360Digest

Zillow is a new start-up, based in Seattle, which recently raised $32 million in venture capital. It’s headed by Richard Barton, founder of Expedia.

Expedia didn’t kill the travel agency per se, but it was definitely one of the nails in the coffin. Since 1995, many travel agents have exited the industry. Of the ones still in business, some have abandoned the “brick and mortar” agency for a home-based business to reduce overhead, and those who remain have managed to survive by promoting other travel products like cruise lines and train excursions, or by promoting their ability to aggressively research and assemble complex travel packages on a moment’s notice (essentially acting as a very advanced concierge).

Many people are expecting Zillow to shake up the real estate business in a similar fashion.

According to this article in The Wall Street Journal, “Mr. Barton said major change in home selling is inevitable over the next five years or so because “there’s an unsustainable disconnect” between the commissions charged by most agents and the value of their services.”

So, I can just see these guys sitting around a table talking… “We went to Harvard Business School and are only making $XXK a year and these real estate agents just went to some public university or even worse, a community college, and are making just as much as we are! Let’s use our superior intellect and design a better website and skim their customers off the top and then sell their clients back to them, for a price! That will show them to mess with business school grads!”

They’re perfect Capitalists, not making the wealth themselves, but figuring out a way to skim profits off of other people’s labor.

Are they going to schlep around from house to house in the evening and on Saturdays and Sundays, in the rain, perhaps with the Buyers kids in tow, week after week, month after month, searching for a dream home? No. But real estate agents do it, and those business school grads and real estate repackagers and website designers and computer programers want a cut of the agents labor.

It’s interesting that the majority of real estate agents are female, as they seem to excell at this “people-person” type of job. The “skimmers’ at Zillow and Redfin are all males, at least the ones listed on their mastheads. A lot of real estate agents are women who have entered the workforce after their children are grown. They are people-people, not strategists, not computer programers, not business school grads. They are attracted to the business for a variety of reasons but if you ask them, a lot will say they like to “help people”.

What stupid women! Silly housewives! They should have been busy learning html and computer programing and search engine optimization and java script and stuff like that, instead of driving people around to look for their dream home!

Homegain is owned by Classified Ventures, LLC which is a strategic joint-venture 100% owned and funded by six large media partners. They are Belo Corporation, Gannett Company, Knight Ridder, Inc., The McClatchy Company, Tribune Company and The Washington Post Company. These are also mostly ran by men. Middle-aged white men. Homegain is also a “skimmer”. They have a partnership with Zip Realty to appropriate the MLS’s listings, lure the buyer in, and then sell that lead back to agents again. For a percentage, of course.

HouseValues.com and it’s sister site JustListed.com, has 18 managers listed on its Executive Team. They are quite progressive as it appears that 2 of these are women. Congratulations! (The CEO is, of course, a male Harvard Business School grad…)

If you don’t make it worth an agents while to be available 24 hours a day to go run out and preview the latest listing or to write up a sales contract or hold a first-time buyers hand through the whole sales process, the good ones will leave the business and you’ll be left with those not up to the task.

One can’t buy a house over the internet like one can buy a book or a new IPod or a pair of slacks. Someone has to get the Buyer into the house, probably into lots of houses, over the course of many weeks or many months. They have to be tour guides, couselors, financial advisors, entertainers, sometimes babysitters, negotiator, and friend to many people. To say that has no value is wrong.

The subtext of what these “real estate repackagers” are saying is that the average real estate agent (most likely a woman who has entered the business after her children are grown) makes more money than she deserves, and they want a cut of the pie. And they know how to get it, by building superior websites to lure the new, young buyers who are entering the real estate market and who are used to researching and ordering everything online.

There’s lots of buzz out there surrounding Zillow. For some of the best dialogue, check out these websites:

Business Week Online How Scared Should Brokers Be?

Ravenna Houses “Zillow’s Infrastructure

Zillow Stories on Rain City Real Estate Guide

John Cook’s Venture Blog Zillow’s New Riches

With the Seahawks win last week, Paul Allen is becoming quite the cultural icon, even outside of Seattle. He even rated a feature in the New York Times. Paul Allen / New York Times.

Have you heard about Alex Mayer’s film, Paul Alien? It’s a mockumentary film that proves the billionaire is collaborating with space aliens hell-bent on seizing control of earth. Ha ha ha ha….. Paul Alien - The Movie.

Unfortunately, Alex’s other endeaver, the blog “The Tattler” has ceased cyberspace publication. But you can read past entries here…..The Tattler. Scroll to the very beginning to read her biting remarks about the zillionth rerun of “Almost Live”. The funny thing is, you see the old stars of that show around town, and they’ve aged, but their TV-counterparts haven’t at all. Yikes!

Architects and engineers compete to see whose team can build the most spectacular structure using little more than cans of food at
Canstruction, the 13th annual NYC Design and Build competition in New
York. The exhibit at New York Design Center is open to the public. At
the end of the competition on 23 November 2005, the 130,000 cans that
are part of the exhibit will be given to the Food Bank of New York
City.

Canstruction is a national charity and has similar competitions each
year in over 66 cities throughout the United States and Canada. For
more information, visit www.canstruction.org

We reported in September that Courtney Love’s New York condo was in foreclosure. Now it appears she’s lost the home that she bought in 1997 for Cobain’s family. Love was named in the foreclosure suit as a trustee of the Courtney Love family trust. She stopped paying the mortgage in December 2003, court documents say.

Seattle Times article on Love foreclosure

If the easy-money days are over in the U.S. housing market and most of your net worth tied up in real estate, that means it’s time to diversify and find appreciation in unfamiliar places. . . Seattle Times 1/22/06

Coldwell Banker Bain (my brokerage), unveiled a new property search function this week on their website www.CBBain.com . It features an interactive search map that really helps buyers narrow down the homes for sale in the area that they’re looking for. It compares quite favorably to similar search functions offered by Redfin. I like it, but find it less informative than the regular text-based searches, though I will change my search interface if I get enough feedback that it’s warranted. Compare the two and let me know which one you prefer. Seattle Home Search.

My feelings, after using both, is that the interactive maps are toys, gimmicks to please the techies. But I find them less effective for serious buyers.

Like coffee? Want Elvis to come to your door with a piping hot cup? Sign up for a subscription to Elvis Coffee

Can’t get enough Elvis? Wrap yourself up in Elvis Fabric

Wanna get drunk with Elvis? Try new Elvis Valentines wine

Eating shrimp used to be a big deal. It was expensive and hard to get most of the year. Read Slate’s shrimp expose for what’s going on in the world of decapod crustaceans and why they’re so cheap (and tasteless) now.

Guilt-Free Guide to Seafood

Chemical Cocktail: The Health Impacts of Eating Farm-Raised Shrimp

A couple and their 3 children in Oregon are getting a lot of flak for living a middle-class lifestyle from begging……“Affluent panhandlers” pissing people off…..

Alternatives to giving to panhandlers

Save Karyn — the internet’s first online pandhandler

Cyberbeg.com — how to start your own internet begging site

“DonateMoney2Me” - another option for online begging

Is this the secret of his long life? That possibility in this ABC News article was never addressed Albert Hofmann’s 100th Birthday

And for a little different kind of trip, “‘Shroomin’ in Amsterdam”

Happy Cactus!

A lovely collection of: Blotter Art

Redfin announced today that it just received a $1.25 million dollar cash infusion from Madrona Venture Group today.

In case you haven’t heard of them before, Redfin is a real estate agency with a website that has an interactive aerial search function.

It started out trying to hook up buyers with independant agents, but then moved to having their own in-house agents. Over time, it became almost hostile to other real estate agents and burned some bridges in the process. They now have one broker and one real estate agent to handle incoming leads from their website.

Founded by techies, they realized they had a nice search function, but were feeling around for ways to make money with it. Obviously, neither approach pulled in the dough that they wanted. They turned to finding a big name to bring on board, and then to getting some venture capital to keep the business up and running.

The problem is, do they have a sound business model?

At this point, they’re just another small real estate firm with an average sales record.

According to NWMLS records for 2005, last year Redfin had 24 home sales. Based on an average 6% commission (or 3% to the sales office), that is approximately $270,000 income for the year. It may have even been less, as they’ve been known to discount their listing fees. According to their website, they have 4 managers. They also have two real estate agents licensed by the State of Washington, for a total of 6 people. I’m assuming they also have additional staff, but just going on their listed 6 employees, at $270K a year, that’s about $45K a year income per person. That’s not counting overhead such as office rental, computers and such. That probably brings it down closer to $35K a year income per person. Wow. And now they’re talking about moving down into California. WHY? If they’re not making any money here in Seattle, why expand? If it won’t work here, who go down there?

How on earth did they talk Madrona Venture Group out of a million bucks? If their income was what I’ve surmised, then I’m guessing most of that $1.25 million is going to pay the new CEO’s salary.

Glenn Kelman, co-founder of Plumtree Software, has been hired as the chief executive officer, and Brian Marsh, a senior manager from Amazon’s community group, is the chief technology officer. Redfin founder David Eraker will continue to lead the company in business development and product strategy.

Glenn mentions in the Seattle Times 1/9/06 “when looking for a home, he used Redfin.com.” He may have seen the listing there, however, records indicate it was listed and sold with Windermere, not Redfin. I won’t mention the sales price (though it IS a matter of public record), but I will say that it sold for almost $30,000.00 more than asking price. You can draw your own conclusions about all this. But if Windermere was the listing and the sales agent, exactly how did Redfin make any money on this sale? I think the answer was, they didn’t. As this illustrates, just having a fancy website does not guarantee one will make money from it.

On an interesting side note, a press release from the company dated 1/9/06 states that “After more than a year as Seattle’s most popular site for residential real estate…..” I thought that this statement didn’t ring true, so I thought I’d try to check. Though I don’t have access to a specific number of hits, I can make some inferences using some web tools. For instance, using the Link Pop check on MarketLeap.com, Winderemere comes in at 133,076, Coldwell Banker Bain at 5747, www.SeattleDreamHomes.com at 4769, and Redfin at only 1770.

Using their Search Engine Saturation function, I found Windermere to be at 14,640, www.SeattleDreamHomes.com to be at 2,684, Coldwell Banker Bain to be at 1,378 and Redfin trailing at 393.

One can use the Alexa rating, but that it very limited in scope as it only tracks those that have the toolbar. They look at all of the traffic numbers and then put all the websites that are out there in order. So if you are #1 that would mean you had more traffic than any other site out there per the numbers Alexa collected (again limited data).

Here are a couple of examples:

Redfin has a ranking of 49,636

Windermere has a ranking of 3,343

So, this would mean Windermere is more than 10 times more popular than Redfin.

These numbers are really easy to manipulate as it tracks such a small amount of websurfers that one person could spend an hours on their site clicking on a bunch of pages and push themselves to a pretty high number. Worse you can use a bots to visit your site and boost the numbers. But, with that said, it is a way to get a very general idea of the traffic a site might be getting.

So is Redfin the “most popular site for residential real estate”? Hardly. Hyperbole and puffery is not new in the world of real estate!

Here’s a great interview with the new CEO of Redfin by John Cook. Be sure to click on the audio interview! John Cook’s Venture Blog

Updated Redfin News 5/31-6/2

PostBubble

Ubertor

David Brunelle

Lopolis

TechCrunch

The Future of Real Estate Marketing

Silicon Beat

More TechCrunch

“Housing Supply: Local Actions,” by the Washington Research Council, has been prepared as part of the latest Quality of Life series examining the availability and affordability of housing in Washington State. The housing supply in Washington State is ultimately determined by local government: cities and counties approve and record every new plat and issue every building permit. Local zoning and development regulations govern density and building envelopes. This brief describes actions that should be taken at the city and county level to increase the housing supply.

Ways to Boost Housing Supply: Local Actions

Photos from The Seattle Times at the Elvis Invitationals

It was a banner year for real estate prices in the Puget Sound area, and December was no exception, according to statistics released Thursday by the Northwest Multiple Listing Service.

But a drop in pending sales — offers made and accepted, but not yet closed — across 16 of the counties measured by the listing service indicates that people are pulling back from the real estate market. It’s the beginning of a cool-down.

Home Sales Cooling by Kristen Bolt, Seattle Post-Intelligencer, 1/6/06

“When Kingman Ho, a physician, bought a 1,000-square-foot 1960’s house in Seattle’s Mount Baker neighborhood in May, the sellers figured he would tear it down. But Dr. Ho was so intrigued by some of the house’s quirky features, like a child’s playpen that converts to a conversation pit for grown-ups, that he devised a way to try to save it.

Dr. Ho is offering the house for $1 to anyone who is willing to remove it by February, when he plans to start construction on a new house. (So far, there have been no takers.)”

Free House, You Haul, New York Times, 1/5/06

Demolition looms for historic home by Athima Chansanchai, Seattle PI, 12/23/05