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.
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.
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.