A few weeks ago I took my kids to see the new Harry Potter movie. One of the previews was for the upcoming release of Moneyball, based on book written by Michael Lewis. I read a ton and saw it on the shelf a few years back, but nothing inspired me to every pick up the book until now.
WOW…First of all it is a fantastic book about the game of baseball. The book is about the team’s modernized, analytical, sabermetric approach to assembling a competitive baseball team, despite the Oakland A’s disadvantaged revenue situation.
If you have a passion for real estate and the inefficiencies that are inherent in the business you cannot help but draw correlation between the two. The man that is really considered the father of sabermetric is Bill James. Bill started creating new statistics around the game that he felt had more to do with measuring success then individual and team batting averages, RBI’s, and stolen bases.
I don’t want to focus too much on the book. This post is really about real estate and what isn’t being done in the business. The consumer has moved the entire home search process online. What we have done as an industry is given them pretty websites, more photos, a location map, and not much else.
Richard Barton and Zillow set out to disrupt the industry by offering the Zestimate. I am not sure what the algorithms actually measure to try and come up with the price ranges, but pulling public data doesn’t allow them enough information to be accurate. The consumer wants it to work, they want it to be accurate, and they want to conduct research at home.
So what about Richard Smith? Richard is the chairman of Realogy that owns, Sotheby’s International Realty, Coldwell Banker, ERA, Century 21, and Better Homes & Gardens Real Estate. I am not sure there is another person in the United States that is already sitting on a huge portion of the data and has the largest salesforce in the United States to create change.
Every property listed with one of the Realogy brands is entered into their management systems by the franchisees. Where it is, how many bedrooms, bathrooms, square footage, etc. And Realogy controls all the data on the properties they have sold.
Not only with having different measurements of data could they provide the consumer with a better search experience, but they could actually start predicting valuation. Putting a structured model in place will take the subjection and opinion out, exactly the same thing that sabermetrics has done to how players are evaluated. The models that Richard could build would make his salesforce of 300,000 the most effective in the business.
One only needs to watch home shoppers on the multitude of shows on HGTV to get an idea of what consumers are really considering when looking at homes.
House freshly painted with modern colors that’s worth a) size of master bedroom, worth b) walk-in-closet, worth c) bad landscaping, -d) views from living room, +e) etc.
When you read the book you will quickly feel that a legion of mathematicians can create the models for real estate. A man with lots of data and 300,000 salespeople and at one point have probably sold 80% of the homes in America could amass the data.
Who wil do it? Will it be Richard Smith or Richard Barton?