Notorious R.O.B.

Jun 28, 2010

All Your (Data)Bases Are Belong to Us

If you’re responsible for real estate brokerage operations, you owe it to yourself and to your company to read this post by Glenn Kelman at Redfin. I have said for a while now that I believe Redfin to be one of few viable models for real estate brokerage of the future, and this post helps confirm that belief. It’s a long post, and worth reading in full, but here’s the money graf:

But outside of calling one agent after another, the CB CEO has no way of knowing what his agents are doing; most work as contractors, for franchises, recording their deals in spreadsheets and notepads. Redfin on the other hand has a system for scheduling home tours and writing offers, which means we also have a system for storing data about every tour & offer. Months before the numbers are recorded at county courthouses or by federal agencies, we know when bidding wars are back, or when tire-kickers have taken over the market. We can see the whole elephant, and we’re minutely sensitive to when he’s about to roll on top of us or stampede through the jungle. [Emphasis added]

Fact is, far too many real estate brokerages pay lip service to the importance of technology. Even the ones who do invest are putting money and resources towards marketing technology rather than information technology. In the long run, I think the companies that survive the Great Recession will be ones who invested in information technology, rather than just another pretty website.

If You’re in the Knowledge Business…

A lot of real estate people say that they’re in the knowledge business, that what clients pay them for is their expertise, information, and knowledge of local markets, of real estate, of transactions, of laws and regulations, and so on. Well, act like it then. Invest in knowledge and information and data. If your spend on marketing is 100 times your spend on knowledge, it’s sorta hard to be convincing as someone whose value rests on what you know.

MLS data is great; it’s valuable, in fact, it’s invaluable. But Redfin collects data outside of what’s in the MLS. What’s stopping you? ”Well, Redfin has millions in venture capital” is not a good excuse, since The GoodLife Team in Austin, a tiny little brokerage with less than a dozen agents, also collects that data. There’s a reason why GoodLife is now up for an Inman Innovator Award.

But My Agents Won’t Do It!

An excuse I do hear often whenever I discuss collecting data from brokers is that their agents simply won’t do it, or can’t do it, or have no time to do it. I term that an excuse because, well, it is one.

Fire them! If your brokerage is in the knowledge business, if you pride yourself on your local knowledge, if your brand promise to clients is that you and your agents are fully on top of what’s going on locally, then why would you continue to tolerate the existence of agents who don’t care about collecting data? It’s like being in the customer service business but tolerating rude and unfriendly staff. Get rid of them.

Of course, if your brokerage is not in the knowledge business, that’s fine. But do tell your clients that so they’re not misled as to what to expect from you and your people.

All Your (Data)Bases

Finally, let’s not confuse a blogpost about the new restaurant down the street with actual knowledge your clients are likely to care about. The client is looking to hire a real estate expert, not a local tour guide.

Read again what Glenn Kelman wrote:

Months before the numbers are recorded at county courthouses or by federal agencies, we know when bidding wars are back, or when tire-kickers have taken over the market. We can see the whole elephant, and we’re minutely sensitive to when he’s about to roll on top of us or stampede through the jungle.

Yes, a huge part of your value as an individual real estate agent is to be able to interpret the data for your clients and offer your wisdom, rather than just raw data. But without the data, what the hell are you interpreting? And if you’re simply outsourcing data collection to some third party vendor (which, by the way, includes your MLS) who is selling the exact same thing to all of your competitors, how are you different from them?

More Knowledge, Less Pizzazz

Do yourself, your company, and your clients a huge favor. Invest in knowledge. That doesn’t mean just buying computers and off-the-shelf databases. It also means spending time — your time, your agents’ time, your staff’s time — to collect and interpret the information. It means turning data into knowledge.

In a tough market, where nothing is particularly certain, clients want experts who know what they’re talking about. They also want to know on what basis an expert is rendering an opinion. Do give that to them, please.

And if that means not investing in some newfangled animated property flyer technology… well, so be it. More knowledge, less pizzazz. More substance, less dazzle. For the good of us all.

-rsh

Redfin Transforms: The End of the Beginning?

Category: Management, Real Estate, Technology

Tagged: data collection, Glenn Kelman, GoodLife Team, information technology, knowledge, Redfin

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http://www.Kens411.com Ken Brand

I'm gonna throw a few random thought particles into the discussion. I'm not judging, or hating, or boot licking, I'm just say'n.

It's easier to know what's going on with a small company, with offices in a few cities, than it is with 1,000s across the nation. It's easer it lead and manage a team of 12 that it is 120, or 1,200 or 12,000, etc. And really, real estate is hyper local, even if Greg and the CB guy both know what's going on in their stores, and across the country, unless the CEO talks about my market, it's worthless, in fact, it's harmful. My big market (Houston) and local market (The Woodlands, TX) is stable compared to the sand states and cities highlighted on the news, etc. All the generalities, make people believe that every market it like Phoenix, or Vegas, etc. All the news and interviews is just hype, and spin, and an opportunity to get their Brand on the news (more power to them). Unless they're talking about my neighborhood, it's almost worthless.

I think all the detailed data is smart, but if you want to know what's going on in our market, I know when sales slow, when Open House traffic drops, when showing appointments ebb, when multiple offers are happening and when you couldn't wound a buyer if you sprayed the mall with a machine gun. I know because I'M in the market. If my broker/owners wants to know what's going on in my market, he picks up the phone and asks me. It doesn't matter as much to us what's happening in Dallas or Austin, we work and live here. In fact, what's happening in Clear Lake and Katy, is often different that what's happening right here. I know, it's important to understand macro trends, many of our buyers move here from other states, if it's hurting there, it effects us here.
As for Krisstina and her awesome Good Life Team, I imagine she knows as much or more about what's happening in her market than the data tells her. Why? Because she lives it, it's a lifestyle. I imagine she and her team would be just as kick-ass without the data as with.

As for our clients wanting, or foaming at the mouth for information, interpretation, hard data and expertise, in our market, and other markets I've practiced in (San Diego, Austin, Aspen), for 32 years it's been the same. For example, seller prospect asks for a market analysis for pricing, you provide all the granular and big picture data, all the interpretation, all the psychology and buyer behavior quirks, etc., you know what happens? Most of them think your data is crap, and they're special (which of course they are;-)? What percentage of listings are overpriced, even though the data screams, don't do it? Choosing an agent is still, and could be for some time, a personal/emotional choice based on trust and cult of personality. If the chosen agent is savvy, and experienced, and awesome in every way they will be successful and chosen frequently. But honestly, consider the number of listings and sales made by part-time, mediocre agents. These people were chosen by the seller or buyer, not only do they not have data, they don't have experience, market knowledge, technical knowledge, or even a clue. But they do have a vote of confidence, because the client likes them.

I'm with you on the idea of moving towards smarter data collection and interpretation, but today and for the foreseeable future, I'd invest my money in building relationships with people I know, creating Top Of Mind Awareness educating my team, and things related to becoming choosable (which could include market-data knowledge)

Lastly, I think you need both. Dazzle, to stand out from the crowd, believe it not, some (most) sellers really like that animated flyer, just as they believe a blurry 2in X 2in black and white newspaper ad is important. Knowledge, to stand out in the crowd, even though mental midgets are chosen every day, all things being equal, even a mental midget would prefer to work someone who's on the ball.

PS. I hope I didn't offend anyone with the word midget. If I did, my bad, I apologize.

PS. My comment is sorta rambley, there are some many, yeah but's, and except for, etc. Great topic though. I appreciate reading the comments and especially what ever the Hahn has cook'n. Cheers.
robhahn

Great comment, Ken.

One clarification re: local data. Krisstina or Jack Miller can speak to details, but they're collecting precisely the kinds of things Glenn is collecting — showing information, agent comments, that sort of thing. So it isn't “data” as we're used to thinking of it. It's more “information” that can be leveraged to educate clients and show them the basis for your opinion.

And while I stand firm in my opinion that the expertise of an on-the-ground expert about a particular neighborhood or a particular market is invaluable, I also believe that given the choice between two on-the-ground experts, one of whom has information and data that form the basis of her opinion, and another who says, “just trust my gut feeling”, I rather think most clients would choose the former rather than the latter.

-rsh

PS: Don't take this post as knocking marketing; of course marketing is important. But the ratio between attention/resource to marketing vs. attention/resource to knowledge is really skewed in a lot of companies today. I'm hoping that will change. I'm urging it to change.
http://www.Kens411.com Ken Brand

Ahhhh, that kind of data would be valuable for sure.

I agree, knowing what other people don't, will always be valuable and attractive.

About marketing, for many, simply redirecting the huge amount of money spent on print advertising that doesn't work, would fund the Knowledge Quest. It wouldn't cost a penny more, but instead of burning dumb money, it'd be an investment in the future.

kb
Chris

As an information management consultant for a regional commercial brokerage, I sort of agree with the post – and sort of don't. This information you're talking about – I call it business intelligence – and while often it might just quantify what some agents all ready seem to know, it surprises them plenty of times.

And we collect this data from agents – usually through the deal transaction process. We know who they represented, who they worked with, where the buyer/seller came from (sign call, website, previous relationship, etc…) and link it with a property record and create comps from it. It's all in a SQL database used by agents, marketing and management. No, not everyone is great about providing the data, but in the offices where they see the value, the agents go into panic mode if they can't access it.

Biggest issue is what you do with the information. We can create all sorts of reports (I send out over 20 each month to the COO…), but as is often the case, everyone is too busy “working” to really look at it. I suspect brokers who do have this information don't really know what to do with it.
http://www.Kens411.com Ken Brand

This isn't exactly the same but it's along the lines of your comment:

[ I call it business intelligence - and while often it might just quantify what some agents all ready seem to know, it surprises them plenty of times.]

I bet they are. We run regular production reports for our market area. Our software sucks in all the individual sales data (units, dollar volume, DOM, List Price to Sold Price %, and some other stuff) for all the agents in our market place. As a Sales Manager, I share this stuff with the agents on my team, the majority are surprised to find out the the Hot-Shot Top Producer doesn't have the near the production everyone thought (Hot Shot has created an empty image in the market place.), and a few they thought were average, are doing more than they thought. Like you said, we think we know, and when we look at the facts, it's otherwise, in some important cases.
Chris

Ken – the “them” I was referring to was management. Wonder what would happen if the agents got a look at some of this information.You got me thinking…
Krisstina

I agree with Rob on this one…

In my opinion, data is power–and as a result, the model of my brokerage is based on data collection. We collect data through our robust centralized database system (everyone uses the same database) that is the hub of my entire operation. We collect all kinds of data…e.g. listings showing data, showing data of our agents <how much are they out showing>, website traffic data, lead response data, agent sales data, agent calls to their database data, % open ratios of all marketing pieces <we compare which agents produce larger percentages of 'opens' on their marketing mail outs than others>, contract data, mls data, source of lead data, intelligent demographic data …the list goes way on. And, we run reports on all of this data.

We are in an industry (real estate brokerage) that has never valued real-time data and as a result have never had access to it (other than knowing contracts written and contracts closed). The brokerage industry is at the mercy of their agents to provide data…from most of whom don't know what data is. When I was an agent at Keller Williams, the office couldn't even rely on the 'up desk' sign call data because the agents were too lazy to fill out the data sheets that recorded the number of up calls, etc. I observed this in the early days and wondered … how the heck can they run a business if they don't have data as simple sign call data..which was at the time the largest source of agent business.

I accept Ken's argument that it is easier to capture data as a company of 12 vs. 1200 since I don't have any basis to say otherwise. All I can say is that I rely on the data we capture in my small firm to make important decisions for the brokerage. And, although we are only 12…they system will work exactly the same at 1200. An example of our data at work is we noticed via our database reports that showing activity on our listings had dropped off by over 65% immediately following the tax credit expiration. Sure, my 115 listings are only a tiny sampling of the market in the grand scheme of 11,000 listings in the Austin MLS, but the data prompted me to assess other data. And as a result, I noticed a trend. That day, I reported the findings to my agents and I recorded a video (you will find on the home page of my website) and sent it to all of our sellers (of the entire company) reporting to them the data and my interpretation of the data. As a result we acquired price reductions across the board (agents called their sellers with a script I gave them). Consequently, we produced several contracts immediately following the video/significant price reductions. Weeks later we saw reports bubble up that sales had dropped 30% since the expiration of the tax credit. Since I had access to aggregate company data (all of my agents are REQUIRED to post the data…or yes, they would be fired), I was able to take action weeks before other reports surfaced. Sure, I am in the market and had a 'feeling' that things were off, but until I grounded it with real data….it was only my senses from which I try not to make serious decisions.

This is only one example of how we very recently used our data to take action as a 'brokerage'…I could give plenty of others:)

Always a great conversation! Thanks for the mention, Rob.
Krisstina

I agree with Rob on this one…

In my opinion, data is power–and as a result, the model of my brokerage is based on data collection. We collect data through our robust centralized database system (everyone uses the same database) that is the hub of my entire operation. We collect all kinds of data…e.g. listings showing data, showing data of our agents <how much are they out showing>, website traffic data, lead response data, agent sales data, agent calls to their database data, % open ratios of all marketing pieces <we compare which agents produce larger percentages of 'opens' on their marketing mail outs than others>, contract data, mls data, source of lead data, intelligent demographic data …the list goes way on. And, we run reports on all of this data.

We are in an industry (real estate brokerage) that has never valued real-time data and as a result have never had access to it (other than knowing contracts written and contracts closed). The brokerage industry is at the mercy of their agents to provide data…from most of whom don't know what data is. When I was an agent at Keller Williams, the office couldn't even rely on the 'up desk' sign call data because the agents were too lazy to fill out the data sheets that recorded the number of up calls, etc. I observed this in the early days and wondered … how the heck can they run a business if they don't have data as simple sign call data..which was at the time the largest source of agent business.

I accept Ken's argument that it is easier to capture data as a company of 12 vs. 1200 since I don't have any basis to say otherwise. All I can say is that I rely on the data we capture in my small firm to make important decisions for the brokerage. And, although we are only 12…they system will work exactly the same at 1200. An example of our data at work is we noticed via our database reports that showing activity on our listings had dropped off by over 65% immediately following the tax credit expiration. Sure, my 115 listings are only a tiny sampling of the market in the grand scheme of 11,000 listings in the Austin MLS, but the data prompted me to assess other data. And as a result, I noticed a trend. That day, I reported the findings to my agents and I recorded a video (you will find on the home page of my website) and sent it to all of our sellers (of the entire company) reporting to them the data and my interpretation of the data. As a result we acquired price reductions across the board (agents called their sellers with a script I gave them). Consequently, we produced several contracts immediately following the video/significant price reductions. Weeks later we saw reports bubble up that sales had dropped 30% since the expiration of the tax credit. Since I had access to aggregate company data (all of my agents are REQUIRED to post the data…or yes, they would be fired), I was able to take action weeks before other reports surfaced. Sure, I am in the market and had a 'feeling' that things were off, but until I grounded it with real data….it was only my senses from which I try not to make serious decisions.

This is only one example of how we very recently used our data to take action as a 'brokerage'…I could give plenty of others:)

Always a great conversation! Thanks for the mention, Rob.
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