One of most interesting (if misguided) things about the RPR project is the drive to create an online property valuation “Gold Standard.” The RPR team intends to do this by layering Realtors’ street-level assessments of value on top of the algorithmic magic that can be worked with mounds of raw property data.
They’re calling it the “Realtor Valuation Model,” or RVM.
When I mentioned this to an investor friend he said, “Oh, that’s easy: the model will be true market value plus 20%.”
Sarcasm aside, it’s a very interesting prospect. Machine calculated property values may satisfy our idle curiosity or grease the skids of online engagement, but they are, still, an imprecise measure. In almost all cases, only a skilled Realtor familiar with the qualitative dimensions of a property and its environs can price a home correctly.
So capturing the practitioner perspective online â€“ in essence, productizing the Realtor mind â€“ would have immense value. Indeed, when Dale Ross explained the RPR to a group of MLS executives at the NAR conference last month he made a point to note (rather clumsily) how deeply interested Wall Street was in leveraging such a human generated measure.
I’ll bet they like cookies and back rubs too.
Part of me thinks that any Realtor willing to feed this beast is committing a profound, and perhaps final, act of value destruction. If big banks and consumers can leverage the knowledge of Realtors through something like an RVM, well, who needs Realtors? (I have always argued that the Zestimate is the good Realtor’s best friend precisely because it, unlike something like the RVM, is inaccurate.)
But I also think there are lots of value creating possibilities here.
One example: The Point2 Real Estate Confidence Index
Realtors from the beginning of cocktail party time have been asked one question:
“How’s the market?“
What if you could answer that at scale?
This past summer, the team at Point2 Technologies began working towards that [disclosure: 1000watt Consulting has performed work for Point2]. The company began surveying its nearly 200,000 members every month. The questions were simple: How’s the market in your area? Where do you see it heading in your area near-term? How about long-term?
The responses, of which there were thousands, were run through a well-designed survey instrument, sorted by state, represented as a value on a ten-point scale and neatly visualized. In time, the company intends to produce regional and local versions of the index. Survey participants can add a Confidence Index widget to their Website or blog; the rest of us get a glimpse of where the market is headed from the people who know.
Consumers have an almost insatiable desire for insight into their real estate fortunes. Zillow’s nine million monthly uniques attest to that. But I think we have missed half the opportunity. And the RVM gets it wrong.
The company that can refine, telegraph and merchandize the view on the street while at the same time delivering value to the those doing the looking will really be on to something.