Redfin sent out a press release today stating that their buyers on average paid 99.329 percent of the listing price while buyers with other brokerages paid 100.233 percent of the listing price for homes.

While it may be true that Redfin buyers in King County paid 99% of the list price for a home from 2/6/06 to 2/5/07, an average buyer in in the same county in 2006 paid only 81.61% of the list price for a home.

I have tried to replicate Redfin’s conclusions using their criteria and I could not.

However, I did find a NWMLS statistical report for 2006 and they indicate that King County single-family-home median list price was $520,797 and King County SFR sales price was $425,000. These were all reported sales, by all agents and members of the MLS.

You can view the report here. Relevant statistics are on page 27.

Homes in King County sold by ALL agents in 2006 were sold for 81.61% of the sales price.

I think it is a mistake to take Redfin’s “White Paper” at face value and not do further research. As we all know, statistics can be manipulated to prove any point you want.

Redfin makes their claims difficult to prove by saying that they’re not allowed to republish NWMLS data, however a quick call today to the NWMLS today confirmed that we ARE allowed to mention, discuss, use and link to NWMLS reports and statistics.

So in case you missed it, here’s that link again.

Page 27.

Median List Price: $520,797
Median Sold Price: $425,000

Buyers paid an average of 81.61% for all single family homes in King County for the year 2006.

If Redfin customers are paying 99.329% of the list price for a home, in roughly the same 12-month period (Jan-Dec v.s. Feb to Feb), then they may be paying a great deal more than they need to for a house.

I’m both appalled and titillated that my little tiny avatar follows me around while I surf. I used to be able to lurk and read blogs in obscurity, but no more, since I’ve joined MyBlogLog.

Shoemoney’s Jeremy Schoemaker had posted about flaws in MyBlogLog’s service, and when he demonstrated how someone could easily pose as another MyBlogLog user when visiting other websites, he was banned from MyBlogLog.

Anyone who might want to could have used a tip Schoemaker published to pretend they were someone else.The Yahoo-owned blogging community service used unique and easily located user IDs that could be placed in a MyBlogLog cookie in a browser.

A couple of days later, Jeremy was reinstated and MyBlogLog apologized for the ban. Fun reading.

I’ve noticed that some bloggers who placed their widget on their site have removed it.

Another MyBlogLog exploit, this one more harmful

Are Buyers really finding their new homes online?

According to the Pew Internet & American Life Project, internet penetration has now reached 73% for all American adults. Internet users note big improvements in their ability to shop and the way they pursue hobbies and personal interests online. While the percentage of Americans who say they use the internet has continued to fluctuate slightly, the latest survey, fielded February 15 – April 6, 2006 shows that 73% of respondents (about 147 million adults) are internet users, up from 66% (about 133 million adults) in Pew’s January 2005 survey. And the share of Americans who have broadband connections at home has now reached 42% (about 84 million), up from 29% (about 59 million) in January 2005.

Though the NAR reports 79% of all Americans report starting their home search online, a Pew survey dated 12/13/06 indicated that only 39% of internet users have looked online for a place to live.

So, 73% of adults are online and, of that number, only 39% of those have looked online for housing.

Many creditable sources urge us to take our marketing online, blog and podcast. Some 12% of internet users say they have downloaded a podcast so they can listen to it or view it at a later time. However, few internet users are downloading podcasts with great frequency; just 1% report downloading a podcast on a typical day.

Denying these are all important trends would be foolish. However, the current penetration in most markets is still minimal. The question “did you look?” does not indicate if they actually found their home that way. Most Buyers still purchase their homes with the assistance of real estate agents.

My advice is to figure out how many years you have left in the business. If it’s less than 5, it’s probably not important to learn all these new tricks, develop a website, blog, podcast. You’ll be retired before it will affect your business.

But if you’re younger and/or just starting out, take this time to start developing your brand, designing a killer website and learning about the new technologies in real estate. If you’re not able or willing to do these things, then align yourself with a company that is.

Nevertheless, it’s my belief that your sphere of influence (i.e. your friends) will still continue to be your largest source of business.

Redfin’s San Francisco blog had a wonderful post “Palo Alto: In Praise of Garages”, enumerating several noteworthy garages in the Bay Area. They noted both the garages of young Bill Hewlett and Dave Packard and another noteworthy garage, the place where Steve Wozniak and Steve Jobs started their “Homebrew Computer Club.” This enterprise later became Apple.

I couldn’t think of any famous garages here in Seattle, unless you counted
Kurt Cobain’s, whose life ended in his garage.

HappyDeathInc.

Nirvana was arguably Seattle’s greatest garage band, though
not its only famous one.

Today, February 20th, would have been Kurt’s 40th birthday. He was born in 1967 in Aberdeen, WA.

The garage was torn down by Courtney, shortly after his death, perhaps because she couldn’t stand looking at it or maybe to avoid it becoming a shrine.

Courtney sold the house in 1997 for $2,895,000. The listing agent had a brokers Open House, and the curious were able to wander about for clues to the previous owners existence. The garage had been torn down by then, a fence put up around the property and a bench erected in Viretta Park, that has had to substitute for a shrine. Courtney had contacted Lake View Cemetery (where Bruce Lee is buried) and Greenwood Memorial Park in Renton (where Jimi is buried) but both cemetery owners were concerned about security. Cobain was cremated; the cremains are kept in an undisclosed private location. His family has yet to approve of any official memorial site.

Zillow has the home listed
with a ZESTIMATEâ„¢ of $5,861,884.00. Which is probably about right.

www.Flickr.com

This Saturday, February 24th, would have been Kurt and Courtney’s wedding anniversary. They were married 2/24/92 in Hawaii.

Angelo Bruscas in his PI blog,
Seattle@Nite writes of the 12th anniversary of Kurt Cobain’s death in an entry entitled “Nirvana at Nite”. The 13th anniversary is coming up April 8th.

The home where Nirvana played its first gig was on the auction block for sale last year.

This is not the first Cobain home lost .……Courtney Love lost both her New York home and a historic home in Olympia she bought for Kurt’s sister Kim.

Cobain listing on Ebay

The other members of Nirvana were Dave Grohl, who went on to front Foo Fighters and lives on the East Coast.

Krist Novoselic’s ties are deeper in the Northwest, and he spends time in Seattle and in his home Southwest Washington he shares with his wife, local clothing designer Darbury Stendaru, who had a studio on 1st Avenue, but now only does trunk shows. They also celebrate their wedding anniversary this month (2/27).

In 1995, Novoselic founded JAMPAC (Joint Artists and Music Promotions Political Action Committee), an organization that advocated on behalf of Washington state’s music community. Novoselic’s work with JAMPAC helped Seattle club owners find ways to host all-ages shows, and was instrumental in helping to overturn the (anti-)Teen Dance Ordinance. And sometimes making music and making a statement go hand in hand, as when Novoselic, Soundgarden’s Kim Thayil, and drummer Gina Mainwal backed Jello Biafra as the “No W.T.O. Combo” at a show performed during the World Trade Organization conference held in Seattle in 1999.

There have been other musical endeavors since Nirvana, as well as new causes. Novoselic is a strong supporter of electoral reform, an issue he writes about extensively on his website Fix Our United States.

He’s also published several books, including
Of Grunge & Government: Let’s Fix This Broken Democracy!

Instant runoff voting: speaking to voter needs
By Krist Novoselic (Seattle Times)

IRV, a better way, by Krist Novoselic, The Nation

Guide to Pacific Northwest Bands, garage or otherwise

Photos of Kurt Cobain’s Seattle house on Flickr

A walking tour of Kurt Cobain’s Aberdeen

33 things you should know about Nirvana — Blender

Cobain unofficial memorial at Viretta Park

Sad reminder of Kurt Cobain’s legacy
- Cobain/Love house sold in foreclosure

Kurt Cobain: Seven Years Later –
a Reflection by Clark Humphrey on HistoryLink.org

What a lovely sentiment.

How many people can wish their loved ones Happy Valentine’s Day like this? Hairshirt? Sacred undergarments? Italian sweater? Flak Magazine’s Essay on Back Hair.

Wunderland Long Hair Index

In Korea, there’s a government campaign against long hair. It stressed the “negative effects” of long hair on “human intelligence development”, noting that long hair “consumes a great deal of nutrition” and could thus rob the brain of energy. North Korea wages war against long hair.

I love juxtapositions and reciprocity and capillaries of connections. I like to look for patterns and order and the weave, web and wiring between people and events. Relationships, correlations and networking connect the people, places and things in our lives.

If you’re a Seattleite, you may know Walt Crowley, founder of HistoryLink.org, a journalist, a social services director, a policy planner for the City of Seattle and the Municipal League of King County, a television news commentator, a freelance writer, communications consultant and networker extraordinaire.

In a sad twist of fate, this former radio and television commentator, lobbyist and public speaker was diagnosed with laryngeal cancer on July 15, 2005. He began treatment at Group Health Cooperative in August, but chemo and radiation therapy ultimately failed to kill the disease, necessitating removal of his larynx on February 9, 2007. Luckily, word is he did well and is now in recovery. He’s not seeing guests quite yet (not even recent visitor Mayor Greg Nickels), but he’s making good progress. Slowly, he will learn to use one of those hand-held voiceboxes and will communicate with his multi-layered network of friends, political cronies, writers, artists and other assorted ne’er’-do-well’s in that way.

In the weeks before he went in for the surgery, he recorded his words so his wife, friends, family and, more importantly, he himself, would not forget how his own voice sounded.

In a degree of bravery I have rarely witnessed, the evening before his surgery he invited some of the friends, cohorts, sidekicks, well-wishers, patrons, advocates, supporters, politicians, ex-hippies and rabble-rousers he’s known, to come by one last time to hear him speak and for a going-away party for his voicebox.

There were several past mayors in attendance, including former Seattle Mayors Wes Uhlman and Norm Rice. Here is a photo of Walt, ex-Mayor Norm Rice and current City Councilmember Jean Godden.

There were also many City Council members there, including President Nick Licata, Peter Steinbrueck and ex-Port of Seattle Commissioner Henry Aronson.

The place was packed. Writers such as Paul Dorpat. Artists such as David Kane (having his own battle with Hugo). Other writers like Milo Johnstone (The Magic Decade) and singer/songwriter Danny O’Keefe.

Walt is also the author of several historical tomes about Seattle University, my alma mater. He wrote “William J. Sullivan, S.J” , a celebration of Seattle University’s renaissance during 20 years under its 20th president and “Seattle University, A Century of Jesuit Education”.

Also in attendance was Ken Bunting, associate publisher of the PI, Tracy Rowland, Maura Donahue, Kurt Geissell, owner of our favorite brunch spot, Cafe Racer, and Quintard Taylor, Dr. Hubert Locke, Professor of Public Affairs, Dean Emeritus, and Marguerite Corbally Professor of Public Service and author of Learning from History: A Black Christian’s Perspective on the Holocaust and Searching for God in Godforsaken Times and Places: Reflections on the Holocaust, Racism, and Death

Walt used to have a show on KIRO-TV called “Point/CounterPoint” with John Carlson, who is still a talk show host on conservative talk-radio, KVI. The show consisted of exchanges between the conservative organizer John and left-wing writer Walt. The mini-debates aired two or three times a week and covered a wide range of political and social topics.

John stopped by for one last verbal spar with Walt, the night before the surgery.

One of Walt’s great successes was the founding of History Link, a fabulous State of Washington history website, with over 100,000 visitors a day.

So what does any of this have to do with real estate?

The seed money for HistoryLink.org came from a $100,000.00 grant from Paul Allen, owner of Vulcan Real Estate, the builder of 1000′s of condo’s in the Seattle area and also owner of Vulcan Capital, the main funder of Redfin.

Also, the Seattle-King County Association of Realtors created the First Citizen’s Award in 1939 to honor outstanding community and civic leaders who’ve made a contribution to improve the region where we live. (The Gates Family were recipients in 1995, Jeff Brotman, founder of Costco in 2005, the McCaw’s in 2004. Dale Chihuly was a recipient in 2006. (Read “Glass Artist = Realtor?”).

The Association of Realtors created a relationship with Walt’s organization, HistoryLink.org, to memorialize the 1st Citizen Award event and most importantly, the contributions of the past recipients. Walt helped write the biographies to provide a new, authoritative, and easily accessible historical reference. HistoryLink.org created 1,500 word biographies for each past recipient.

This past week, Crowley took his voice on a farewell tour, appearing on public radio and local TV news stations:

Cancer claims radio host’s voice on NPR

Historian’s voice still fighting to be heard

NPR (KUOW) radio interview with Walt Crowley

Seattle historian loses voice (KOMO-TV)

A voice of Seattle faces a challenge (Seattle Times)

To send get-well wishes and to check up on Walt’s progress, you can visit Driving Mr. Walt.

It was a slow news day and I was almost tempted to write about Anna Nicole Smith, but between your interviews with Kris Berg, Annette Haddad and Tina Wood and your other comments and interviews here and there, we’ve got material for days.

Being Redfin’s natural antagonist is often a difficult job but I’ve never been one to shirk responsibility, and I’m not about to start now.

Matt Goyer, a Redfin employee and blogger defends Redfin’s position of not having 8000 transactions for Redfin yet. According to the MLS figures for the Pacific Northwest, they’ve had 235 transactions in the State of Washington in 2006 (the LA Times cites 242). The average sales price between the single-family homes and the condo’s was about $475K, so you can do the math.

Every Redfin employee I’ve met has been smart, nice and utterly professional. However, none of them appear to have had great experience as real estate agents. Several have even blogged about their lack of success in real estate sales (which is why I guess they went to Redfin to begin with.) Several agents had just received their licenses in the past year, with no real estate sales experience prior to their Redfin jobs. Nothing wrong with that, but it’s interesting….

One of the problems I have with Redfin is their continual commoditization of the bad-boy stance, their claim of being the outsider, the renegade ready to fight against The Man, ready to defend their clients against the Real Estate Industrial Complex, when in reality the business is made up of hundreds of thousands of individuals. There’s no cartel. There are thousands of little real estate offices all across the U.S., with 100′s of MLS’s, each with their own rules. Redfin has co-opted the power of dissent by appropriating the language and symbolism of non-conformist youth and tech/geek culture. By inserting themselves into the real estate equation, they place themselves in the role of counter-culture hero and the consumer into the role of rebel against the Real Estate Machine.

It’s an exciting visual, but it’s also a fabrication concocted as a brand just as much as Microsoft, Starbucks or McDonalds is.

Kelman seems like a nice guy, and I bet he’s a blast at parties, but in his enthusiasm for his business model and his role as the Rebel CEO, he omits the truth about his business model, which is that it is non-profitable. It just costs too much to help buyers buy and sellers to sell homes. His interviews, taken as a whole, imply (and sometimes just come right out and say) that traditional full-service agents overcharge for their services.

It costs MORE than $2000.00 (their listing fee) to sell a house. Even if the house sells in 1 day, there are overhead costs, office space, administrative support, infrastructure, both real and virtual, website development and support, basic signage, keyboxes, advertising, etc…. It may have taken a particular real estate agency years to develop a brand. It took years to develop an MLS and it takes constant maintenance to keep it up-and-running. These are all real costs for the agency. If the seller doesn’t want to participate in paying for these costs, then they should definitely go to the venture-capital-subsidized Redfin, at least until they run out of money. After that, they could probably go to another discount (no brand name) broker or try FSBO.

Brian Brady had an excellent article Is Your Broker Profitable?- Traditional Brokerage laying out, at least for him, the costs to do business. This is probably closer to the truth than what Redfin is espousing, refunding 66% of the commission to the buyer (unless you work for Microsoft, then the buyer gets a whopping 75% back.)

When a standard Errors & Omissions Insurance policy has a $5000.00 deductible, it doesn’t make sense to collect less than that in a real estate transaction.

Redfin fuels the birth of the rebel consumer and the rise of the techno geek as it attempts to co-opt and capitalize on “alternative culture” v.s. the established real estate business. Kelman’s stance as a rebel who takes pride in this revolutionary, “out of the box” thinking — while hoping to extract hefty profits at some point in the future — rings hollow and untrue.

It’s branding, product placement, posturing and public relations.

Traditional real estate is PC. Redfin is Apple.

Kris Berg called this the Flinstones v.s. The Jetsons. Redfin, by pandering and selling to Rebel Consumer who demonstrates his nonconformity by his purchasing habits, ensure themselves a clientele by feeding this kind of buyer/seller’s need to be seen as an outsider smashing convention, and Redfin is there helping to feed this delusion funded by a dwindling $8M in venture capital.

Joel Burslem snagged an interview with Ian Morris, CEO of beleaguered HouseValues, and the take-away was that they were going to focus on their Customer Relationship Management (CRM) platform which allows the agents to manage any leads they receive and develop a business relationship with that individual, probably using drip campaigns involving emails and follow-up phone calls.

Brian Villanueva of Omega Realtors in Northern California made the following points recently on an Inman message board:

HouseValues is a classic investment banking (later called dot-com) scam:

1) Spend millions on marketing to create industry buzz.
2) Ramp up volume very quickly without regard for sustainability.
3) Deride critics as “behind the times”, not able to understand your “superior business model”.
4) Go public to create liquidity.
5) Have your board members and angel investors sell their shares and cash out.

Don’t take my word for it though. The proof is in the results:

IAN MORRIS (CEO) – $1,037,249 in shares sold
MARK POWELL (founder) – $9,900,000 sold
MICHAEL NELSON (board member) – $18,089,854 sold
and many more….

Since 2005, the executives, board of directors, and venture capitalists of HouseValues made $43.4M in options sales. That’s 40% of the market cap of the entire company today. While they were cashing out, HouseValues share price has dropped by 80%, completely screwing the small investor.

These guys fleeced Realtors and investors to make themselves extremely wealthy. And no major trade group (where are you NAR!!!) or media outlet has ever called them on it.

Documentation of all above numbers is at http://finance.yahoo.com/q/it?s=SOLD

HouseValues.com does not get it’s revenue from real estate buyers or sellers, but from real estate agents who are desperate for leads. These agents pay up $200, maybe as high as $500-$600 a month, for zip codes in targeted areas. For this, they are promised a certain number of leads per month.

There are dozens of entries from angry real estate agents from across the country on Rip-off Report.com and there appear to be dozens of other sites that are filled with complaints about this company.

StockLemon.com suggests that HouseValues is not a viable business model, that it faces too many competitors offering the same information for free (i.e., not asking for personal information), and that there is radically increasing customer acquisition cost, since HouseValues already spends nearly 50% of every revenue dollar on line item “Sales and Marketing Expense.” They have recently begun to give seminars to teach agents how to “work the leads”. Seminars are a costly business that will eventually eat into the bottom line, and that in a declining market, their customer base (i.e. agents) will be leaving the business.

If Housevalues.com was providing a valuable service to real estate agents, if the leads were good and the service worked as promised, agents would be ecstatic and happily pay their monthly fees.

However, that is not what happens. Homeowners are promised that they will receive their homes value, online. What they receive, however, is an email or phone call from an agent. Why? Because the information the homeowner enters online is sold to an agent as a “lead”. Even if the homeowner isn’t planning on selling. But each homeowner contact is sold to an agent as a lead because there is not an option on the HouseValues input screen that says “Just Curious” or “Just Wondering”. It’s not the agents fault. They think they’re buying viable leads. It’s not the homeowners fault, as they think they’re just going to get a number spit out of a computer program.

According to the SEC filings on HouseValues, their churn rate, which measures the rate at which subscribers cancel, ranges from 6 to 6.5% per month. Essentially, 72% to 78% of its customer base cancels its subscription every year. This does not speak well of the HouseValues product. It could be that its questionable marketing tactics, the high customer (agent) churn rates, and the importance and validity of such sites as Zillow will soon catch up to Housevalues.com.

The Puget Sound Business Journal ranked the top 25 residential real estate firms ranked by residential sales volume in millions, for 2006. The top 5 were:

1. Windermere ($23,709.6 / 60,200 transactions)
2. J.L. Scott ($12,745.6 / 32,590 transactions)
3. Coldwell Banker Bain ($7,998.7 / 19,131 transactions)
4. Re/Max International ($6,649.4 / 19,662 transactions
5. Prudential Northwest ($2,997.6 / 8,719 transactions)

20 more were listed, including Gordon Stephenson’s RPA, Real Property Associates. (Stephenson is on the Board of Directors at Zillow.) This year, his firm placed #17 with a reported volume of $146.9M in sales. Stephenson took issue with last years ranking of #16 for Excel properties, and I believe he was correct, though I was not able to verify that as that company has become a John L. Scott franchise.

RPA is one of the largest independent real estate brokerages in the Northwest and had 283 transactions reported last year with 35 agents, which comes out to about 8 transactions per agent. That is significanlty better than the NWMLS average of 4.1 transactions per agent in 2006, down from 5.2 in 2005.

Interestly enough, no so-called or self-identified “Discount” or rebate model real estate firms, including Zip Realty, Help-U-Sell, Redfin or MLS4Owner made the list of top 20 real estate firms in the Seattle area.

Glenn Kelman, chief executive of the online discount real estate brokerage Redfin Corp., said he went too far with a blog entry last June. He posted the name and photo of a real estate agent who he claimed refused to work with Redfin under the heading “The Hall of Shame.”

In an interview in the Puget Sound Business Journal 1/26/07, Kelman admits it unduly antagonized the real estate industry. In retrospect, “I wish I’d been more diplomatic.”

To Kelman’s credit, he hasn’t deleted the post. Couldn’t anyway, really, as it will exist in perpetuity online.

As the article notes:

But many CEOs are finding that the desire for transparency and accessibility isn’t always compatible with an executive role. Indeed, just as employees have learned the cost of posting too-personal details on MySpace, CEOs are discovering that chatting in cyberspace can backfire — sometimes disastrously.

What can one do if they write something they later regret? Is there anyway to expunge the post?

Some companies, such as Reputation Defender, have sprung up claiming to be able to erase your online presence. They claim to scour the Internet to dig up every possible piece of information about you, allowing you to select the unwanted info. Then “Our trained and expert online reputation advocates use an array of proprietary techniques developed in-house to correct and/or completely remove the selected unwanted content from the web.” The charge for this service? $29.99 per nasty item. “When we find an item of online content you don’t like, we’ll carry out our proprietary DESTROY process for you on that item. This is where the rubber hits the road. It is an arduous and time-consuming process for our team of specialists, but we work hard so you can sleep better at night.”

Of course, by using a service like this, it could backfire and you could end up looking even more foolish.

Blogger sued over comments left on Blog

State contractor files federal lawsuit against blogger.

Blogger sued for “inappropriate linking”

Bloggers warned they can be sued for libel.

Courts are asked to crack down on bloggers and websites.