Spencer Rascoff of Zillow
Spencer Rascoff of Zillow

Zillow CEO Spencer Rascoff appeared this week on Bloomberg TV, declaring that the housing market is “back” and noting that some markets like San Francisco are seeing values skyrocket to unstainable “bubble-licious” levels.

But what caught my ear was Rascoff’s comments, yet again, on the potential challenges facing discount brokerages such as Redfin.

“For most people, buying a home is very infrequent, very expensive, very emotional and highly complex, so they typically need a real estate practitioner, a professional, to help them through the transaction,” he said.

Asked specifically about competition with Redfin and others, Rascoff stressed the differences in the two business models. “We sell ads, not houses,” he said.

Echoing comments made last year at the TechNW event in Seattle, Rascoff noted that “consumers don’t respond” to the message from discount brokerages “because it is too important of a transaction.” He added that it is very difficult for “discount brokerages to gain share” and that they will have a tough go of it.

Zillow’s stock remains near an all-time high, trading at just above $52 per share. That gives the company, which went public at $20 per share in July 2011, a market value of $1.77 billion.

You can watch the full interview here.

Previously on GeekWireOK, we still don’t really get why Zillow was removed from the Nasdaq Internet Index (and Trulia was added)

Comments

  • http://walawrealty.com marc_h

    Keep in mind the distinct possibility that Spencer Rascoff, CEO of Zillow, and Spence the guy at the end of the bar drinking a beer with his buddy may have two different opinions on this issue. Mr. Rascoff as CEO of a company that “sell[s] advertising and software tools to real estate agents” does not directly have a dog in the fight with Redfin but all of his paying clients do so he has no choice but to come down on their side of the argument.

    Spence, on the other hand, giving his dear friend advice about selling said friend’s home is probably pretty likely to concede that paying 3% to a traditional agent to list a home in a market where homes are selling for above full price in as little as a single day is flat out stupid. Because it is. No disrespect to traditional agents.

  • http://blog.redfin.com/ GlennKelman

    Redfin employs its own real estate agents to price homes, show homes, host open houses, attend closings and provide a wide range of in-person services. The process is, as Spencer says, very emotional; anyone who has read the tens of thousands of gushy reviews posted to our site will appreciate how intense people feel about their real estate agent, especially if they feel that the agent was really on their side.

    When defenders of the traditional industry argue that consumers want an agent, not technology, it excludes the possibility that what people really want is both. The technology we have developed isn’t a replacement for personal service but rather an extension of it. Here are a few simple examples:

    –> Mobile tour scheduling helps our customers get into homes faster;

    –> An online Deal Room guides customers through the escrow process;

    –> Everything we know about the customer’s online and offline home-buying activity helps us recommend listings to our clients that they might otherwise have missed;

    –> We feature our own agent’s listings on our search website and mobile tools, doubling the Redfin traffic those listings get.

    At Tedx, we recently made a broader case that technology can complement rather than compete with real-world goods and services:

    http://blog.redfin.com/blog/2013/03/glenn-tedx-talk-hybrid-businesses.html

    Finally, when skeptics emphasize that consumers buy homes infrequently, their point is usually that there’s no reason to offer consumers better service since the service-provider has to wait 5 – 7 years for repeat business. We believe that better service is an end in itself and in any event, we don’t mind waiting that long.

    • Redmond

      I wasted 6 months selling my condo in 2008 with Redfin because I wanted to save some money. In the end I delisted and found and agent with John L Scott and sold in 1 week. I didn’t get the high price the Redfin agent suggested, however I got good advice and sold, looking back, at a great price! I was again reminded that you get what you pay for. You don’t need sub par agents just to have “technology”.

      • http://blog.redfin.com/ GlennKelman

        Hi Redmond. I am glad you sold your home, and very sorry we let you down in the early days of our service to home-sellers.

        In the five years since we failed to satisfy you, we have invested significantly in our people as well as our technology. Factoring in benefits and expenses, we pay our agents at about the 90th percentile of what an agent earns in the area. According to Seattle-area sales records, we sell homes on average faster, for more money and with less risk than the traditional brokerages.

        That is small consolation for you, as it doesn’t mean we sell every listing we take on. No brokerage is that successful. But unlike any other brokerage that I know of, we let the world see where a Redfin agent failed to sell a home, and what the customer had to say about him.

        This gives us plenty of motivation to do everything we can to make sure cases like yours rarely happen. Thanks for giving us a shot, and for sharing your feedback with us. We’ll use it to keep improving our service, our technology and the value we deliver to our customers.

  • http://twitter.com/cliffrudolph Cliff Rudolph

    Redmond,
    We had quite a different experience using Redfin, with offers in the first 24 hours and accepted within the first week. We were so pleased with the experience, we used Redfin to purchase our next home as well. (we sold last summer and were in our new home in September). You can find my review here: http://www.redfin.com/real-estate-agents/kurt-pepin/reviews/119795
    I would agree with marc_h, Zillow is in the business to support Real Estate agents, while Redfin competes directly with the typical Real Estate agent model. Rascoff’s comment that a real estate transaction is complex and emotional is very true- but this isn’t in conflict with the services of Redfin. In fact, our agent, was extremely communicative and highly available, a product of the fact that he isn’t out showing houses at all hours of the day. He almost never missed a call, day or night and always made time to have a conversation. We saw a ton of homes and always felt that our agent was supportive of us finding the right home, not just closing a deal.
    I hope this perspective from a recent redfin client is beneficial to the conversation.
    I also want to comment on how great it is that Zillow is doing so well. We used Zillow a great deal in our recent transactions as well. The Zestimate for our house that we sold was dead on, and it helped us significantly in understanding values in different geographic marketplaces when we looked to purchase.
    Now if they (both Zillow and Redfin) would just develop a solid Windows Phone App!
    Cliff

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