Also, the cost of keeping up with technology is significant for most businesses. Just because you might save a cost in one area doesn’t mean you haven’t paid for it in another. Case in point, I do a lot of internet advertising for my client’s listings – so does Redfin – but I also have to pay for my own website (no venture capital funds except my own) and when I buy a new computer server and customer relationship management to make sure we maintain good records for our clients (as is required) then that’s $5k out of pocket in one month. Yes, it streamlines my business but it’s more expensive than keeping reams of paper and there are updates of software over time, and on and on.

The reason that homes listed with agents are even available to the public is because many cooperative associations have spent a lot of money putting in place the technology that would allow that to happen. A broker’s website might easily cost six-figures to develop and there is constant maintenance and upkeep. We know that consumers in large part already embrace it – over 70% of all home purchasers start their search using the internet. Powerful numbers.

A report just came out in January of this month from NAR that shows Buyers and Sellers use technology but they also want personal services. There is room for all kinds of business models – none has been a “catagory killer”. Back when RE/MAX started (early 1970’s) it was thought within the “traditional” brokerages that this was a major threat. Granted, 20% of all US commissions are now paid out to RE/MAX associates but we haven’t decimated the “traditional” brokerage any more than Redfin will do. Consumers want choices – and all Redfin does is give them one more. If you want to read how new entrants (meaning agents) into the real estate field impact it then I would suggest reading “Can free entry be inefficient? Fixed commissions and social waste in the real estate industry” Written by Chang-Tai Hsieh; Enrico Moretti for The Journal of Political Economy; Oct 2003.

I don’t necessarily disagree. But until traditional brokerages recognize that technology should, in some…not all cases, reduce the cost to the consumer, the point is moot.

Everyone wants the traditional brokerage to spend more money on technology…but that isn’ the answer to the real question. When is technology in the real estate business going to impact the cost of service to the consumer? At least those consumers who embrace it?

It is nonsense and debilitating to the brokers to equate technology with competition. Technology is a prmary tool brokers will need to bring to bear on their business to provide the highest quality of service to their clients. If Dalton prefers the term “skill” over “service,” then why not include the mastery of the available technologies in that skill set?

Trying to bully Redfin in front of a friendly and scared audience just gives the technophobic brokers a momentary sense of security, while cloaking the huge pink elephant in the room…the truth that a broker who ignores technology will be left behind. period.

There are dozens of sites out there built to benefit the brokers help them use technology to better serve their clients. Our site US Condo Exchange is one such site.

The future will be fun and profitable for those who embrace the tools available.

The whole concept that the buyer agent somehow has to tow the seller or seller’s agent’s line is outdated. The rules need to change in that regard. If amont of “work” was really a factor in compensation, you would have to look at what you did for each seller at the end of each transaction, and rebate to the seller when the sale was easier. You don’t do that do you? So your fee is NOT about exactly what you did or didn’t do and stays the same regardless, but you hold the buyer agent to a different standard than you do yourself? Agree that is traditional thinking. But it is traditional that has to “get real”, not Redfin.

My gripe is with Redfin and their presumption of expectations without even asking me if I agree. Somehow you have tried to turn this discussion around to be perceived as an issue between the seller and the listing agent. The issue lies between Redfin and the listing agent.

It also sets up a strange precedent with undefined boundaries of responsibility of who gets compensated for what. Redfin has conveniently chosen to have someone else do part of their work for them, and they pass their unearned savings on to the buyer since they used the listing agent’s valuable time and good will. Perhaps the next step would be to fill out the offer for the Redfin buyers too? They are unilaterally shifting the division of responsibilities to the side that helps them as a company be most profitable by minimizing their time investment and interaction with their clients, at the expense of others. It only comes back on them as a problem if they have a buyer who wants to see a Redfin listed property, which is of course a very small minority of properties out there.

If this all happens every once in a while, then I completely agree with the “so what” and “just do it”. But any model such as this needs to considered on a larger macro scale and determine if it is sustainable. Under that criteria, it either falls apart or the compensation division between buyer’s agent and listing agent should change from the traditional 50/50 to more for the listing agent and less for the buyer’s agent. The extreme progression of the Redfin model is for listing agents to become all-the-time “semi-dual-agents” whose client base is limited by their listings, buyer’s agents fade away, and Redfin becomes a paperwork-processing plant. That’s exaggerated for effect, but it helps illuminate the idea.

I have many times also done “pro bono” work for other agents as you have, but I bet they do the same for you when you are on vacation. Different scenario entirely than the Redfin situation, and I don’t find it to be analogous.

And I’m not sure I follow the reasoning or agree that Jonathan’s suggestion should result in suing the MLS, if that is what you meant. The practice of compensating a listing agent for handling a buyer agent’s client is already frequently used, and is an offshoot variation of referral fees. It doesn’t penalize an alternative business model; instead it sets out expectations and describes what the buyer agent and the listing agent will be compensated for depending upon the buyer agent’s completion of certain duties, and the buyer’s agent can choose how s/he wants to complete those duties and get compensated accordingly. I even saw that Redfin posted something acknowledging potential value in this idea, though they were legitimately concerned about tracking and verification issues.

I also share professional and ethical concerns about the buyer’s lack of onsite representation in these situations and the vagaries of perceived dual agency (independent of discounting this issue by what the law says), but that’s a whole different discussion and up to the buyer to choose as they so desire.

If agents were screaming about the real problem with all this, instead of whining about the “extra work”, I’d honor that.

Truth is the reason a listing agent should not want to meet with the client of another agent, is that they cannot hold the information received during that showing, confidential from the seller.

Something as simple as how much the people liked the house, or something overheard that the wife said to the husband when the thought the listing agent was listening.

Representation of a buyer client does not start they day they find a house that they want to buy. So there really is more to all this than just the financial aspects.

If Redfin doesn’t meet the buyer until after they find the house, how much information may the seller’s agent have gained, to the seller’s advantage, by that time? Doesn’t seem quite fair to the buyer to close him up in a room with the “opposing” side of the equation, especially if that agent is not going to represent them in any way during negotiations.

It’s like telling the chicken to go get the fox to get into the henhouse…isn’t it?

A buyer represented by Redfin should say so. If the listing agent doesn’t want to show the property then the buyer can contact the owner. It might do some good to shake up some agents that forget who they represent and what service they can provide to their seller.

On the other hand if the Redfin “represented” buyers didn’t feel so sheepish about screwing someone they would proudly announce to a listing agent that they are using the discount broker.

TRANSPARENCY is a two way street.