Statistical Inference, Exploratory Data Analysis, and the Data Science Process - Doing Data Science - page 47

How Does RealDirect Make Money?
First, it offers a subscription to sellers—about $395 a month—to access
the selling tools. Second, it allows sellers to use RealDirect's agents at
a reduced commission, typically 2% of the sale instead of the usual
2.5% or 3%. This is where the magic of data pooling comes in: it allows
RealDirect to take a smaller commission because it's more optimized,
and therefore gets more volume.
The site itself is best thought of as a platform for buyers and sellers to
manage their sale or purchase process. There are statuses for each
person on site: active, offer made, offer rejected, showing, in contract,
etc. Based on your status, different actions are suggested by the
software.
There are some challenges they have to deal with as well, of course.
First off, there's a law in New York that says you can't show all the
current housing listings unless those listings reside behind a registra‐
tion wall, so RealDirect requires registration. On the one hand, this is
an obstacle for buyers, but serious buyers are likely willing to do it.
Moreover, places that don't require registration, like Zillow , aren't true
competitors to RealDirect because they are merely showing listings
without providing any additional service. Doug pointed out that you
also need to register to use Pinterest , and it has tons of users in spite
of this.
RealDirect comprises licensed brokers in various established realtor
associations, but even so it has had its share of hate mail from realtors
who don't appreciate its approach to cutting commission costs. In this
sense, RealDirect is breaking directly into a guild. On the other hand,
if a realtor refused to show houses because they are being sold on
RealDirect, the potential buyers would see those listings elsewhere and
complain. So the traditional brokers have little choice but to deal with
RealDirect even if they don't like it. In other words, the listings them‐
selves are sufficiently transparent so that the traditional brokers can't
get away with keeping their buyers away from these houses.
Doug talked about key issues that a buyer might care about—nearby
parks, subway, and schools, as well as the comparison of prices per
square foot of apartments sold in the same building or block. This is
the kind of data they want to increasingly cover as part of the service
of RealDirect.