Wednesday, March 15, 2006

Reflections on the MIT Enterprise Forum

I just got back from the MIT Enterprise Forum which was all about the future of real estate featuring myself from HouseValues, the founder of Redfin David Eraker, the CFO of Zillow Spencer Rascoff, a broker from Coldwell Banker Bain Jim Reppond, and Gordon Stephenson who is a broker owner at Real Property Associates as well as a Director for Zillow.

It was an enlightening evening, and upon reflection, I personally learned a lot. In the spirit of David Letterman (on my tube right now as my two-month-old dozes next to me), I figured I would create a top six list of things I learned from the evening:

6) MITEF: Kudos to all those involved in the MIT Enterprise Forum. The MITEF put together an excellent program and discussion of very different business models that are changing the real estate. The MITEF provides a great service for the Seattle community and I am very proud that I could participate in one of their programs.

5) The Role of Real Estate Professionals: It was really interesting to see the entire panel agree that real estate will continue to be a professionally assisted transaction. Spencer contrasted buying and selling homes with buying airplane tickets, and separated the Zillow management team from the Expedia and Amazon business models that ultimately disintermediated travel and retail. I feel very passionately about the fact that real estate professionals will continue to play a crucial role in the home buying / selling process, because the home purchase is and will always be large, complex, infrequent and unique for the majority of buyers and sellers.

4) Real estate agents and entrepreneurship: Technology entrepreneurs get a lot of press, but the world is filled with entrepreneurs, particularly in the real estate industry. Real estate agents, real estate brokers and mortgage brokers are entrepreneurs by every measure of the word. I feel very lucky for having gotten to know Jim Reppond, a broker with Coldwell Banker Bain and one of their top producing real estate brokers in the country. Jim has really approached real estate as a business, investing in the right people, marketing and tools to be successful. Jim is an ideal example of the “”Agent CEO” who has been scaled from a sales agent to a broker to successful business owner managing a large real estate practice in Seattle. Way to go Jim!

3) Courage: David Eraker at Redfin is pursuing a discount, limited service buyer agency business model. In general, Redfin is pursuing a very different model than HouseValues. David was on the hot seat for much of the night for working outside of the traditional real estate industry and commission structures. At the same time, I have a lot of respect for David for not backing down, defending his position and his company’s business model. David is a pure entrepreneur, pushing the envelope in real estate. Redfin will appeal to some percent of home buyers and sellers, and the market will determine how big that percent will be.

2) Accuracy: There was a very interesting discussion about the importance of accuracy in the creation of home valuation. Zillow publicly states that they are within a 10% margin of error for the homes in the US that they cover. Spencer stated that they provide free information to consumers and that their current service has its limitations, and that if a consumer is interested in an accurate home valuation, they should contact a local real estate specialist – a real estate agent, real estate broker or appraiser. At HouseValues, we wholeheartedly agree! We believe strongly that accurate local home valuations should be provided by the real estate professionals that specialize in the neighborhoods where people live and work.

1) Know Your Customer: I feel very fortunate to have worked with the founder and Chairman of HouseValues Mark Powell. One of my personal learnings from Mark was a simple fact: you MUST know your customer inside and out. HouseValues has done very well as a company by intimately understanding our real estate agent customers as well as home buyers and sellers.

Hopefully everyone in the audience learned as much as I did. It was great program that spurred a lot of discussion. I would love to continue the discussion, as I feel the book on the future of real estate is far from written.

Happy prospecting everyone and best of luck!