When whispers scream my house is for sale, who needs a listing broker? Or for that matter the MLS? Isn’t that what Pocket Listings, Quiet Listings, and Whisper Listings have been demonstrating for the past six months in California and other markets where an estimated one in four listings is selling outside the MLS?
Contrary to it’s name, those are some of the questions Redfin’s newly launched Price Whisperer shouts. Is this simply a shrewd move by one innovator to preempt pocket listing; or is it another sign that proactive house hunting is going mainstream, the MLS is shrinking in it’s importance as well as inventory, and the open ecosystem Zillow envisions will transform the real estate market before 2018?
Consumer Benefits: Intended & Unintended
As a consumer advocates, buyer agents, and fee-for-service real estate consultants, Real Estate Cafe’s hope is that whispering about hidden homebuying opportunities will have four consumer benefits: (1) reveal the depth of the “intention inventory,” (2) drive down bidding wars created by artificial scarcity, (3) create a marketplace of alternative, fee-for-service real estate business models, and (4) deliver the money-saving potential of IntentCasting to millions of homebuyers and sellers annually.
What are IntentCasting and Intention Inventory? We described IntentCasting as broadcasting intentions in a recent blog post, so let’s focus on Intention Inventory. Redfin’s innovation underlines that fact millions of homeowners are watching the market trying to decide when it’s a good time to sell. We’re not talking about Zillow’s MakeMeMover, we’re talking about homeowners who have not yet expressed their intention to sell or have tried previously and failed. For example, in one luxury suburb in Greater Boston, there are only 33 active MLS listings, but Real Estate Cafe’s analysis of expired and canceled MLS listings reveals four times that number have yet to relist. (Yes, some may have sold for sale by owner, we’ll complete that analysis later).
If Price Whisperer invites potential homebuyers to respond to target asking prices, what’s to prevent DIY homebuyers from making a pre-MLS offer directly to the seller? Redfin blog post addresses that, but doesn’t disclose which party are they are representing or whether they are simply facilitating the match for a modest fee:
“The Price-Whisperer email is a test and only a test. We won’t use it as a secret solicitation to sell the home. No matter how many buyers respond to the email, the owner is still more likely to get top dollar by putting out a sign and offering the home to the entire market. We are also governed by our membership in local Multiple Listing Services, cooperatives for sharing listing data between brokerages, which require brokers to show all bona fide listings to all buyers.”
Beyond their policy above on Pocket Listings, my guess is that offering finder services would undermine Redfin’s revenue model. That’s not true for nimble fee-for-service real estate consultants like the Real Estate Cafe. When we help buyers create their own homebuying opportunities with Proactive House Hunting, our fees start at just one percent, 0.5% for each side not the 5% commission model Redfin assumes.
Zillow says that “Home Stalking” is one of the leading trends this summer, so if DIY homebuyers and sellers find each other independently and just want help on an hourly fee, were set up to offer a menu of options there, too. Just like what happens when you consider buying a used car from an owner; asking a mechanic to evaluate the car on an hourly or fixed fee can help you make a more informed decision before agreeing to a final price.
But last I checked, Redfin did not work with FSBOs “for sale by owner” properties and has a minimum fee of $6,000. And instead of broadcasting a homeowner’s intention to sell the whole market, Redfin narrowcasts it to up to 250 of THEIR buyer leads and tells them to get in line:
“Folks who respond get first in line to tour the home if you decide to sell.”
Conflicts of interest
That raises questions about Redfin’s agency relationships and obvious conflicts of interest. Are they trying to get the highest price for the seller, the lowest price for the buyer, or both sides of a commission? They can’t do all three despite their home page assertion that “Redfin Agents are on your side.”
This isn’t the first time Redfin has had a conflict of interest or tried to host their own bidding wars in-house (at least in Boston) as we blogged in the past.
By restricting access to whisper listings to their own buyer leads is Redfin effectively requiring buyer and seller to consent to Designated Agency, a conflict of interest by any name?
That’s not the only conflict of interest. If Redfin is “whispering” leads to hundreds of buyers and only one can purchase the property, how will the others respond if Redfin has signed a contract to act as their buyer agent?
Opening the Real Estate Ecosystem
Regardless of how Redfin answers these questions, there’s no question it’s just a matter of time before homeowners will be able to manage their own digital identity as well as their home using their personal cloud. If 30 million homeowners – or an amazing one in three — have already tweaked the description of their properties on Zillow, it’s just a matter of time before they can issue an IntentCast that operates outside of Redfin’s silo, Zillow or the MLS.
1. Want to learn more about how consumers, both buyers and sellers will benefit from an open ecosystem in real estate? Read the 22 idea starters on our reVRM-Minifesto on the last few slides of this Game Changing presentation, and join us offline at MIT for a visioning exercise.
2. Want to learn more about Proactive House Hunting and the 10 Hidden Costs of Reactive House Hunting? Schedule for a webinar online or meet offline using this form.