SAN FRANCISCO — With instant communication, MLS access, expanding mobile capabilities and paperless processes, real estate is increasingly a real-time enterprise, said Lennox Scott, chairman and CEO for Washington-based John L. Scott Real Estate.
“If it isn’t instant it’s not fast enough. Real-time is the only time,” Scott said during the Real Estate Connect SF conference Thursday.
Plans for a massive high-speed wireless network for the city of Richardson, Texas, may offer a glimpse of the data-saturated future, Scott told conference attendees during a question-and-answer session that also featured Glenn Kelman, president and CEO for Seattle-based brokerage company Redfin. “That is just going to blow the doors off,” Scott said of the concept.
Other real estate and industry luminaries, including craigslist.org founder Craig Newmark and Realogy Franchise Group president and CEO Alex Perriello, also took the stage Thursday during the annual real estate conference.
Scott said that his company, which has about a 17.4 market share in the Seattle area, is “traditional, with traditional values,” but is progressive when it comes to technology. On the company’s 75th anniversary its managers began to work on a vision for the company’s 100th year in business, for example.
While Redfin chucked traditional forms of real estate commission for its agents in favor of a customer-satisfaction-based pay, and offers discounts and rebates compared to more typical real estate commission rates, Scott said that his company’s repeat business is evidence that the commission model is alive and well.
“Our clients want expertise. They want the consultation. This is a significant purchase and they want a trusted advisor. Eighty-seven percent of our business comes from relationships of people we know,” he said. For agents, commission-based pay is “a high motivation,” he also said. “The commission model draws the best individuals into the industry.”
Kelman, meanwhile, said, “I think in an ideal world an agent is a customer service person,” and he suggested that John L. Scott could perhaps be a better company if its agents were paid based on customer satisfaction — and those who did not satisfy consumers would be fired. “I know (commission) is a good motivator,” he said, though he said commission pay may not motivate all agents to do the right thing for clients.
Kelman’s company was featured in a “60 Minutes” news segment earlier this year that was critical of the commission rates typically charged in the real estate industry, and Scott said that an agent from his own company was interviewed for the same segment but did not appear in the television news program. “They chose not to use our agent,” Scott said.
The Redfin business model has been tweaked a bit over time, and Kelman said that the company has had some growing pains — particularly in Southern California. “We have a big challenge there.” The growth strategy has been debated within the company, he said. “I think we’re going to take a break when we (expand) to Chicago” to re-evaluate. Expansion to that market is expected this year. “Our challenge is just going to be scaling and distance.”
Redfin and John L. Scott are not the only companies to embrace the growth of Internet technologies.
Alex Perriello, who leads one of the largest real estate franchise companies in the world, noted that Realogy Corp. today entered into a marketing agreement to display about 700,000 property listings at the Yahoo! Real Estate Web site, the latest in a series of deals to post company-affiliated property listings at third-party Web sites. Realogy’s affiliated real estate brands include Century 21, Coldwell Banker, ERA and Sotheby’s International Realty.
“Our view is inclusion. It’s not about exclusion. And on the Web you have to look at almost a layered approach,” Perriello said, with the goal to drive more online traffic to the company’s sites. Realogy’s brands have also shared property listings on sites such as Google and Trulia, he noted.
The partnerships do have built-in protections, he noted. “We put together good agreements on all of these distribution transactions that we’re doing.” If the company is dissatisfied with the actions of its partners, “we have the ultimate action … stop sending the listings,” he said.
Perriello also revealed that Realogy is “getting very close to a full (Internet Data Exchange) solution” that will allow consumers to view a national compilation of all property listings available through broker-sharing agreements.
Realogy’s Coldwell Banker brand is marketing and selling real estate in a three-dimensional interactive world known as “Second Life,” and Perriello said he was skeptical at first about the company’s venture into this domain, though it may be a useful conduit to connect with a new demographic online. “It could be the evolution of where the Web is going. Why don’t we get smart about it now? Why don’t we see if we can jump the gap from this virtual world to reality?” he said.
Newmark, whose empire of about 450 locally focused craigslist sites collect about 8 billion page views each month, said that craigslist managers are still considering whether to accept bulk feeds of property listings from brokers. He compared craigslist sites to a flea market, which is as much about socializing as it is about commerce.
“We represent one kind of social media that complements what more structured sites do,” he said. Real estate is just one of many categories of postings at the site. “Sometimes you prefer to go to a flea market, sometimes you prefer to go to a department store.” Newmark shared the stage with Perriello during a “duet” presentation at the real estate conference.
As for craigslist’s competition with other sites: “We just screw around doing what feels right. We don’t pay much attention to competition and things like that. We just keep plugging away. We don’t think we’re altruistic. We just think we’re following through on some small things believe in — that pretty much everyone believes in,” Newmark said.