There’s always something to howl about.

Zip Realty and a Press Release

It never ceases to amuse me (amaze me?) what the press finds “interesting” for a real estate “news story”. Of course it is totally predictable what Inman News finds newsworthy – hacking away at Realtor commissions. Brad Inman has been on a mission from God on this issue for some years. So please don’t get the idea that only obviously crazy people are the only ones working on this vital issue. Here is a link to post I made on Inman’s blog last week. If you are interested, here is the link to the video on CAR’s website. Allan Dalton’s comments, especially the stuff in the last twenty minutes, are well worth any Realtor’s time. I especially liked his idea that yammering on about “we give great service” is NOT productive – and that no one really gives a crap. You will see what I liked so much if you watch it. The first part is quite boring but once Allan starts to talk – turn the volume up and listen.

Zip Realty Logo

Zip. A stupid name? I think so. But damn are they good at using the press! Here are some numbers they just released:

ZipRealty Inc. (Nasdaq: ZIPR) today announced third-quarter net income of $600,000, down from net income of $2.9 million in third-quarter 2005. For the first nine months of the year, ZipRealty reported a net loss of $386,000 compared with net income of $2.57 million for the first nine months of 2005.

The company employed 1,747 ZipAgents as of Sept. 30, compared with 1,383 at the end of third-quarter 2005 and 1,669 at the close of second-quarter 2006.

ZipRealty also announced that the total value of real estate transactions closed decreased about 11.8 percent in the third quarter to $1.2 billion, compared with $1.36 billion in third-quarter 2005, while the number of transactions closed fell 6 percent to 3,467 compared to the same period last year.

Please keep in mind this is a NATIONAL company. In my area (greater Phoenix area) there are privately owned real estate companies that have better numbers than Zip.

Local companies here that have about that many agents (just here – not all over the U.S.) would be: Realty Executives, West USA, 1st USA Realty Professionals, Dan Schwartz Realty – to name but a few.

I personally know INDIVIDUAL AGENTS who have quarterly net figures comparable to Zip’s (their entire corporation) quarterly figures.

But because Zip Realty is supposed to “help the consumer” and there are endless articles in the press about their “dynamic growth”. Every time they open an office they manage to get national attention. Compare the amount of national press the press gives to – just for example – Keller Williams Realty. KW opens more offices, recruits more agents, is growing at a significantly faster rate (both in rate of growth and in absolute numbers). In fact, in virtually every meaningful way, KW is way ahead of Zip Realty. This includes the average commission rates that KW agents charge the consumer. Read that last line again. The average consumer is getting a better deal from the average KW agent than from Zip. But that isn’t “news”. KW isn’t positioning themselves as a “discounter”.

No, writing about a “traditional broker” – hell, that just isn’t “news”. It isn’t “exciting”.

Just an educated guess but I’m thinking that a name, like say, “Re/Max” (if one wants to choose a national brand) has much more credibility in the consumer’s mind. Sometime – just for a fun exercise – get the actual commission rate that Zip would charge and compare that against what the average (especially with the mind set most agents have in this market) Re/Max agent would charge. I believe that the commission rates will be very close if not better (lower) from the Re/Max agent.

Zip is a public company. So the “normal” rules, like one has to actually make money tend to get suspended for quite some time – while the stock floats up and down. Where a real “boring” company like Keller Williams is physically owned by individuals who care about every little detail regarding the actual company – not what Wall Street thinks.

Do I think Zip will wind up “successful”? Not really. Unless there is something I am missing here, what real value proposition do they offer? Lower commissions? Not really – and lower commissions alone isn’t (at least at the rates they have to charge just to pay expenses) enough – as their rates really aren’t that low.

It is almost as though the various news media don’t evaluate relative importances very well. Could that be possible?