[photopress:glenn_1_2.jpg,thumb,alignright](This Article is Posted By Glenn Kelman, CEO of Redfin)
Just kidding! But I did want to start by acknowledging that Redfin hasn’t always been the darling of Rain City Guide, so we’re especially grateful that you would allow us to post here as part of the Yankee Real Estate Blog Swap. We’re real estate agents like you, and we’re online entrepreneurs too, so we have plenty to talk about (Meanwhile, Rain City Guide’s Ardell has seized controls of the Redfin blog, and begun broadcasting her pirate signal to Redfin’s dazed subscribers).
Here’s our top-eleven list of what you should know about Redfin:
1. What surprised me most since joining Redfin: that Zillow didn’t do what we’re doing, real estate e-commerce. What a relief! It’s less profitable and more difficult than ads, but it’s more satisfying for us, and more fun.
2. What the second-biggest surprise was: that I would like the real estate part of the job, not just the web part. It’s nice to look up from your computer and see someone buying her first house. Moments like that have been schlockified by the real estate industry unto death, but they’re still nice. That half our office is filled with real estate agents makes the place more lively than if it were just the typical software nerd cave, which is what I’m used to.
3. The best part of my day: reading your blogs, when really I have plenty of other stuff I should be doing too. You’re funny and insightful. Calling me a jackass just convinces me you’re telling the truth.
4. What I like best about the real estate industry: it’s filled with whackos, misfits and entrepreneurs. Our kind of people.
5. What I dislike about the real estate industry: all the bull-shitake. It hurts our industry more than we realize.
6. The only thing you do that drives us crazy: calling Redfin a discounter. We’re not a discount brokerage, any more than Amazon.com is Half-Price Books. Online service can be different and even better in some ways than traditional service, not just less than “full service.” It seems like one of those intentional digs, like Republicans saying “the Democrat party” or Democrats calling the vice-president “Dick.”
7. What’s scariest about the inner workings of Redfin: losing money, even if it’s less than we planned. Our real estate operation throws off profits, but not enough to pay our engineers. This is why the holiday party was hosted at my house again this year… 
8. What perception is most inaccurate: that Redfin is arrogant. Actually, we have a self-esteem problem. Every time we meet someone who compliments our site, we end up tearfully promising to make it better. Last week, I started wearing this messed-up rubber night-guard because I fret so much in my sleep about how we could improve Redfin.com…
9. What shows that we listen: you guilt-tripped us into free home tours, even though it hasn’t helped sales, even though I still feel that when you sign up to sell a house, you should be clear about whether you’re willing to show it. But why argue? Ardell convinced us to do it. It may not seem like we’re listening, but we always are.
10. How I feel about being in the papers: excited yes, but also sort of appalled. I hate to hear my voice on the answering machine. Before testifying to Congress, I thought I was going to puke. I often get depressed after being interviewed by journalists about Redfin-related controversy, for the same reason that nobody likes a pro athlete’s airing a grudge on TV, rather than working it out privately. It’s just that we can’t seem to work it out any other way, with brokers, with the MLS, with the real estate commissioners and law-makers. And we can’t allow our customers to be intimidated either.
11. What is most important for people to know about Redfin: even though we’ve made plenty of mistakes, we make the world stop for our customers. No matter what you think of Redfin, a company with that as its core value can’t be all bad for real estate…
OK, that’s it, back to work! Thank you very much for allowing me to post here, and to everyone who contributes to this amazing blog.
Be sure to vist all the Yankee Blog Swappers: Transparent Real Estate’s Pat Kitano vs. Zillow Blog’s Drew Meyers RSS Pieces’ Mary McKnight vs. Future of Real Estate Marketing’s Joel Burslem St. Paul Real Estate Blog’s Teresa Boardman vs. Phoenix Real Estate Guy’s Jay Thompson 3 Ocean Real Estate’s Kevin Boer vs. SLC Real Estate’s Nigel Swaby Issaquah Undressed’s Larry Cragun vs. Maury Properties’ Andrew Maury Chicago Home Weblog’s Geno Petro vs. NY Houses 4 Sales’ Christine Forgione Phoenix Arizona Real Estate Blog’s Jonathan Dalton vs. Real Estate Snippets’ Bonnie EricksonThe boys of Sellsius vs. Real Estate Tomato’s Jim Cronin ML Podcast’s Michael Price vs. FamousAgents.com’s Elise Wright My Tech Opinion’s Reggie Nicolay vs. Ubertor’s Steve JaggerRedfin’s Glenn Kelman vs. Rain City Guide’s Ardell DellaLoggiaCondoDomain’s Anthony Longo vs. miOaklandCounty’s Maureen Francis The San Diego Home Blog’s Kris Berg vs. Urban Dig’s Noah Rosenblatt The Property Monger’s Jon Ernest vs. XBroker’s Jeff Corbett Realty Blogging’s Richard Nacht vs. The Mortgage Reports’ Dan Green Christian Real Estate Network’s Justin Smith vs. Wanna Network’s Tony Senna Sacramento Voice’s Gena Riede vs. Max Sell’s Brad Nix For an overview of the event and all its participants, please visit www.YankeeBlogSwap.com.
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I’ll freely admit that I’m not the biggest fan of Redfin’s model. But that doesn’t make it wrong, just different. Thanks for “humanizing” a bit of Redfin for us.
Refreshingly honest Glenn. Like any new venture, there is resistance and ridicule. We expect to get the same. It goes with the territory. But you’re giving it a shot and that takes guts. We admire that.
There’s not much to “fear” in Redfin’s model. I think the comment on Glenn’s recent post about the Redfin holiday party pretty much sums it up:
asdf wrote: “At the end of the day, you’re a discount RE agent with a cool map, based on Flash and proprietary maps. “
I think the major agencies could just offer “tiers” of service, continue to ensure they keep their web sites + Internet-based customer tools up-to-date and they will maintain their current position in the market. Really, what’s there to fear from Redfin any more than any of the other discount or power-FSBO brokers? Even craigslist is basically just FSBO on the cheap. Basically the traditional agencies either need to “fear everyone and die” or “adapt and survive”.
Personally, I see two kinds of real estate sites out there: ad-driven ones that customers use for searching (zillow, google base, etc.) and transactional web sites where customers go after finding a listing or to “get more help” after just browing. Agencies will have to list their houses and buy space/ads/links on the ad-driven sites, much like most businesses do SEO and buy keyword ads from google to drive traffic to their own web sites. But once the customer gets to your site, it’s up to you to make it a good experience and that the “price” is right.
Maybe Redfin will be the company that does this, maybe it will be John L. Scott, or maybe it will be some combination of those two along with places like craigslist for the “DIY” of the market.
Glenn, re #9: The flip side of your point, from the view of the traditional real estate industry, is, “When you sign up to represent a buyer, you need to realize that your duties include showing properties.”
That goes back to Ardell’s point on the Redfin blog today: The way things have been done traditionally isn’t necessarily the way things should be done.
Our industry needs a shake-up, and you’re certainly playing your role.
Hi Glenn,
regarding Touring Homes with Redfin, from your site:
“Touring homes with Redfin Direct is easy. The first tour, for up to three hours, is free and there is no obligation whatsoever to use Redfin as your agent. Future tours are $125 per home or $250 for a three-hour tour. We realize it seems surprising to pay for a tour at all, but we think you’ll agree that this is a small price to pay when you compare it to the 3% of the sales price you will traditionally pay a buyer’s agent.”
Here’s my issue – buyers don’t pay the agent so this statement really isn’t true. The seller pays a listing fee to the listing agent and that person advertises an SOC via the MLS (typically). How can you put this on your site when it isn’t really accurate? This could be worded much better.
Why not just state this element of your services is a “fee for service” since you refund much of the SOC to the buyer and it pays for the time your agents spend in the field?
Hey, Glenn,
Thanks so much for participating I loved this post. Because I’m not really in real estate, just on the periphery of the industry, I’ have a completely different impression of ya’ll and we kinda like you guys over here. So, again, thanks for sharing a little of your corporate culture to us.
I believe there is a place where we can all exist together. America is a wonderful free market and we can all be successful in our own ways. Luckily for me there is no commercial Redfin (did I just give away a business concept?).
Reba, buyers pay the buyer’s agent as part of the sale price they bring to closing.
Rebecca, I don’t like this wording either and we will change it (changing the text is more involved than it should be, but we will get to it). The point we were trying to make is that $250 is a small amount of money compared to our commission refund.
As for JCricket’s comment, it easy to say that our web site is “just” maps with listings, parcels, past sales and an online brokerage; you could also say Zillow is “just” a site with proprietary maps, valuations, a wiki and a form for posting listings (yes it is beautiful, and nationwide; my point was not to disparage Zillow). Google’s real estate site is much worse that Zillow’s. We’re all just starting.
But neither GoogleBase nor Zillow will be the primary site for most home-buyers to search for for-sale properties at any point in the near future; we think we can give the MLS-powered brokerage sites a run for their money by adding more information about listings and neighborhoods than is available anywhere else. It is also worth noting that, however flawed our current site may be compared to what the future may hold, so far we have been more successful than we had hoped we could be.
This is not say that there isn’t plenty an Internet company like Redfin can do to provide electronic service beyond what discounters have traditionally offered: daily traffic reports on a listing, data-driven pricing guidance, self-service access to all the documents associated with a transaction, a closing calendar, I could go on and on. This suggests to me yes that we NEED TO GET GOING but also that we have the basis for a much-larger business, the basis even for hope (that isn’t just BS).
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Ardell, you know that plenty of properties sell without an agent representative and prices aren’t inflated to include agent fees. The sale of a home is the price a willing buyer is offering a seller and that the Seller is willing to accept. Parties can do this privately between themselves or they can bring in attorneys, etc. Thankfully, Glenn and I are seeing eye-to-eye on this as I agree with him on his assessment of my comment. His simple explanation is more forthright than the other wording on the site at this time.
Can you guys share some advice with me regarding asking the buyers agent to represent the seller as well? In case when we have found the house entirely by ourselves, will this open doors to ‘asking’ for a percentage of the comminsion be given back to us? What are the risks here?
I can’t speak specifically to Redfin but you might want to justify a bit more on which new construction you’re talking about Sandy. I’ll explain… Many large builders such as Centex, Quadrant, and other similar types will often not allow the payment of a “selling office commission” (aka SOC) to a buyer’s agent if they haven’t pre-registered the client at the site. Some smaller builders use a preferred agent rather than having staffed agents and those you may still be able to more easily use Redfin with – but I’ve had several relocating people not realize that these rules exist for agents in new construction. For many of them, if you don’t pre-register your clients you either don’t get compensation through them or it is significantly reduced. It will be interesting to hear how Redfin works in these situations.
Sandy,
Your comments always show twice for some reason. I deleted the repeat one as I did last time you commented.
Reba is correct that you need to note your agent the first time you enter the new construction, and often have to have the agent with you…but not always. Sometimes telling them you have an agent at first contact is sufficient.
In my “Everybody Run to Redfin” post back in September or so, the office would pay 3% (condo conversion) but would not give the buyer any concessions for that 3% if they had no agent. In that case, regardless of quality, the buyer would still come out $8,000 to $12,000 ahead if they wrote in Redfin as their agent when they first visited the site.
Reba,
While you are “traditionally correct”, with online real estate companies coming aboard, it is doubtful that the builder could refuse a buyer’s choice of Redfin as their agent, simply because the agent wasn’t present. As long as the purchaser made it clear at first contact that they had an agent, the builder cannot force “Dual Agency” on a consumer in WA, regardless of “common practice”. Dual Agency requires the written consent of both parties.
What has been deemed acceptable in the past, is not necessarily appropriate or acceptable into the future. These rules have been around for a VERY long time. I’m sure some budding attorney would love to fight the consumer’s right to use an online agent.
Craig? Russ? LOL
Sandy,
To answer your question about quality of agent, if I joined Redfin tomorrow would I automatically become somehow “lesser”? I think quality of agent abounds in any company. Difference at Redfin (I think) is that since they are all salaried, so you should be able to get your pick of the litter 🙂
We have represented buyers in dozens of new construction transactions. We have only had one deal that I can recall where the builder enforced the site registration policy and our client only got 2/3 of a 1% instead 3% of the sales price as a refund. This was a function of their site registration policy and would have happened whoever represented that client.
Regardless of who is representing you, be sure to always register that you have an agent (feel free to use my name) when you visit a new development. As Ardell points out it can save you several thousand dollars if you ever decide to buy in that development.
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Thank you folks for your responses. I found it hard to believe that the services provided by Redfin ‘match’ those of a traditional buyers agent, especially given the fact that we buyers may be eligible for a large cash back deal.
Sandy,
When it comes to new construction, unless it is a pre-built “spec” home, the agent value is not as great (in my opinion) as it is on a resale home.
On the condo conversion project I noted, there were NO buyer options. All units were being done identically with no variables. So other than picking the right one, that would have the best resale value for the money paid at purchase, not much else an agent could do for you.
Once 50% of them were sold, I wouldn’t touch them, as the remaining 50% were overpriced based on location negatives. So all I could do is tell you, sorry too late. If you still wanted to buy one of the lesser locations, best for me not to be involved at all.
Best value an agent can provide sometimes, is to tell you when NOT to buy it. If you don’t want to hear that…if and when that is the case, then you don’t need an agent to do much besides “push papers”.
What “value” would you expect from an agent with regard to new construction? Builders that offer very high buyer agent fees, are the ones the agent can provide “the most value” to the buyer, for their service.
Resale is a whole ‘nuther story. Buying a 1953 rambler vs a new condo…huge difference.
Thanks Ardell. You make a good point to distinguish new home (construction) buying and buying an older home.
I must confess I am ‘new’ to Seattle (east side specifically) and this home buying process poses some interesting questions. I find the price of homes (new constructions and 0-7 years old homes) very high. While I do sort of see sales dropping off, homes sitting around for longer in MLS, I am not seeing a price decline as yet. One classic example is the education hill area in redmond where there are lots of new constructions or relatively newer homes for sale. What would estimate the value of homes in this area today as? What would you predict the future prices of these properties?
Sandy,
Since you first raised that question, I received a private email from someone asking the same question. I promised to write a full article addressing the topic, generally, on my blog after the Blog Swap of yesterday.
Will try to get it up at http://www.SearchingSeattleBlog.com by end of day. I do it there because I try to keep an indexed list of topics, so I don’t have to answer the same questions repeatedly. It’s not good “blog etiquette” to index posts the way I do there, but it has worked for me this year. Will be going back to the beginning and revamping the list and articles, as I get ready for 2007. Will include this topic, which is basically what I call “in the Zone” meaning a radius around Microsoft, which is a market unto itself.
Remember…in a flat market, new goes down while old can go up or stay the same. That is always true, with the next “age” variation at 8 years, or whenever builders create a demand for “something different”. For instance in 1982 to 1990 builders added a demand for a big master bath. So if you bought a shower master in 1989, you would have just missed the boat and bought a 1982 “style” which changed overall by 1992. Sometimes one year can make a huge difference.
So far, other than caves and home theaters, I’m not see any dramatic news in new construction that will impact future value of all homes.
I will be writing 30 or more specific articles to catch up on “the year that was vs. the year that will be” between now and January 10th. All of these may be of some help to you.
Understand, however, that what you are asking are questions you ask “your agent” and not the normal “blog questions”. Specific guidance on specific properties is not generic enough. I might like 2 properties that are new in Education Hill for example, and none of the others. So to generalize would be a disservice not only to you…but to other readers as well. I might feel confident that one of them will go up by 8% to 12% this year, given its location and floorplan and lot size. Another could go down 3%, given the same considerations, even though they are both “new in Education Hill”.
New vs. old is not in and of itself the primary factor, as new can equal NO LOT AT ALL and resale product can equal a 7,000 sf lot or a 15,000 sf lot. The biggest newest trend, is that too big of a lot is equalling a decrease in value…especially in “the Zone” where yard maintenance is not welcomed. But too small is not good either.
This does fall in the category of “pick the agent’s brain for free” and then go use Redfin. You are crossing the line on that one. There is a line, and you need to know ethically, when you are crossing that line. When you use Redfin based on info you receive from other agents…not playing fair.
Ardell, thanks for the information. I am not working with any agent as of present, let alone Redfin. I am new to Seattle and barely know anything about the local markets. I have just relocated from a state in the opposite end of the country :)Sincere apologies if these are not the normal blog questions and seem to cross ethics line. Totally unintentional, and will be more careful in future.
Sandy,
I am writing a new article on this right now. Should be up within 15 minutes or so. It has more to do with “online” services and Redfin, than you personally. Since it is a dilemma created by online business models across the board, I decided to devote an entire article on the topic.
Ardell,
I agree, it’s not right for a buyer to pick your brain and then use that information to write an offer through a discount, limited-service or rebate firm. I understand that Sandy wasn’t doing that, but some Buyers do.
You have years of experience and expertise, and that has a definite value. Even if a Buyer “finds” the house themselves online, and you advise them, write the contract, negotiate the sale, guide them through the inspection, lending, title, and escrow process and that “only” takes so many hours, they are not paying you “by the hour”, but for your expertise in getting the sale to closing.
It’s like the electrician who comes out, switches a wire, and charges you $300 for 2 minutes of work. You’re paying $10 for the wire switch, but $290 for him to know which wires to switch.
A Buyer may be able to get a $5000 rebate at the closing of their condo by using a discount or rebate firm, and maybe if they would have used you, they’d get nothing. But you would have told them about the impending condo association’s special assessment for rot in the building envelope that’s going to cost them $10,000 over the next 3 years or would have urged the buyer of a house to have the LP siding inspected by an expert in that material and saved them $20,000 in siding replacement. You just never know. But having good representation has a definite value, as does specific knowledge about the area, and it’s important not to discount the value good advice brings to a transaction.
Sandy,
I went “sideways” in my article, as I am known to do. So I’m back here to address your issue more specifically. You are asking questions of great value to you. You are also asking questions that require an agent to answer…not any agent, but your agent. So if you have these kind of questions, and generic info posted (as I still will) is not enough, and it won’t be, you need to hire an agent that you “likely” will use later, to answer these questions adequately.
Your needs are great, your having recently relocated here. But know that the answers are of great value and cost something. The one mistake I made this year was the time spent on educating persons relocated here, who ended up using me to answer all of their questions and then using the “relocation agent” assigned to them by the company they work for. They wanted to pick my brain and then were forced to use the agent whose brain and info they did not value. So someone else got paid for my advices.
This is common. If you recently relocated here, and your company paid any portion of your costs to relocate here, you already DO have an agent whether you know it or not.
In any case, it is obvious to me and other agents reading your questions, that you need an agent now. You need a lot of “pre-information” as all relocated people do. That is why your company almost always provides you with one from day one…even if you are not going to buy for a year to 18 months from now.
Marlow,
My new article address your “Procuring Cause” question as well. So I’m interested in your thoughts on that one.
As to your comment here, understand that “Redfin buyers” are those who are simply not getting those advices from anyone. They are not being adequately represented with regard to the issues you have raised. They are not meeting the right agents out on the street. And so they are saying, if this is all I get (meaning someone to open the door and whip out a contract), I may as well keep 2/3 of the commission.
When offered full and adequate knowledge, skill and service, they choose that. But lacking that…they choose Redfin, and rightly so.
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Glenn,
In this article you said: “you guilt-tripped us into free home tours, even though it hasn’t helped sales”
It’s not about whether or not you had more sales, it’s about the buyer having choices. My support of alternative models is about buyers and sellers having more choices. Taking away the choice for a buyer to see the home with their buyer’s agent, is not about more or less sales.
You offer YOUR CLEINT the opportunity to see the house WITH you, because it is the right thing to do WHEN and IF YOUR CLIENT prefers it that way.
I was just revisiting the old “yankee blog swap” as I happened on this fun post http://raincityguide.com/2006/12/14/glenn-kelman-vs-ardell-dellaloggia/ in my “travels” on bing today.
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