The Streeteasy Fiasco Two Months On

I love thinking about the bigger aspects of the Real Estate industry, and I went a little out of my comfort zone last month when I ranted quite a bit about Streeteasy, without question the #1 platform for buyers to start their real estate search.

In short, Streeteasy, branded as Zillow everywhere else in the US (Zillow bought Streeteasy for $50mm a few years ago), brought into NYC a program which is the biggest money maker for them nationwide: The Premier Agent Program.

I think it’s a disaster in New York.  The program is meant to help unrepresented buyers match up with brokers who might be able to work with them and help them with their purchase.

In practice, it has created a big mess in New York, a place where there is just too much complexity to the sales process, building to building, listing to listing, to simply insert a random agent in between a buyer and a listing.

A lot of very intelligent posts have been written about it, explaining how the program is a huge money maker for Zillow, how agents use it in their arsenal of marketing, how it’s effective to help agents grow their business.

A lot of articles have also been written about the broker backlash in New York City, from TV Personalities calling for a boycott of Streeteasy, to a more realistic take on what’s going on by other brokerages,  to more broad discussions of its impact and the current unresolved issues taken up with the Department of State in New York.

After shooting off my tirade to Streeteasy, I did not expect any of my direct communication to be met with a response.  Nor do I expect this program to be unsuccessful as a lead generation tool for agents.

But I have seen a couple of interesting impacts, as the program is still in its infancy:

  • Multiple calls to show my exclusive listings for the same buyer from different agents and agencies.
  • Vague emails from agents who call to let me know that their buyer will attend an open house.  But when the buyer shows up to the open house, they tell me that they aren’t working with an agent.  This isn’t disloyalty- it’s confusion.
  • I have seen a proliferation of new small companies in the marketplace that seem to be using the lead generation model as a way to entice agents to join them: “We have more buyer leads than we know what to do with!” etc. Never mind that they are garbage leads.

Where do I fall out on this?  I still strongly feel that an experienced agent will be a tremendous help as buyers work their way through the purchase process.  As I’ve written time and again, I get gravely concerned about buyers who think that they know what an apartment’s value is after spending a few minutes doing research online.  Some might say, “The market determines the value of an apartment.”  I don’t disagree with that notion.  But if a buyer is aiming to make a purchase of a specific apartment, and one buyer is armed with better information and a more knowledgeable agent than the buyer armed with less information- the uninformed buyer is likely not to get the opportunity to buy that apartment.

I remain unpersuaded.

A random agent with no experience in a particular building isn’t going to add value in that situation.

Further, with cooperative apartment buildings, buyers must be carefully qualified to ensure that they could pass a board.  Listing agents serve as gatekeepers, yes, but critical gatekeepers for co-op listings.  As long as cooperatives exist, there will be roles to play for listing agents.

With condominiums, the purchase process is easier, less fraught with all the liquidity requirements, and approval processes. An agent in the case of condominiums is going to assist a buyer in ensuring that they don’t underbid when offering all cash (which isn’t exactly king in new york condo purchases- non-contingent offers mostly are).  Further, relationships matter in New York City Real Estate.  Established, experienced agents, or agents who go out of their way to connect with listing agents, stand a much better chance of “winning the deal” for their buyers.  I just don’t see this program doing the job in that case, either.

All of this is to say that nothing has really convinced me over the last two months that this program is doing anything positive other than making money for Zillow, which, funny enough, really isn’t making that much money as a company.

I’ll keep you posted as my feelings evolve on this.

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