law), and never have to use it. You can't wait until you've had an accident to buy insurance. An if you make a serious mistake in the middle of a real estate deal, it may then be too late to hire an agent to save your bacon. If you think agents are expensive, check out the prices for lawyers and lawsuits.

My point is that not all agents are lazy, incompetent, or liars. Most of us work hard for our money, and there are many people who are willing to pay for the security of working with an experienced agent. And in case anyone didn't know this, a full-service agent only gets paid when the purchase or sale of property actually closes successfully. That's right folks... we do all our work up front, and we get paid last - as it should be.

Robert Grove
Realtor

Similarly, there are plenty of online brokerage options for people who want to invest their money based on their own instincts. If those folks want to buy or sell real estate based on those same instincts, more power to them. Caveat emptor. If you want an ally working for you who understands markets, timing, negotations, etc., bring a realtor into the mix.

Good job stirring up the emotional side of real estate Robert!

I'd like to submit an idea or two that seemed missed in, what looked like to me, the infomercial for Zillow.com.

First, there is a foundational assumption that all homes are yellow pencils subject to the Zillow algorithm of valuation. That is a huge leap. Further, do historical prices always predict current market conditions? Both points handled in depth in other posts above.

Second, when one chooses to adjust the value of ones' home on Zillow, it is a self reinforcing belief as the data comes from within ones own data set. Once the seller begins to enter his own data, the Zestimate is unlinked from any statistical or experiential (agent) frame of reference for market valuation. It becomes the users favorite number.

Third, there is a huge body of law that is on the books (since the grand re-write of 1997) that is there because real estate has complexities that really can hurt the unaware. There are vast amounts of lawsuits every year that fall out of real estate transactions. There are laws at every level of government regulating the transfer of property for very distinct reasons. Realtors are actually responsible for bringing awareness of these issues to the processing of the transaction. Zillow and ReFin do not appear to me to have any responsibility to the sales process -- only to displace Realtors as new "service" providers and collect profit from site visitors. Real Estate law is not trivial. Any serious consumer representation would address this domain of risk.

Fourth, Realtors have a duty of agency to their clients. I don't see where dot-coms have a duty of confidentiality or performance. Resultantly, I would ask "Are users of dot-coms even more on their own?"

Finally, it was sheer silliness of Zillow’s chief to equivocate finding a date or a relationship on-line (U-tube & MySpace) with selling a house on-line. Money -- cold hard cash -- is way different than lust or love. Contracts are the basis of virtually everything in the United States. An attitude that focuses on the minor commission verses the actual return PLUS the mitigation of risk is less than optimal.

6% commissions are pretty much a bygone number anyway, a red herring. Who pays that much? Realtors won’t go away; they COMPETE by providing cost-effective SERVICE at a market driven rate.