A Bird’s Eye View

It’s not going to come as news that the housing market is currently in crisis. And the root cause of that extends beyond the mortgage industry fiasco, Fannie Mae/Freddie Mac, etc. It’s equally a crisis of consumer confidence.

Part of the road to recovery will be helping people regain their faith in the process of buying & selling homes. Those of us who provide information or services related to real estate have both a responsibility and an incentive - to help restore confidence in the entire industry.

One of the areas we believe needs to be addressed to restore this confidence is in the quality (comprehensiveness, accuracy, freshness) of homes for sale data on the web.

As many of you know, we just released a study in conjunction with the WAV Group (a well respected industry consulting & research firm) that demonstrates the difference in the comprehensiveness and accuracy of homes for sale listing data on a variety of types of real estate sites. The intent of this study was to point out that there is a significant difference in the listing information on two types of sites – those that leverage the widely adopted IDX standard (Roost.com network sites, broker & agent websites, etc) and then those that rely on aggregation & listing syndication feeds.

We believe that consumers & the real estate industry as a whole are better served by comprehensive and accurate data they can trust

The study, conducted in three markets across the US (Miami, Dallas, San Diego) clearly shows what most of us already know - IDX sites offer significantly higher levels of comprehensiveness and accuracy when it comes to representing what homes are for sale in a given market. This is not to say that sites that rely on feeds are bad or do not offer value. These sites typically offer tons of other wonderful & useful tools and information. But it is to say that when it comes to viewing accurate information about current homes for sale they are not the best source a consumer can find.

We’re under no illusion that the study conducted was perfect. It cost us thousands of dollars to do in just three markets, even on a moderate sample of homes. Imagine the work to go into hundreds of home listings in a market and dissect if each one is actually for sale, already sold, or duplicated. There are over 35,000 homes for sale in the three markets we selected. It would have cost well over $100,000 to conduct an every home study in those markets.

But we’re confident that if we were to broaden the study, we would find the same dynamic. And we are more than willing to share the cost of broadening it with any other parties who would like to participate (especially those who have leaped so furiously to debunk it).

By the way this is not a new issue. We’re just the first who have tried to bring some level of data & analytics to it. The issue has been a popular topic across industry blogs over the last year.

What’s been very interesting is the reaction we’ve gotten

As you’ll see on TechCrunch and in other spots, this study has caused a stir. We’ve been called all sorts of fun names - and so has the study that was conducted. Liar, silly, ridiculous, misleading, among them.

Folks have also tried to attack the methodology of the WAV group’s study by implying that the specific price range selected would somehow favor IDX based sites (tell me exactly how one specific price range would favor IDX data in a practical way?). And in trying to further confuse the issue, people have leaned heavily on how many foreclosure & FSBO properties they show in order to fend off any challenge.

But as those of us in the industry know. These are all red herrings, and frankly…”me thinks thou dost protest too much…”

The fact is that by and large, IDX is the best possible view into existing homes for sale currently on the market. Are there exceptions? Sure. Manhattan is the most obvious. But generally, this is not in dispute.

Sites that aggregate together direct feeds from brokers/agents, aggregators, owners and then combine those with other types of inventory do their best to get as many feeds as they can, dedupe them and take out stale ones. And we respect their efforts, but this is an impossible task to do perfectly. They quite simply cannot give a current and comprehensive view of what matters most - existing homes for sale that are represented by a REALTOR. Usually they are missing anywhere from 40-60% of the inventory, and as importantly, many of the other 60-40% of the listings on these sites are duplicated or already sold. Most consumers are spending time online looking at homes that aren’t for sale.

Foreclosures are a critical part of the picture (Roost will be adding them soon). As you know, foreclosed properties that aren’t sold at auction are passed back to the banks and mortgage companies that held the note. Banks are, more and more, marketing their “bank owned” or “REO” properties using real estate professionals like the rest of us – through a REALTOR and therefore via the MLS/IDX. We’ve heard estimates that Foreclosures and REO properties represent about 20% of all the homes currently for sale. Roughly one-third of those are in the MLS – and therefore on Roost.com. FSBO is also important (Roost has these as well), but this is a relatively small set of the data. In the end, having either or both of these does not make up for not having IDX data.

Thankfully we have gotten a ton of support from folks who have been waiting for this type of discussion to take place. For example, Glenn Kelman does a great job of summarizing the issues more eloquently than I could at the Redfin Blog. And we encourage others who share our view that this is an important topic to continue the discussion.

It’s about the consumer

The bottom line is that consumers deserve information they can trust. Data on real estate websites is probably never going to be 100% perfect - not on Roost.com, not anywhere. Homes are too complicated and dynamic a product (which is why REALTORS are so critical!). But it’s all of our responsibility to offer consumers the best information available if we want to restore their confidence in buying homes.

We’re very proud to have moved the discussion on this topic one step forward, and we’re not going to be bullied into being quiet on this point. Consumers deserve better and so does the industry.

alex

Alex Chang

CEO

Roost.com

2008 Inman Award Winner - Most Innovative New Technology