As a followup to recent articles relating to the industry revolt and ACCC investigation into RealEstate.com.au, Australian Financial Review journalist Ben Hurley has released another article that takes aim at RPData and their valuation strategy.
RPData have been working on a valuation system similar to US portal Zillow in the USA where they provide a valuation to consumers. Naturally this has upset real estate agents and valuers alike around the country. There are a couple of differences though but the primary one is that Zillow clearly identifies that the prices they provide are just estimates by calling them “Zestimates”. Statistical guesses if you will.
It seems that RPData has removed the references to the word valuation since their launch but they still imply it with the claim “Want to know what a home is really worth?”
This AVM (Automated Valuation Model) application is a feature on the RPData facebook fan page and allows anybody to track 3 properties for 6 months.
Really Worth?? …are they sure??.. because they contradict themselves when you start using it with this additional information later in the process.
This estimate is computer generated and is not a professional appraisal. It uses complex modeling which includes property attributes, recent sales information and other data elements to reach an estimate of the property value and possible value range. The model also provides an estimate of how confident the value tracker is likely to be based on the availability of key data elements such as the attributes of the home and depth of recent sales data.
This estimate depends on information relating to the subject property and other properties which may be incomplete or wrong, negatively impacting the accuracy of this estimate. This estimate is based on one or more statistical models and assumptions, which may not capture all relevant factors or features of the subject property. This estimate also does not take into account the potential impact of external factors (such as a change in the economy, future planned infrastructure or environmental contamination on the subject property), which may affect the value of the subject property. Accordingly, this estimate should not be relied upon by you or any other person, including when making any decision in connection with this or any other property.
We at RP Data value your feedback and our Data Integrity Team are on hand to correct any property data. Please send us an email with the property address and its full attributes to [email protected] and we will assist you.
You just have to look at the recent Optus decision to see just how outrageous claims in marketing hype cannot be protected by the fine print. RPData’s competitors, Pricefinder and APM quickly distanced themselves from such tactics.
The AFR article also covers most of the old ground from the previous two articles for those that missed them plus raises a few issues that we have covered on Business2 already such as the success the ACCC has had with realestate.com.au after complaints by the agent assisted websites.
More interesting though is the reference to the Redfin model that Ben raises in the article.
Just like I did in the last article on the ACCC investigation Ben draws similarity with how realestate.com.au and Redfin (http://en.wikipedia.org/wiki/Redfin) both have contact with the seller to sell advertising on their portal. But Ben takes it a little further and more in line with a persistent rumour doing the rounds though the industry at the moment that states that realestate.com.au is looking more directly at the Redfin model, specifically the whole idea of commission sharing. This is of course countered by the numerous statements by Greg Ellis recently that REA will never claim some of the sales commission, an obvious response to the rumours.
When I called Redfin a Portal in the ACCC article, ex REA CEO Simon Baker responded in te comments with :
Your comparison to Redfin is misleading. Redfin is a real estate brokerage (agency) that primarily uses the internet to source leads.
They are not a portal.
They have a discount model and are attempting to change how agents in the US approach selling and marketing real estate.
Redfin do not fit into any box easily in the USA let alone here in Australia. Whilst I agree with Simon that Redfin technically are not a portal there is far more to it than that as they are a hybrid solution and their offerings differ on location.
They run a website featuring listings from other agents similar to a potal but they also show property and charge commission… BUT only in just 16 metro areas only… Outside of those areas, and that does leave a lot of the US, they have partner agencies that they generate leads for on their website. The partner agent only pays 15% to Redfin for that lead if they make a sale.
In areas outside of those 16 metro areas I would argue that they are more like a portal than not. See for yourself at http://www.redfin.com/neighborhood/10157/CA/San-Diego/Loma-Portal (the word portal in the URL was not lost on me either!)
Personally I cant see how that could easily fit into the Australian market at all. I believe that the strategists at REA would have considered every possibility including this, because I know I would have if it was my company, I don’t think it has any legs.
A typical real estate transaction in the USA has a sellers agent and a buyers agent for 3% each, totalling a commission of 6%. Redfin represents the buyer who effectively gets some of the commission back in savings similar to how Refund Home Loans works here in Australia.
Let’s face it, I believe that the moment they took their first listing authority it would take only a few days for 10,000 agents to remove every listing on the portal.
The article also raises something that an anonymous poster, Deepthroat alluded to in previous articles and that was the meeting of Victorian agents at REIV headquarters about the revolt against REA…
REIV cheif Enzo seemed very quick to add that he has not been a part of the meetings and the REIV only provided the meeting rooms as they often do. Why was he not involved… because Enzo is the CEO of RealEstateView.com.au if he was involved in discussions you can bet that REA would be calling in the regulators.
As I have said many times in the past since I started to contribute here in 2007 , real estate agents need to control our data and not let companies like Realestate.com.au, RPData and Onthehouse use it from their own benefits as clearly their monetisation models are at our expense.
With the debates starting to focus on RPData I am more convinced than ever that an REI portal website is not THE solution. I dont think it will do any harm, and I am sure that it can only place more and more pressure on the top two portals but the key to Project Rebellion is control of the data itself, not just sold data, but all data. If Realestate.com.au, Domain and the data companies did not have unfettered access and the right to sell and trade it amongst themselves then these problems would simply not exist.
It seems that the campaign in Victoria to withhold sales data might have had an unintended victim as agents are not advising of Auction results according to an article in the Sunday Age. This issue itself is not new though as if you compare the various Auction Clearence rates quoted by some companies they never seem to agree. Until the regulators legislate that public auction results be made public this will be an ongoing issue.
We should start to get an indication of what the real estate groups and REI’s ase planning as a response soon.