There’s been a bit of a kerfuffle within the real estate space with Redfin’s recent release of their “Scouting Report” (I published my initial thoughts here).
For those not familiar with the Scouting Report, Redfin, a semi-national real estate brokerage, announced last Thursday that they would be displaying some sales statistics for all agents in areas they served. All agents, not just their agents.
A little mini-shitstorm ensued. Some agents don’t care, others voiced their displeasure in no uncertain terms. The range of feedback in the real estate agent community ranged from “Meh” to “They’re committing fraud” and pretty much everything in between.
Here are a few of the most vocalized issues agents seem to have with Redfin’s latest offering on their web site:
The data is inaccurate!
Indeed it is in many cases. In fact, Redfin swiftly pulled the plug on displaying data from my own MLS due to problems with accurately reporting agents brokerage affiliations. Four days later the number of MLS’s turned off or limited now numbers six ”“ ARMLS (Phoenix area), and Sacramento, CA are “temporarily disabled”. Redfin initially said they hoped to have ARMLS fixed within 24 hours, but that was four days ago. Now they say 24 ”“ 48 hours.
Whatever.
MRIS (D.C. area MLS) has been suspended pending a review by MRIS.
And now Southern CA and Long Island NY are limited to two years of transaction history, and Denver, CO is limited to one year (this vs. the three years of transaction history Redfin initially said all MLS’s would show).
I’m sure Redfin will work out their technical issues.
But that won’t fix the data integrity issues that are inherent in MLS data to begin with. The old adage, GIGO ”“ Garbage In, Garbage Out ”“ still rings true. As long as agents keep entering Garbage Into the MLS (and many do, trust me), Redfin won’t be able to do anything but put Garbage Out.
Oh, they’ll have a disclaimer to that effect. We all know how much people pay attention to those.
Of course bad data in the MLS isn’t Redfin’s fault. It is the fault of those entering the data ”“ that being real estate agents”¦
Redfin doesn’t have the right to publish this data!
Maybe they do, maybe they don’t. I’m virtually certain Redfin had a small army of attorneys and others pour over MLS data agreements prior to releasing their scouting report. Every MLS has different rules and regulations. Redfin knows this. Agent’s seem to be forgetting it. If you don’t like your MLS’s rules on data sharing and publication, then you need to do something about it. Contact your MLS or local Association. Voice your concerns. Send letters to your boards. Be proactive and work on getting the rules changed if you don’t like them. The MLS in the not-so-distant-past was the domain of its members ”“ real estate agents and Associations. WE let the cat out of the bag, not Redfin.
Redfin is making their own agents look good!
Well duh. It’s their web site. Do you really expect anything else? Redfin has more data on their own agents, and they have reviews of their agents. That they package all this together ”“ on their own site ”“ to benefit their agents isn’t a surprise. At least it shouldn’t be. If you think Redfin has spent the time, money and effort doing this “for the greater good” of mankind, then think again. They are doing it to increase their business. As they should be.
Some data is missing!
Off MLS sales, primarily many new construction home sales and Trustee Sale (foreclosure) transactions, aren’t recorded in the MLS. If a sales transaction isn’t recorded in the MLS, then Redfin (or anyone else creating performance-based statistical reports like this, such as Frankly MLS in northern Virginia area who has been doing this since mid 2008) obviously can’t report that data.
“Agent teams” can throw another wrench into the spokes of performance-based statistics. There are many “teams” out there, sometimes comprising dozens of agents where MLS data is reported under the team leader. Ever seen something like this in agent advertising ”“ “We sell 500 houses a year!” I can just about guarantee you that is a team making such a claim. There isn’t enough time in the day for a single agent to sell 500 homes a year.
Statistics don’t tell the whole story!
True statement. The performance based statistics available to Redfin (or agents in general) is pretty limited. Days on Market (DOM) is an inherently flawed metric. First, in Redfin’s Scouting Report they offer no comparative statistics. If they report Joe Agent has an average DOM for his listings of 60 days, is that good or bad? If a consumer compares Joe’s 60 DOM metric with Jane who has a 45 DOM metric is Jane a “better agent” than Joe? Maybe, maybe not. Perhaps Joe lists a lot of short sales and is at the mercy of the banks on getting transactions closed. Perhaps Jane and Joe work primarily in different markets ”“ location, price range and more can impact DOM.
I could formulate a “what-if” rebuttal to just about any statistic that can be derived to measure real estate sales success.
But that doesn’t make such statistics completely worthless. When compared to a baseline, and not considered in a vacuum, then stats like number of transaction sides closed, final sale to list price ratio, number of times a listing is re-priced (or re-listed) can provide meaningful information that are a reasonable part of determining whether or not you are talking to a “good” agent.
However, it should be noted that some things are exceedingly difficult to measure. “Trust” comes immediately to mind. “I need to trust my agent” comes up WAY at the top of the list most real estate buyers and sellers make when it comes to deciding which agent to use. How do you measure trust? I don’t know.
This is where reviews of agents by past clients can come in to play. Redfin asks every client to review their agent’s performance, regardless of whether or not a transaction closes. This is smart, and something we’re trying to do here at Thompson’s Realty. There is no one in a better position to review an agent’s performance than their client. Agent review sites are popping up all around us, like it or not. (We have compiled a few, and included our own at ReviewOurAgents.com. All of our clients are welcome to review our agents on any of these sites.)
Bottom line: No, statistics don’t tell the whole story. But they can tell a significant part of the story. If you don’t like Redfin’s packaging of your statistics, here’s an idea ”“ package and present them yourself. Put them in your listing presentation. Your potential clients just might appreciate it”¦
And my favorite ”“ “No other group of professionals publishes their members productivity, why should real estate?”
Once again, we (we collectively as in the real estate industrial complex) have brought this entirely upon ourselves. How many times have you seen proclamations in real estate agents marketing materials, websites, newsletters, whatever saying things like:
- I’m a million dollar producer!
- Member of the multi-million dollar producer club!
- I am your neighborhood expert!
- We sell 500 homes a year, more than any other agent!
- Best real estate website in [insert city name here]!
- We are Number ONE!
Yes, the propensity of real estate agents and brokerages to push their productivity onto the consumer is rampant. Why? Honestly I have no idea. “Million dollar producer” has bugged me since Day 1 when my original broker made us submit data for these nonsense awards. What is a “million dollar producer"? It’s an agent that has sold one million dollars worth of real estate ”“ typically within a year. That sounds like a lot. A million is, after all, a pretty large number. But do the math”¦ let’s say an agent gets a 3% commission for every home they sell. $1,000,000 x 0.03 = $30,000. So we’re off bragging that we made $30K last year”¦ Heck, there are brokerages that hand out trophy’s and plaques and certificates suitable for framing for this accomplishment. People put it on business cards, and on their web sites.
It’s ridiculous.
And you can be a MULTI-MILLION DOLLAR PRODUCER! if you make $60K in a year. Congratulations.
You are a “top producer”? Really? Compared to what? Hey, if you really are a “top producer” then knock yourself out proclaiming it to the world. If you really are NUMBER 1! then go for it. But you should have the data to back those claims up. (And a definition of “top producer” would be handy too ”“ I’ve never seen anyone define that term before they slap people in the face with it.)
Neighborhood expert? Ever seen a real estate agent proclaim to be a so-called “neighborhood expert” having never sold a home in said neighborhood? Believe me, it happens every single day.
And now that Redfin is displaying data, real buyers and sellers have a way of verifying if these claims are true.
That seems to make agents nervous. Imagine that.
Don’t get me wrong”¦
As I said in my original article, I don’t have a problem with anyone displaying our agents statistics ”“ if the data displayed is accurate. And on Redfin’s site, that accuracy is questionable. While I am not a fan of a real estate brokerage displaying competitors data, the simple fact is that data (flawed as it is) is out there, and in some MLS’s there are not any rules against anyone displaying it. That’s not Redfin’s fault. That is OUR fault. I would much rather see a “neutral third party” display this information as opposed to a competitor. I think that would be better for the consumer. But I firmly believe the vast majority of consumers are a lot smarter than we generally give them credit for being. Some consumers will want to see this data, some won’t. Some will use it, in combination with agent reviews ”“ and hopefully personal interviews ”“ to help them find an agent. Some won’t.
It isn’t a surprise (or shouldn’t be) that someone has done this. I’m surprised it took this long. Also unsurprising is the general reaction within the real estate industry.
But really, we asked for it. Now we get to deal with it.
Grandma always said, “be careful what you ask for, you may just wind up getting it”.
Grandma was pretty smart”¦
Photo Credit: futurechape on Flickr. CC Licensed.
The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...
First to comment again..
“I would much rather see a “neutral third party” display this information as opposed to a competitor. I think that would be better for the consumer.”
Zillow…I hope you have something in the works. I’d like to see this too 🙂
I’d be surprised if they don’t…
All great points. MLS rules are being rewritten nationwide as we speak. Good idea, but it’s going away soon, at least in the single-brokerage “write your own rules” variety.
I like the idea if implemented by the MLS. I’m not sure if it’s really in Zillow’s best interests. Will they create issues with their paid agent advertising when they’re showing other agents’ superior statistics immediately adjacent to those ads?
It may go away in the single-brokerage variety, but I bet it doesn’t go away for good… And it’s going to take awhile for MLS/associations to craft and pass new rules preventing it.
But I bet some are working on it.
I agree with Drew that it needs to be a third party that does this. Zillow, Trulia…take your pick. I have no issue with it, and if I were going to do it, I would allow agents to opt-in. Some would choose to and consumers would like it. That would put pressure on other agents to be transparent.
Remember, agents kicked and screamed at listings going out via IDX. Those that checked the opt-out box were at a clear disadvantage. Same idea with allowing agents to opt-in at first. Once Armageddon doesn’t happen and life goes on, the rest will come around as consumers suddenly choose agents that openly share that information.
I have no problem with the issue. I do have a problem with another brokerage doing it. If it was CB or KW doing it, I will still be against it going out on their site. It isn’t a Redfin issue to me.
I know my MLS allows us to enter non-MLS sales as solds, and encourages us to do so for greater data completion. So the whole “off MLS sales” isn’t an issue in my area as we have a way to add those in easily.
Melina – how does your MLS control / verify the non-MLS sales? In other words, what’s to stop someone from entering anything they like, whether they sold it or not?
The quality of MLS data is what is. My MLS data isn’t perfect, but it’s very good. I guess I’m lucky compared to other areas.
I think the discussion about teams, and MLS data quality are important, but are distractions from the core issue. You are a broker who agrees to share your listings with your competitors. When did you agree to share your agent stats so your competitors could index your agents names and calculate their performance metrics on your agents? I don’t think you did.
What happens when all brokers start calculating their interpretation of data on every other competing broker? The result won’t be consumer transparency.
I looked at Redfin’s numbers in detail. I don’t believe there’s anything honest about this move. In my area, their numbers aren’t so great. Something you won’t find on their report.
http://mocorealestate.com/2011/10/02/redfin%E2%80%99s-stats-they-don%E2%80%99t-want-you-to-know/comment-page-1/#comment-11139
Bruce – I may have agreed to it when I signed my MLS agreement/contract. There aren’t any rules (in my MLS) that prohibit it…
I’m not overly worried about them indexing my agents names. I can beat them at that game. But you bring up a good point — there are a lot of brokerages that can’t or won’t.
That’s Redfin’s argument – “you didn’t say I couldn’t, so I’m doing it”. This will be something that brokers in an MLS will need to resolve.
If I had your PR strength (which you earned), I wouldn’t worry about someone else indexing my agents either. Unfortunately, the rest of us aren’t you. 🙂
Bruce’s point may be the most important yet.
When a consumer Googles “Bruce Lemieux”, the first link they may find is a page on Redfin’s site. If that page advertises Bruce’s business and incorrect data, it’s not only a detriment to Bruce’s reputation, it’s a lawsuit in the making.
Every single agent whose information is displayed incorrectly is a potential litigant, and based on the current data, it might be the majority of agents whose stats are incorrect.
So, did the company weigh the potential publicity vs. alienating thousands of agents and creating more legal scrutiny, and publicity came out on top?
“If that page advertises Bruce’s business and incorrect data, it’s not only a detriment to Bruce’s reputation, it’s a lawsuit in the making.”
I would suspect it would be a NAR Code of Ethics violation as well. Though personally if I were Redfin, I’d be more concerned about the potential litigation.
Sam, this is my beef. They have me with 2 sales in the past 12 months when the actual figure is over 40. The longer inaccurate data is out there with their blessing, the more they expose themselves to liability.
Neutral third party — I’m not so sure Zillow or Trulia are all that neutral. Perhaps better if a neutral third party were non-profit. Wouldn’t NAR be a reasonable choice? Yes, I recognize that they are not quite neutral (in that they represent REALTORS and not non-REALTOR licensees). It would be a true test of the REALTOR member if they were to actually support this concept. That’s the biggest hurdle for NAR, as was seen when the Houston Association of REALTORS tried this.
Why not the MLSs? The NAR doesn’t need to get involved with trying to do this for hundreds of MLSs across the country, each with it’s own set of rules… In my opinion.
What about consistency of reporting in overlapping markets between different MLSs? Also, wouldn’t uniformity in the statistical reporting across broader markets or across the country be necessary?
Actually, now that I think about it, we’re right back to the issue of different rules between MLSs that creates the consistency challenge. Never mind…
And therein lies a BIG part of the issue / challenge!
…and now we’re on to the National MLS with standardized guidelines. Local boards won’t give up that control, though.
Jay, I agree with you that there’s plenty of bad MLS data out there. But I think it’s worst in areas of the database that don’t matter for the primary function of the MLS. Of course issues will come to light when data used in unusual ways. If the MLS (and members) bought into the idea that certain statistics had to be generated and be accurate for display then rules and compliance resources would be put into making sure the basis for those statistics was accurate. Then the data may not be perfect, but it would be better.
Dream on, Matt. I spent almost 30 years trying to convince real estate agents and brokers that data integrity was a desirable quality in an MLS. But always there were those who withheld listed properties from the system, did not turn in under contract listings, never reported sold data, and measured property by holding up their right thumb and guesstimating. As long as MLSs have volunteers collecting data and those volunteers are interested in their own best business interests (as they should be), accurate data will be a rarity. The question is, is there a system we can put in place which will stimulate accuracy and completeness in MLS data? Clearly we haven’t figured it out yet.
Nice post, Jay. Thanks.
The NWMLS in our area has process in place–monetary fines, even automatic fines for certain routine errors. I’m not saying that agents like it, but it seems to keep you on your toes, and keeps the database fairly accurate.
Jay – you are awesome. Thank you for keeping this very important conversation going and helping to categorize the issues. I believe that organized real estate should have a productive conversation and address this one now. Stop putting it off and recommending that we can change the rules and policies to keep someone else from doing this. I agree with you — I believe the MLSs ARE in the best position to do this. They are the most qualified stakeholder to collect most of the relevant data in each market and make it as consistent as possible.
NAR – we don’t need NAR to get involved and don’t need the national MLS committee to work on this one for 3-4 meetings over the next two years. Just a lot of noise at the national level and a majority of MLSs won’t like the resulting mandate from NAR anyway. What a waste of talent and energy.
Some of this data will never line up 100% — like DOM calculations. There are dozens of ways MLS Committees try to calculate this one — too much variety for a national standard here. However, I think we can count transaction sides, dollar amounts and come up with good answers for handling teams and agents changing brokerages. MLSs with some best practice guidelines are certainly up to this IMHO.
I don’t expect Trulia or Zillow (or any other “national publisher” will get this right with all of the variables and 885 different MLSs. Seems to me that Redfin is at least trying to get this right. Would a national player make a similar effort? So I vote for MLSs taking a serious try at this.
Jay, I like what you are doing here by categorizing the objections. We need to have a constructive conversation about this from all involved parties. Let’s ask a few consumers what they think. How about asking the brokers and agents that are doing the deals and paying less attention to the anticipated noise from the non-producers? You want production numbers and great customer service ratings — then dig in and earn them. Consumers will take notice.
I for one say we don’t need to put up more roadblocks, new policies or lawsuits from inside. How does this help or improve the REALTORS'(r) image with the public? It won’t.
Keep up the good work Jay and others. Let’s capitalize on this one now from inside. The alternatives won’t ask what we think and they can’t do it as well as we (MLSs) can.
“I don’t expect Trulia or Zillow (or any other “national publisher” will get this right with all of the variables and 885 different MLSs.”
Remember that the Zillow’s of the world don’t have to worry about MLS’. They don’t get their data from them, so they don’t have to abide by their rules.
Good followup to the “initial thoughts” post. I talked with our MLS person this afternoon. Nobody in Austin had called in to complain, kick or scream yet. I think most agents are still unaware.
Will be interesting to see how this unfolds.
Bravo Jay! I love reading these snarky posts. Looks like Redfin separates the men from the boys.
Sometimes presentations data and statistics only who someone wants it to look like. It can be the government, banks, mortgage companies, etc. Truth is often far away, but it was not what they wanted to show …
Yep. They have never brokered anything here (Las Vegas market) but with the work of their “partner agents” at other brokerages they sure do look like busy bees!
That’s my bitch. They claim to be objective & transparent and it’s anything but.
Renee, I would echo this. When I was a partner agent for Redfin, they had their own standard for how things should be reported to the MLS. Yet their lead agents got MLS credit for the work their showing agents did.
Two standards, and all that after they gave me their word that they wouldn’t tell me how to run my company.
I checked out my so called report – “meh” is my response. A lot of transactions mysteriously missing but looks pretty good. I am not surprised a lot of agents are up in arms over this. Easier to play the part of a top producer than really be one.
And, so it begins…
http://activerain.com/blogsview/2537149/redfin-cease-and-desist
Jay. If anyone benefits from Scouting Reports, it is me. I *am* one of the guys who has the numbers to back his production claims, and I trade on that as I build my brokerage. But Redfin has me with 2 crummy closings the past 12 months, because they are missing my main MLS data.
That isn’t GIGO. As a matter of fact, agent input errors don’t concern me in the least, because we aren’t talking about the wrong number of bathrooms or the type of heat. It is closings and days on market, which are system generated, and unless an agent can’t even input their own ID into the MLS there shouldn’t be a problem there. But there is.
I also don’t think that Redfin has an army of attorneys all over this. When I was a partner agent and informed them that my profile was non compliant, Adam asked me to get him the exact part of the law that said so, which was ridiculous.
If there were accurate data, and we are talking about two basics, sold and days on market, there wouldn’t be an issue with me. But it isn’t accurate, and they shouldn’t have made this live so flamboyantly (“Live by the sword! Die by the sword!”) with it so buggy and wrong.
“It is closings and days on market, which are system generated, and unless an agent can’t even input their own ID into the MLS there shouldn’t be a problem there. But there is.”
Therein lies a fundamental part of the issue JPF — every MLS is different. Here buyer’s agents are completely reliant on the listing agent entering in the closing information. They get prices wrong (which could falsely impact your median sale price) and they often get the buyer’s agent wrong (or put themselves in as both listing and selling agent).
DOM can also be manipulated by cancelling listings, letting them sit through the period required to reset DOM and then re-listing them — all the while they are actively being marketed within the brokerage as a “pocket listing”.
GIGO is a concern here. It may not be in your MLS.
Jay, in New York if the listing agent had the temerity to input themselves as the selling agent when it was in fact an agent from another brokerage, they’d have a grievance filed against them in a hot minute.
Anyway, Redfin has apparently made my own report far clearer that it excludes the EAMLS data and the dual agency icon now includes “unrepresented” buyers, which is progress.
I was under the impression that the term “Top Producer” pertained to the agent that sold the highest dollar amount of real estate in their brokerage.
We have been calling the sf 49ers #1 also for 10 years! Nobody paid us any attention!
Again, just another day at the zoo