Redfin on 60 Minutes – Something to Monitor
Robbie on 05 14, 2007
As many of you know, Redfin was featured on 60 Minutes last night. Although, I read Inman’s copy of the NAR head’s up prior to watching the report, so it was interesting to read their spin prior to watching it. At any rate, I didn’t see Redfin’s blog post until after I watched it. I don’t know if that colored my opinion of the report, but I thought I’d throw it out there and let know you know. Anyway, here are my thoughts on the 60 Minutes segment.
- I thought Kelly Engel’s comments will strike a chord with many people who are young and tech savvy. Of course, not every transaction takes only 5 hours, but if yours did, you’re not going to feel good about paying that traditional 6% commission.
- I didn’t think Ms. Arends did the best of jobs defending the “traditional agent”. Although, to her credit, when challenged by Ms. Lesley Stahl, who asked “You don’t do enough for the 6%”, she responded “I am not the agent for you”. However, most of the “traditional” agents I associate with are “non-traditional” (perhaps hybrid is a better choice of words). I personally think traditional agents should better market their staging skills. Since IMHO, that’s a high touch skill that brings a lot value to the home selling process.
- I thought 60 minutes kind of glossed over the whole eRealty.com, NAR, DOJ thing. However, they have to leave time for Andy Rooney’s weekly segment (Yeah Andy, I agree with you, I think I peaked around 21 too).
- I thought the end of the piece where they listed 8 states that have minimum service laws and 11 states that prohibit rebates was very powerful. Perhaps Redfin could actually cite those statutes on the respective state legislature law books / web sites so fans or potential customers of Redfin could more effectively lobby for changes in their favor.
- I noticed most of the agents have two monitors on their computers and I really need to get a second monitor for my computer at home. Which size / model Dell LCD monitors are the Redfin employees using? Do they like them? How well does it handle graphics work or software development duties? I keep waiting for the new Samsungs (2 months late and counting) and the more I think about it, the more likely I’ll probably “go with the internet discount vendor” and get the Dells. Anyway, any feedback on your monitor choices would be welcome. (I already know what Redfin thinks about the real estate industry, but I really want to know more about what they think about the monitors).
Overall, I thought Redfin came off looking like amicable revolutionaries (I felt it had a Dell of Internet Real Estate vibe to me). It’ll be interesting to see how this plays outside the relatively friendly confines of Seattle.
Anyway, what are your thoughts about the piece? How did Redfin come off looking? How did the “traditional” industry look? Was 60 Minutes fair? And of course, are the new Dell LCD monitors any good?
About the Author: Robbie Paplin
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Wow. Guess I’ve been under a rock the past few days. I had no idea this was even on….and I subscribe to the Redfin blog too. Thanks for posting the videos, I’ll be checking them out on my 2nd monitor, a Gateway 21-inch 10,000:1 contrast 2 ms response. I’m actually holding out for the samsung LED monitors. Didn’t follow the link, but guessing those are the ones you’re waiting for too.
By the way, I LOVE my 2nd monitor. Never really thought about adding one until about a month ago. I use a Mac at home, so I have Windows XP running on the 2nd monitor with parallels in coherence mode. Looks and feels just like my XP laptop, but faster. I also have twitter hanging out on the 2nd monitor, and my chat client, photoshop palettes (when using PS), and my feed reader sitting over there. Graphics work fine on it.
Mostly Dell 1905 and 1907, but we are starting to get some of the newer high resolution 20″ Dells. I am trying to figure out how I can wrangle two of the hi-res ones.
Once you go dual monitors it is really hard to work any other way.
I’ve got the 60 Minutes thing TiVo’ed, haven’t watched it yet. I’m not a Redfin, but this is my monitor of choice. I **love* it…
http://www.phoenixrealestateguy.com/the-newest-member-of-the-family/336
The fact that Kelly Engel didn’t take the time to physically look at the property her clients were buying is more a commentary on the level of service she offered as a Realtor than on Realtors overall. I suspect Redfin is a better fit for her as an employer.
One point that I thought was the most interesting was Glen, the Redfin CEO, mentioning how one of his agents does 8 deals a week. I think this translates into 5 hours per client from start to finish which shows the tradeoffs clients need to make when choosing between discount brokers and full service Realtors.
My conclusion is that Redfin is great for people who want the Home Depot remodeling experience. No doubt, it can save them a lot of money but there are differences when dealing with a tele-agent versus an on the ground one.
I think Glenn did a great job. The visual of Redfin being people who sit in an office in front of screens taking orders, and traditional agents being in a house answering questions about the house, was very powerful.
The couple who saved $26,000 were the best “actors” in the whole piece, don’t you think? Talk about doing a good job in front of cameras. They were AWESOME!
In defense of Arends, I turned them down because they wouldn’t talk about the commission NOT being 6% They wanted that big gold 6% hanging there and had pre-ordained the piece to be 6% vs Redfin. They didn’t want to talk about anything in between the two. Nor did they want to talk about when the commission isn’t 3% with regard to Redfin or the traditional broker on the buy side.
That said, justifying the fee based on “postage” was a hoot!!!
I’m wondering. The agents who are now putting “3% will be reduced to 1% IF THE AGENT is not present with the buyer at the first viewing of the property” Isn’t that “boycotting” and targeting a single business model? Isn’t that the same concept of the e-company that was forced out of business with “New Rules”?
I know Marlow also turned them down. I wonder how many agents declined to follow their take on the business, before they got Arends to agree. They wanted me to make it “funny”. I can tell you the people in my house watching it laughed at the thought of “postage costs” being a defense of charging $26,000 more.
I thought the piece on Redfin last night was very interesting.
George, I think you are absolutely right when you say that Kelly Engel showed her skill base when she mentioned that she didn’t deserve the full 3% commission. If she didn’t even look at the house, what else didn’t she look at?
Did she:
1. Look at the title report?
2. Negotiate at all, or show any sort of negotiating skills?
3. Attend the inspection or pre-inspection, easing the buyer’s mind or pointing out the negatives/positives?
4. Did she help with the appraisal at all, with coordination, with facilitating?
5. Did she communicate with the lender at all? Did she check the status of the loan? Did she check with the loan documents, etc?
6. Did she review the estimated HUD statement?
7. Did she help facilitate work orders?
8. Did she help with escrow at all? Did she do anything in regards to escrow, or did she just sit back and wait for her check?
9. Did she add any value to the transaction? Did she know the neighborhood, the pros/cons of the neighborhood, the crime or school statistics, the ongoing political issues, etc?
10. Did she help coordinate key exchange?
11. Does she continue to be a resource for her clients long after the transaction closes?
12. Did she actually fill out the purchae and sales agreement correctly and without errors? I doubt it.
13. Did she provide peace of mind throughout the transaction?
Better yet… if she was so successful at what she did, why isn’t she a traditional agent? My gut tells me that she actually wasn’t successful, and with that being said, couldn’t make it in the business. She didn’t receive any repeat referrals, and therefore her business dried up.
Luckily for her, she has a bunch of tech savvy buyers who think they can save some money by using Redfin. I am looking forward to the first lawsuit that Redfin gets.
Also, they didn’t mention that Redfin also provides traditional real estate services. They also didn’t mention that Redfin makes you sign a Buyer Agency Agreement, so you are tied to them for the next six months when making an offer. They also didn’t mention to them that they don’t go out and actually view the home. So Kelly can sit behind her desk and look at the home on line… but she woudln’t be able to do much more than say “wow, nice pictures.”
Finally, for $3000, they will list a home. So, what do they do for that $3k? You can put your home on the MLS for much less than that with other companies. Why chose redfin for such? If they are just charging less for inputting these listings on the MLS, then their model will fail as they provide no service at 6 times the cost of a generic “place your home on the MLS for a flat fee” company.
I would like to also point out the difference of a LIMITED SERVICE versus DISCOUNTED SERVICE company.
LIMITED SERVICE: Redfin – They don’t do everything you need, nor do they want to.
DISCOUNTED SERVICE: Typical Agent – An agent that goes above and beyond the call of duty, provides all the support you would expect and more with a traditional agent, but doesn’t charge the market rate.
[...] 2 – There is an extraordinary amount of conversation in the re.net, but this is the most succinct comment I have yet seen about RedFin. The fact that Kelly Engel didn’t take the time to physically look at the property her clients were buying is more a commentary on the level of service she offered as a Realtor than on Realtors overall. I suspect Redfin is a better fit for her as an employer. [...]
As a customer, I think it would have been more even-handed to show either a happy customer extolling the virtues of the traditional realtor model, OR they could have shown an unhappy customer with RedFin. There is way too much that can go wrong with a real estate transaction, so until you can find a way to mitigate that risk – I’ll stick to paying my agent to deal with that on my behalf. Let’s see how RedFin and others handle things (particularly Ms. “5 hours a transaction”) when the **** hits the fan for one of her customers.
Hi George,
You’re assuming Redfin agents work 40 hours a week. They don’t. It’s more like 60+ hours per week, plus being constantly available via phone and email. These people are not nine to fivers. This probably doesn’t change the thrust of your argument, but I thought you should know.
Bridgette,
There is no such thing as a 9-5′er in the Real Estate industry. The mere fact that Kelly answers her phone at 9pm at night gives me no such solice.
Ardell, we all know, is a discounter. Redfin, we should know, is a limited service company who thinks of you as a number.
#5 this week! Now serving #6!
Regarding the screen shots,
I just Tivo-ed 60 Minutes, and Slingbox-ed it to my PC. Joost may be more interesting, but Slingbox is a lot more useful (if more restrictive).
Regarding the monitors,
I’ve heard the Dell Ultrasharps have had color banding issues in the past, but Dell fixed the issue w/ a firmware upgrade. Before I left MSFT though, they got 21″ Ultrasharps for everybody I thought it was the second nicest LCD monitor I had seen up to that point (next to my trusty Samsung 213T).
My current employer has Acers. They are cheap and look OK, but lack every useful feature available. Having Portrait/Landscape mode, adjustable height, and a bevy of video connections is a MUST have on any future monitor purchase.
I’ve seen the Gateway’s at Fry’s. To it’s credit looked nice and had the features I wanted, but my impression is that the Dell is/was a better value, and the Samsung will be a better monitor. It could be I’m tainted by the bad Gateway computer experience I had 14 years ago, and I’ll give them a second look. Thanks for the recommendations Shaun & Jay.
The real problem w/ the Dell for me is the prices to good to ignore. They supposedly used the same panels as Samsung and you can get 24″ UltraSharp for $570 right now!
Jason H,
If her clients were happy with that level of service and there were no legal problems after the transaction closed, is there anything wrong with giving a “Walmart level of service”? But I agree that Redfin isn’t for everybody… The real trouble will be if people expect a “Nordstrom level of service” at Walmart.
Besides, even if Redfin charged 6x more than the generic “place your home on MLS for a flat fee”, I think they could make it. After all, they now have national name recognition because of that 60 Minutes segment to go along with the excellent web site they had prior to their “coming out party”.
JB,
I agree that the report could’ve been more even handed. However, given time constraints I can understand why it wasn’t. However, I agree with you. I’m tech savvy, but I still need to spend an afternoon in the back of Lexus to see/smell/touch the houses before I’d make an offer and I’d get overwhelmed during the listing process without an agent there to help me and my wife get the house ready for staging. (It’s amazing what a good staging can do)…
I’ll be going w/ “a blogging hybrid agent” for my next home transaction. The most interesting thing is that we’re still having this debate. After all, TurboTax didn’t kill the CPA market and Redfin won’t destroy real estate, although it will change it.
As someone who is looking to buy a house in a couple of years, I have a few questions in response to Jason’s comments. Which of the 13 services that he listed provided by a traditional Real Estate agent are contractural? If the agent “looks at the HUD form” and does not notice there was something wrong there, can I sue the agent for breach of contract or fiduciary duty? For me and a bunch of my friends and co-workers who will be buying houses in the near future, we’ve had a hard time figuring out what is so sacred about 6%. We work in tech companies and are looking to buy our first house in the coming years. All we can come up as a possible reason for the 6% is the access to information about the market. This made sense 20 years ago, but sounds ridiculous now. Going back to Jason’s comment, I need to pay someone 3% so that they can “tell me about a neighborhood”, “inform me about ongoing political issues”? In short a bunch of stuff I can find out by a few Google searches. If I am going to put down $500,000 to buy a house I will make sure I do my research and will hire someone who has a fiduciary duty to help me. If Real Estate agents have a fiduciary duty towards clients, I’d like to hear about how it provides consumers with a definite safety net.
Hi,
I have been amused by the ruffled feathers after my comments but here is a standard breakdown of how I made $12,000 in 5.5 hours (more than once). If you are a full service agent and you have been around for awhile I am sure this has happened to you several times:
Buyer finds their own house online and drops by the open house (0 minutes). Buyer calls me (through referral) to write an offer and they summarize the terms of the offer in this call (15 minutes). I write the offer and email it to my client (30 minutes). I then email the signed offer to the listing agent and discuss the offer (10 minutes, maybe 20 minutes w/ technical difficulty or chatty agent). Negotiations back and forth until mutual acceptance (20 minutes). Set up escrow and send all documents to lender and quick call to escrow/lender for followup (20 minutes). Setup inspection and confirm w/ all parties (10 minutes). Inspection including drive time (3 hours). Inspection negotiation including all faxing and conversations (20 minutes). 3 VM’s/emails to client to assure them we are on track (10 minutes). Check in before closing to confirm loan docs and arrange key transfer(15 minutes). Buyer picks up keep on closing day from listing agent’s office (0 minutes). Total time working with this buyer from start to close: 5 hrs and 30 minutes. Total commission on a $450,000 sale price: $13,500. Now minus $1500 for misc. expenses related to this transaction= $12,000 TWELVE THOUSAND DOLLARS.
In the industry, agents often refer to these type of transactions as the ‘balance for the really tough closings’. But how does that stack up for the independent buyers and sellers who can stage their own homes and find their own houses online?
I am working at Redfin because I made a business decision for my future. Redfin won’t be going away anytime soon.
Jason H.
I think “a discounter” NEVER charges full boat. That is not true of me. Not “defending” Who I Am, just correcting false info.
Someone buying a $950,000 home and selling a $650,000 home to do it would not pay $48,000…more like $10,000, ” on the sell side and $10,000 on the buy side,saving” $28,000.
But someone buying a condo with nothing to sell for $200,000 WOULD pay $6,000.
Not sure what you would call that, but there are times when the “going rate” is my charge, and sometimes not. It all depends on the business at hand. Someone totally capable of doing 75% themselves gets 75% returned. Not all have that ability or confidence in their ability or the time to do that. Have only had one of those to date, and it worked out well.
My “experiment” is in matching the service and cost of service to the need of each particular client. I’m getting closer to boiling it down to a “plan” that is more transparent, by experimenting with different costs.
What I won’t do is offer someone limited service who needs full service. Much like a doctor won’t give you pills if you need an operation. So far clients have been fair and honest regarding their needs, and it has worked out. Problem will come when someone thinks they can do it themselves, but can’t. I can’t stand around and watch someone shoot themselves in the foot in order to save commission dollars. But so far, that has not been a problem.
I once knew a lady who took every dime she had and bought Enron stock. Someone should have refused to “take that order”.
I’m trying to use a dentist model. It seems to fit best. Broader scale of electives.
SS
There is no “definite” safety net. Reduce and manage risk…yes. Eliminate it entirely…false promise. No one can tell you for instance that you will make money when you sell your house. They can only show you which houses will best fit that objective and explain why, IF that is your objective. They can show you why the house you “thought” was best isn’t, and why another is better. But they can’t promise you what will happen at some unforeseen date when you sell. Any that pretend to, should not be considered.
Deborah looked like a deer in headlights through half her interview. They did a good job of making the Redfin employees looking youthful and full of energy, whereas Deb looked old and worn out.
I can’t believe she actually tried to explain the gross gain in her comission as “inflation”. If the inflation rate is running anywhere close to the local appreciation rate, interest rates are going to be doubled by the end of the decade ala 1979-1982.
I meant keys not keep in my breakdown above. Yikes!
Kelly,
I have had the pleasure of brief dealings with you, and feel your talents are examplary within the Redfin model, from my limited experience.
My question is, both before and after Redfin, at what point do you say “that is simply the best choice of what is available TODAY, but your better choice is to wait for a better choice”?
Clearly 70% of what traditional agents do that is “of value” is to tell people to go home until something better comes on market. That seems to be the missing piece in both your “before Redfin” and “as a Redfin Agent” scenarios.
The mechanics from write offer to close are clearly never worth full boat. On that Redfin is correct.
Hello SS,
If you want the 13 services I listed above, get it in writing. An agent that is worthy of their commission will be glad to put in writing what they do and abide by it. Buyer brokerage agreements are not there just to protect the agent (nor should they be), they are there to protect the buyer. With that buyer agency agreement and with a listing agreement, an agent should list out in detail what they are going to do. You are employing them to provide a service. You are hiring them to do a job. Where is their job description?
If an agent says “I am going to review your estimated HUD for inaccuracies and I would also like to review your Good Faith Estimate with the HUD” and they write in and sign it, then yes. You can sue them if they miss something.
If you have them write it down and prove their value, you will find they will not only PROVIDE that value, but will EXCEED that value. Especially in a litigious society that we live in.
SS, I work with a lot of tech people, from Amazon, from Google, from Microsoft… and they are my biggest referral sources. They appreciate the work that I do as I go and preview homes that they are unable to see. The biggest complaint today is, “Pictures ARE deceiving” I actually preview the homes and report back to them so they don’t waste time looking at homes they have no intention of purchasing.
Keep in mind, as a buyer, you don’t pay for these services. Rather, the seller pays the 6%. Redfin kicks you back 2% of the 3% an agent would normally receive.
Let me ask you this, SS. If you were going to have a vasectomy or a cancer removal surgery, would you look at the internet and go to the one that appeared highest on Google? Would you go to the cheapest one?
Probably not… you would ask around, get the best doctor you could and probably interview them as well. Would you not? Why is that any different with purchasing a home that is probably going to run you 2000 times more money than a surgical procedure? You go to experienced doctors because they offer insight, they have been down the tried and true paths before, they have experienced what works and what doesn’t work, and you trust them.
I don’t trust the eight 20-somethings in the redfin board room, not with the biggest purchase of my life.
Does this make sense?
Robbie,
The value is in knowing the property weaknesses at time of sale, not at time of purchase. If you go to sell your house and the agent points out weaknesses that make your home less competitive with other homes for sale when you go to sell, won’t you wish someone had pointed those out before you purchased?
And I’m not talking about things that involve the home inspection, though there are times when inspection issues should not be resolved and buyer should just walk.
So Kelly, I see that you have a pre-prepared response including the 2nd response. Since they are the exact same responses that you left on my post over at Active Rain. I am going to go ahead and assume that they were prepared for you since you don’t even seem bright enough to have written even that fantasy of a transaction description. Why don’t you cruise on up to response #6 here and start reading a brief outline of the parts of a transaction that you are not aware of from Jason.
Ardell,
I assume you meant to say, “The value is in knowing the property weaknesses at time of purchase, not at time of sale.” instead? Your next sentence contradicts the first.
SS, you’re absolutely correct in rejecting the premise of Jason’s 13 services: many buyers do not need that level of service and the percentage that do is dwindling by the day. Thank you 60 Minutes for shining a light on the “6% myth.” Unfortunately, one aspect of the myth that gets little attention is the falsity of the statement that the seller (and not the buyer) pays the commission. Make no mistake that buyers & sellers are conditioned to build the commission into the final sales price and the buyer’s cash or loan proceeds provide the funds, thus, both sides share in paying it. Furthermore, the side who truly pays the bulk, if not all, of the commission is the one who is not able to negotiate a more favorable price (i.e. lower for the buyer or higher for the seller). On this basis, one could argue that buyers in hot markets, like Seattle, tend to pay the entire commission.
Personally, I think anyone who uses a limited service agent or a virtual agent like Redfin should pay the Realtor on the other side an extra commission. In all likelihood, the other Realtor has to do all the work of managing the transaction while the virtual agent tends to his/her other 8 transactions that week.
Jason,
Thank you for the detailed response.
1. I do not understand the concept of the seller paying the agent. Most sellers would be subtracting the 6% when they agree to a price. Finally, the buyer is paying everyone, right?
2. Technically, the mortgage broker should review and certify the HUD statement, any contracts should be reviewed and certified by a real estate attorney, and a home inspector should inspect and certify the house. Now, these professionals are the best qualified to perform these tasks. My responsibility as a buyer is to make sure that my interactions with these professionals is captured by a contract so that any violations can be addressed appropriately. I would appreciate my Real Estate Agents opinion of my mortgage terms or the specifics of the contract but I would hold my broker and real estate attorney responsible for any violations.
3. Now, lets take a $500,000 house. 3% is $15,000. I think you can easily hire good real estate attorneys, appraisers, home inspeactors etc. within this budget. I am just unconvinced that an agent is the best source for a lot of this information.
4. I actually have seen a team of 20-year olds with one senior engineer beat the crap out of their complacent competition with a new product. A bunch of 20-year olds in Redfin does not bother me as long as they have senior folks who have been in the industry and know what they’re doing. Your point about having the best team on my side for this huge purchase brings me back to #3. Why would I not spend the money on a real estate attorney, appriaser, home inspector and the like rather than put all my eggs in a real estate agents basket?
Maybe this is a good question for escrow…I wonder how often the commission actually is a straight 6% and how often agents deduct costs from their commissions in favor of the buyer or seller? “6% Myth” could be a pretty accurate discription.
Ardell, I agree with you that no one can say what will happen if I have to sell at an unforeseen date or if I will make money when I sell my house. Anyway, I am not a investor or speculator, just a potential home-buyer who will buy a house when it makes financial sense and an acceptable lifestyle change.
If you bought a home for $100,000 in 1970, it was the equivalent of $514,948.50 in 2006 dollars. This is pretty much on par with overall inflation.
If average commission rates remained constant over that time (which they have not – they have gone down), Realtor income per trade would have grown at no greater pace than the cost of living. Net result = no real value raise in pay over 35 years. Try to put that past any Union in the US, I dare you.
In 1970 real estate commission rates over 6% were the norm. Today’s average rate is slowly dropping and runs between 5% and 6% across Canada and the US. They are not and cannot legally be fixed at 6% as both Redfin and Leslie/CBS blatantly and slanderously stated in the 60 minutes piece. (friendly tip – put your lawyers on speed dial guys)
The net real value income Realtors earn per trade is dropping. Commission rates are not fixed and fluctuate based upon the demands of the consumer just like home prices do.
The cost of licensing for a Realtor was around $200 in 1970 and is closer to $5000 today. Brokers carried all liability in 1970 and agents paid little or no expenses. Today’s realtor is personally liable in a transaction, pays desk fees board fees, office fees, long distance fees, printing fees, insurance, ongoing educational expenses and more on into the thousands of dollars each year.
Add to that, internet fees, cell phone expenses, marketing expenses and on and on. There is no pension plan no medical plan or any company benefits built into the job. 80% of graduates leave the business of Real Estate in the first two years mainly due to the high cost involved.
I wonder how Leslie is making out compared to 1970 and who she might call when she needs to trade her seven figure NYC digs?
If you bought a home for $100,000 in 1970, it was the equivalent of $514,948.50 in 2006 dollars. This is pretty much on par with overall inflation.
I’m not sure what you mean by this. Are you trying to pointout how much more realestate has appreciated above inflation? Locally, a $515K home would have been worth $100K somewhere between 1985 and 1990, and maybe $25-35K in 1970.
Bill,
These figures for 1970 to present used national inflation rates and average home prices across the country I believe. Your point that the example home in your area was worth $25k to $35k rather than $100k still supports the statement, perhaps emboldens it some. Thanks
Wow, finally 60 mins comes up with a topic that I really wanted them to address. I wrote to 60 mins about an year ago about this. I had no clue that this was coming or else I would have watched live rather than on my DVR.
Anyway, I remember having that discussion with ARDELL a few weeks aho about this topic. This industry will change and these broker fees will have to come down. This industry will face the same thing as the stock trading.
Remember 10 years ago there were no discount traders and all stock trading used to be through “real broker”, who would charge you a arm/leg to make a trade. Now you make a trade for fraction of a price what a “real trader” used to charge. Of course with cheaper price, there wont be people to stop you from buying ENRON. Similar thing would happen with houses. Some people will get burned, and then the RE insdustry would say, if they had real agent things would be good.
I still believe that RE agent should be hourly based. I engage and agent for 12 hours, i would pay 12 x $$$
1. I do not understand the concept of the seller paying the agent. Most sellers would be subtracting the 6% when they agree to a price. Finally, the buyer is paying everyone, right?
**Yes, you are right. Part of the cost of selling your home is the 5-6% you are going to pay the listing and selling office of your transaction, but also the 1.8% the state takes from you, and the escrow, title and any kickbacks you give to the buyer. The buyer ultimately ‘pays’ for these services, but it is the seller who ‘feels’ it the most as it appears on their HUD statement and not the buyer’s HUD statement**
2. Technically, the mortgage broker should review and certify the HUD statement, any contracts should be reviewed and certified by a real estate attorney, and a home inspector should inspect and certify the house. Now, these professionals are the best qualified to perform these tasks. My responsibility as a buyer is to make sure that my interactions with these professionals is captured by a contract so that any violations can be addressed appropriately. I would appreciate my Real Estate Agents opinion of my mortgage terms or the specifics of the contract but I would hold my broker and real estate attorney responsible for any violations.
**SS, this is just it. I don’t know a single mortgage broker (correct me if I am wrong) that actually reviews the HUD statement. The agent should review this and confirm the numbers with the mortgage broker. The agent is really the focal point of the entire tranasaction. They are the focal point for the mortgage broker, for the escrow, title, RE attorneys and the seller or buyer. By not having someone that can communicate on all these levels, it will hurt you. In my experience a real estate attorney will review a contract, but they will not negotiate for you on their behalf. Sure, you could pay them at $400 an hour to call the listing agent up and tell them that the language in the contract is incorrect, or that the wording needs to be changed to protect you, but that never happens. What does happen is the real estate attorney voices his/her opinions regarding the contract to the buyer and the agent, and then the agent goes about facilitating language/changes regarding the contract that would benefit the party in which they are representing. The real estate attorney will review the language and offer advice, but they will not use that knowledge to better arrange your contract or negotiate with the seller/agent. The mortgage broker will facilitate your loan, ensure underwriting requirements are met, but they tend not to get their hands dirty with technical details such as whether or not the buyer was actually credited the $256 dollars for a renegotiation on the inspection response.**
3. Now, lets take a $500,000 house. 3% is $15,000. I think you can easily hire good real estate attorneys, appraisers, home inspeactors etc. within this budget. I am just unconvinced that an agent is the best source for a lot of this information.
**You are absolutely right. You would want to hire those attorneys, appraisers and home inspectors ON TOP of the Real Estate agent… The real estate agent will recommend all three of these, be able to offer insight and interpretation as well. A good real estate agent is a teacher, a communicator, a facilitator and a consultant. They interpret the jargon that industry professionals spit out and interpret it in a way that will help you understand and make sound judgements based on such information.**
4. I actually have seen a team of 20-year olds with one senior engineer beat the crap out of their complacent competition with a new product. A bunch of 20-year olds in Redfin does not bother me as long as they have senior folks who have been in the industry and know what they’re doing. Your point about having the best team on my side for this huge purchase brings me back to #3. Why would I not spend the money on a real estate attorney, appriaser, home inspector and the like rather than put all my eggs in a real estate agents basket?
**This is just it. These are young agents, similar to the role of Williams Marketing (won’t go there just yet) who are just getting their feet wet in the industry. What an agent that has been in the business learns in just three years, much less five or ten (as long as they continue to embrace change), is more than can be passed on from a mentor to a protege. With that, who is their ‘PM’ of substance coupled with years of experience? No one… Do you want that boat of experience to navigate you through the pitfalls of purchasing a home? Maybe…
Not everyone fits one mold or another mold… but they tend to migrate back to the traditional model.
Acquaintances of mine said, “we are looking through Redfin, but we are finding it very frustrating. If we don’t find a home soon, we are going to go the traditional route.” Two days after they chose the traditional route, they made an offer on a home and won.
They have debunked the Redfin model, for now…
Bolla, I agree the hourly model is the best route and most fair for all parties.
Here’s the rub. How many buyers would be willing to pay per hour? I think the fact that the Agent commission gets rolled in to the mortgage is seen as a major benefit for many buyers even though they could probably save money by paying by the hour, being responsible about their Realtor’s time, and asking for all the commission back at the end.
If I had my druthers, I’d actually prefer my clients pay by the hour but I’ve yet to meet one that’s willing to do so at a reasonable rate when they can call another agent and pay it on the back end (regardless of how economically inefficient that might be).
BTW, speaking of hourly rates, based on RedFin’s model of 5 hours per project, and their min fee of $3k, they’re charging $600 per hour so let’s not assume low cost of service means higher value.
Ken,
Excellent Point!
I overlooked those numbers. And by selling a $1M dollar house, they are making $2000 per hour!
The Seller pays the commission unless they buyer pays his agent directly. You can twist this all you want but the bottom line never lies.
Example A:
Seller sells his $200,000 house with a 5% commission. Seller nets $190,000.
Example B:
Seller sells his house FSBO $200,000 with no commission. Seller nets $200,000.
The house is worth what the buyer pays for it. And a $200,000 house is a $200,000 house FSBO or traditional.
The only person that takes the hit is the seller. I just sold my $350,000 house with an agent I could have sold it FSBO which I am very capable of. If I would have sold it FSBO I would have an additional 16k in my pocket to use on my new purchase. I needed to sell the home quickly so I figured the 16k I would pay was worth not missing out on the home I wanted to purchase.
Jason,
I think we are both in agreement that you should have many professionals advising you on a home purchase. I’d like to point out that if a Mortgage Broker is not reviewing the HUD statement then they are simply being derelict in their duties. Maybe I am being naive, but isn’t it their job to do so with their clients?
I would expect a home buyer to have done their homework so that they can understand Real Estate terms and the various forms that are involved. If they still need help from an agent, I can see some consulting at an hourly rate, but no more. I see the Real Estate Agent as a broker of information. I think we disagree about the centrality of the agent in a transaction. If the home owner/buyer decides to run the deal themselves, then the role for an Agent shrinks.
I think the race to the bottom in terms of rates is pretty unstoppable assuming the DOJ wins its case against the NAR – it will be driven by customers who will want to do most of the running themselves. Will this mean that some customers will get burnt? Sure, but thats how it is when you buy a car, stocks, pretty much anything.
Your point about Redfin’s hourly rate highlights the fact that there is nothing sacrosanct about 1% or a % commission either. It might happen in fits and starts but I think we are on our way towards an hourly rate, which I think is a pretty good way to go. My point is that such a system makes sense to me as a consumer.
Allen,
Many who have tried and succeeded in selling private will tell you it was an eye opening experience and they came away with an added respect for the many hats a Realtor wears and the many tasks that go with it.
Of those many would opt to pay someone to handle a future sale. Anyone I have worked with who has tried the FSBO method then opted for a Realtor at some point did so to take advantage of the exposure a Realtor could provide to the public and to a network of thousands of Realtors increasing the chances for a higher priced sale.
Buyers are not idiots and approach fsbo listings with the expectation of putting the money the home seller hopes to save into their pocket and more often than not will make their offer accordingly negating any savings to the seller.
Other confessions were for safety and privacy fears from having unscreened strangers show up at the door wanting to case, sorry view their home.
Many had deals fall apart as there was no registered course of action on offers. All of these factors have a value that is dependant on how an individual assess risk in general. One can pull their own teeth if they choose, its easy, I prefer to pay a professional.
Allen,
Have you considered the lack of incentive a seller’s agent has in advising his client to hold out for a higher price? This is one of the inherent conflicts of percentage based compensation in a relationship where one person is relying on the expertise of another who has his own interest in the outcome.
In your Example A the Seller sells his house for $200,000 and nets $190,000 after paying $10,000 in commission (5%). Presuming the listing agent gets half of that amount, he received $5,000.
If the Seller could hold out a little longer and get $205,000 he would have netted $194,750 and paid $10,250 in commission (with $5,125 going to his listing agent). That’s an extra $4,975 in the seller’s pocket but a mere $125 more to his agent. Now you tell me, what are the odds that the listing agent will advise his client to hold out for the best price he can possibly get?
It goes without saying that a quality, ethical agent would act in the best interest of his client. But, how many other agents would quickly recommend taking the bird in the hand?
As the house prices get larger the listing agent’s disincentive to wait for a better price mounts at an alarming rate. I’ll be the first to admit that for some sellers it may be in their best interest to get what they can and get out.
Jason,
I think the point you are missing, and most tech savvy people miss, is the knowledge and the support you get from a traditional agent.
Like I have said before, traditional agents have their space, just as doctors that make housecalls have theirs. If you think you can overcome all the pitfalls of Real Estate, have the time, the energy and the ability to spend the time reseraching the information, then you may find that you can save money by going with a limited service company.
However, if you are a busy professional who values time, professional judgements and doesn’t have time to spend on things such as “What is this house really worth?” or “what is it going to cost to replace the roof?”, then an agent will be your main focus.
Frankly, I would be suprised if you hired an attorney to review your contract (99.9% don’t), and that you researched your own inspector (most go with the word of mouth referral or the agent’s suggestion, if at all), and I would be really suprised if, when in a multiple offer situation, you won the home.
Color me jaded, but I have seen traditional agents not suceed in some of these areas…
But to each his own.
DOJ might win their case against NAR, or might not. Regardless, these limited service broker’s are here to stay. With that being said, it will be interesting to see how everything plays out over the long haul.
I think, just as the health care system has, most traditional service agents that know their value will survive and expand services. Then again, they already offer so much more than a limited service or discount broker does.
Good luck!
Marc,
I can’t speak for all agents, but you have an excellent point.
I think the business model that has been successful and that will continue to be successful is the model of referrals. If you do wrong by your clients today, the liklihood of them referring you to another party is very slim.
Let’s take your example. If my client’s home has been on the market for six months and homes are selling around them, with an average days on market around 30, and they receive an offer at 190k, I might encourage them to take it. Not because I think they can’t get more, but because there is probably something wrong with the home that is not easily corrected (they would know this by now, as I communicate constantly with clients).
However, if the home has been on the market and it’s only been a week, and there are 3-4 showings a week and no one is saying the price is overpriced, and there are possibilities of another offer, I would say let’s negotiate. Let’s counter at full price with better terms, as the interest is obviously there.
A house is really worth what a buyer is willing to pay. So a seller walks a very fine line of… what is my house worth. Just because the house down the street sold for 20k more, doesn’t mean that your house is worth that either.
I would imagine that the less traditional brokers would do much less for a seller in the scenario you pose than a traditional agent. Don’t you agree?
I dunno. Rfins market share is hardly perceptable. Nobody has been able to make any REAL inroads in the discount model. Will it be rfin? Who knows. And if rfin doesn’t make it, someone else will try. EVERY RE company eventially gets their day in court. (and I mean that one literally). One of these days a Buyer is going to be wronged big time by a bad negotiation, physical defect, Functional Obsolescence, Economic Obsolescence or negligence. I’m sure they have E & O insurance, but every policy has a limit and only covers “errors and omissions”, not malpractice. I’m sure rfin has venture cap and angel money, but one day they’re going to have to stand on their own 2 feet. A lawsuit here, a lawsuit there on top of an unprofitable model could end the argument!
BTW, for you buyers contemplating using limited service buyer services, make sure you understand terms like Functional Obsolescence and Economic Obsolescence and the impact of your purchase today and in the future. These things are hard to figure out on your computer screen! How often I’ve seen people chase a savings, only to incur monumental costs as the result.
I believe in an open market and giving buyers and sellers choice. There are savvy Buyers who really can handle a Walmart experience. The problem is for those who think they’re savvy, but they’re not. I’ve worked in the industry for over 12 years, I still learn something new about a conctract or a consumer issue almost daily. I’ts virtually impossible to change a mind, but we can introduce better information. Most of opinion suffers because “we don’t know, what we don’t know.”
Bolla,
Put a number on that x 12 X WHAT? Come on. Just for the fun of it. You’re anonymous anyway.
Personally I think hourly wouldn’t work. People like to call us day and night with any question, and that communication is a good thing. They like to email or call us the minute they have a question or a fear crops up. Best to deal with fear issues immediately.
If they were paying by the hour, they may not want to call, and that is not a good thing for consumers. I know I would suck up some questions and concerns if the meter were running, so I’m sure many others would as well.
Seems flat fees and minimums work best, as far as I can tell. Caps the cost at a reasonable level. But hindering people’s abiltiy to keep asking until they “get it” is not a good thing.
Greg,
I think the issue isn’t all about Redfin’s market share, but how Redfin will change the rest of the industry.
As to the “alternative” to Redfin, we’ve heard that 90% of agents don’t look at HUD 1’s, don’t go to signings, don’t give any input about the buyer’s choice of home, etc…
That 90% that is collecting full boat commission, as Kelly did prior to joining Redfin, is the problem. Not Redfin.
When Brokers started telling agents to stop giving advices and to become “order takers”, that is the problem that created Redfin. Redfin isn’t the problem. Redfin is the answer to that problem.
Will brokers respond by making sure their traditional agents take on more responsibility and liability, so that they are worth the difference? I’m not hearing any talk like that.
Ardell,
I disagree that flat fees are the best model. If people like to call you day and night, they should pay you for your time. Masking your charges with a flat fee and potentially overcharging for the privilege of calling you seems unfair. Also, if they keep calling and consuming your time, why should the fee be flat? That would seem unfair to you.
Ardell,
Before any company can make significant changes, they have to prove profitablity. IF rfin can become and remain profitable standing on their own in the marketplace, then they’ll have inpact. All they have right now is publicity (and my hat’s off to rfin becuase no matter how we feel about them, they are doing an outstanding job at viral marketing).
Where did you see that 90% figure quoted above? Is that a verifyable fact? or supposition?
Anyway you’ll be pleased to know that, at least in our Windermere office, we spend a great deal of meeting time and resources going over the issues you bring up. Windermere has stringent and clear standards of practice. There are plenty of good brokers in the other major comapanies, as well as some of the very classy botique companies that we have in the region, who also have high customer (full) service beliefs and teachings. Also, referral based training systems, such as Buffini and Company, CRS classes and advanced Realtor training also address the need and value of giving good (full) service. I don’t think agents boycott Jillayne’s classes on ehtics and preditory lending. I think they want to know! The training I’m involved with encourages the agent to create a quality experience and be aware of and help protect our clients in consumer issues. Order taking isn’t in the vocabulary of the agents I associate with.
We do have local “clearing house” brokerages that have up to 300 or more agents hanging licenses without any real training supervision. Now that is a problem……
The sad fact in our society is that good, caring consumer centered good service is not newsworthy. 60 minutes will never do an article on the agent who saved their client $50,000, but will make a big deal about a commision rebate by a company that, by their business model, can put their client at risk.
Joe,
Who said flat fees don’t pay for my time? I like to use the model agent’s like. There’s a cap. The business decision is to determine after meeting with a client where that cap should be. There’s no difference really between a flat fee and a percentage based fee. I like flat fees. They feel more honest. Sure people can do the math of a percentage, but the actual dollars being discussed feels more honest, even when those dollars equal a percentage.
Greg,
I read the 90% figure here posted by escrow people. I also was told that when I asked for HUD 1’s from escrow companies as in “why did I need to see one, most don’t?”. I don’t like to discuss other brokerages, but feel free to post if your office or Company mandates that agents review HUD 1’s in advance of signing appointments. It’s an open forum for discussion. Feel free to post if you are under a mandate to review the HUD 1 and how you do that, what you are looking for. Do you compare it to the GFI.
I am referring to agents who I deal with who say they do not listen during the home inspection, as they were told by their broker to sit out on the step or read a book or work during the inspection, as there is some kind of liability in remaining engaged.
I’m referring to agents who will not give a buyer an opinion as to value at the time they make an offer or an opinion as to the house during a showing.
I like you Greg, but anyone who says all agents are equal, just can’t be correct. To even insinuate that they are is insulting to people’s intelligence.
No company has agents that are all equally qualified, not even Redfin.
Ardell,
I am advocating against both flat and percentage fees. The pure hourly model seems the most efficient and transparent.
Unless you have a magic ball at your meeting to predict exactly how many hours a client will need or are comfortable renegotiating / rebating when they approach the cap, you’re always gonna be over or under what they really should be paying you.
Why can’t clients just pay agents (Redfin, Bluefin, Winderemere, or even Williams) for the exact amount of service they get? Redfin is merely doing five hours work for $3K versus full service Agents who might do 25 hours work for $12K. As much as Redfin wants to appear as an innovator, they’re really not that special.
Now, if Kelly would let clients retain her for $250 an hour and pay her $1,250 for her 5 hours of work instead of Redfin’s $3,000 (600/hour) model, they’d be truly charging fair prices commensurate with their service.
Galen,
When I first started at Redfin I was mesmorized by the two monitors. I thought it was incredibly fancy. I think I got spoiled. Now I get very frustrated when I have to use just one.
Jason, that was useful feedback. I wonder how well my plans will actually work in practice with multiple bids and negotiations. Guess I’ll find out in a couple of years.
Ardell,
If I insinunated that all agents are equal, that was not my intent. Of course they are not. A one year agent will never know as much as a 10 year agent. A good broker will keep an inexperienced agent on a short lead, and normally assign some kind of mentor. Those unsupervised agents in the license “clearing houses” can be outright scary. And, above all, the consumer reserves the right to choose their agent to represent them.
You were looking for “talk” about brokers making sure that “traditional” full service agents take on more responsibility and liability, so that they are worth the difference. I’m giving you some of that “talk”. There are plenty of good brokers working hard to a climate of great service and services to our clients.
Good companies have good service standards. Great companies have great service standards.
The same goes with agents.
Some companies and agents don’t have much in the way of standards, but again the public gets to choose.
As for some individual business practices, reasonable people can disagree on the definition of a “perfect world”. You’re commited to your paradigms and because you are committed your clients get a good a and predictable result. Take your example of inspections. One person might think that if the agent is hovering on every word an inspector says, they can be accused of “steering” and negatively influencing the inspector. Obviously the other point of view would be to leave the inspector alone so they have complete privacy with the client….who is paying for the inspection…to feel free to talk about the defects without “agent interference”. Here’s the point…if both agents are totally committed to finding out every possible defect in the property so that their client can make the best possible decision, who is right and who is wrong? There may not be a “right or wrong” in that example. And what if the client prefers to be left alone with the inspector? What is the client’s “perception” of customer service if we don’t listen to their needs? It is the agent’s commitement to get all the answers for the client that may matter the most.
Again, I have no quarrel with limited service brokers. In fact, when the smoke clears, there may be more room at the top than the bottom!
Joe,
I sold an entry level one bedroom condo earlier in the year, that if I tallied up the time I spent for m client, I’d be paid more than the value of the condo! How about the Buyer we work with for 2-3 years to find a special Mercer Island view property? Joe, the world of commissions is so foreign to people who get a check every 2 weeks. Sometimes we work for months and even years before we get that check one to six months after we make a sale.
The pure hourly model seems the most efficient and transparent.
How much is an agent worth on an hourly basis? $100? $200? $400?
My clients aren’t paying me for my time, they’re paying for results and for my 6% (I do discount repeat clients, buy/sell clients and deals where my partner represents the buyer) they get more money in less time. I am cost effective at 6%. Unfortunately the same can’t be said of the majority of traditional agents and none (at least as far as my dealings have shown me) of the limited service agents. If you’re good at this, you’re worth every penny of the 6%, if you’re the typical part-time uneducated, ADD hobby agent you should be working for a flat fee and a very small one at that. The Redfins, and HelpUsells of the world only exist because of the pathetically low standards the state, NAR, the MLS and the brokers allow to exist. Since their business model is based on the sheer numbers of agents paying into the kitty they have no incentive to raise the bar.
I would never hire an agent on an hourly basis. I’d feel I was being rushed to find a house more quickly.
JD Blackwell
Can you tell us who you are and where you work so we can report you to those people who tell us we are not allowed to say 6% please? Thanks.
Usually when I hear this argument, the agent’s average sale price is no where near the broad range of prices here in the Seattle area. No one could possibly argue that a percentage of $1,700,000 is equal to the same percentage of $230,000.
Side note about Redfin. The agents do not need to do all of the work during the escrow phase. They have Transaction Coordinators who review Title and HUD 1s, and possibly some of the other work as well. So the average sales per agent does not necessarily include all duties on behalf of the buyer client.
Side question –
How many real estate agents use travel agents to book their travel ?
I am sure the travel agents bring “value” by telling you to wait
for the right price/package.
Also, for those throwing around big sounding words like “fiduciary
duties of the full price agent” etc. Is there even a single case of a
consumer winning a case by proving the agent did not perform his/her
duties ? Most of this is couched in “fine prints” that in the end the
consumer just loses either way (discounted or full service).
I am sure there are some good agents out there, but given the
probability that most are just mediocre or newly minted most
people are better off with a discounted agent.
My $0.02c
Given the lower cost and commodity status of plane and hotel tickets, I think the more appropriate question is how many real estate agents use attorneys for major legal matters. Another good one is how many would use a wedding planner if they were to put on a $600k wedding.
Greg,
Your example of that one client consuming all your time is a perfect example of why the hourly model is necessary. Essentially, all your easier to manager clients paid for that one bedroom condo client’s innefficient use of your time.
Ardell,
If you’d be feeling rushed to hire an agent by the hour, that’s a good sign. If it made you feel better, they can pay you in blocks of time that you deduct as you go along.
Joe,
It’s not just about efficient use of time. We also do what it takes to make sure the client is well represented and confortable in the process. In that specific situation, I put the client’s needs ahead of my “efficiency”.
Two words, OK five words, [editor: I edited the name out... I don't think it is appropriate for the hammer of RCG to pick on other agents by name.], he’s a Real Estate swindler. He chose this profession. He lies, cheats, and steals what ever he can for, get this, the good of his children.
Real estate is a very complicated business. The fact a thousand kids entered the profession these past ten years has only made it much more difficult.
Our Universities are spewing out lawyers that need to find work. Many of them will be extremely busy in the next few years. They will insinuate themselves into the Real Estate business the same as the tech grads are doing today.
Joe,
I’m pretty sure hourly has been tried by some and tossed out. It’s just not a practial method. Lots of first time buyers take many hours of time, and are buying at the lowest price range. There’s no way they could afford an hourly rate of any kind.
I had one who called me every day at lunch time for 9 weeks before he was even ready to look at property. I’ve had one take 5 months and 4 or 5 offers before getting a property with over 2,000 emails over that time. It just wouldn’t be affordable and would make them feel they were taking too much time.
Buying a house is just not about the time it takes. It’s right when it’s right. So I do alter the fee when it’s fast, but when it’s slow, there’s no way someone could afford to pay for the time it takes.
I’m working on one now that closed weeks ago. Trying to get a rebate for the buyer on something. I’ve already been paid and there’s no system of getting paid after closing.
I worked with someone getting their house ready yesterday. Sometimes I have to help people get the house ready enough for workers to come in, like paint and carpet people. You would have to have different rates for the different things we do.
Bottom line is, until my clients want an hourly rate…it’s not worth talking about. Right now, I’m not interested in working with someone who wants me to keep time records in addition to what I already do. It adds to my work load. It’s easier to do it, than to account for the time of doing it.
Heck, half of the time we are thinking. Someone asks a question that has 5 reasonable reponses. Which response is right for this person and this situation takes some thought. Should people pay me by the hour to think about them? Which neighborhood and style of house fits this peron’s needs, as you learn their needs over time? Lots of thought involved in the process. No one wants to pay me by the hour when I’m in the think tank. They want to pay for the hard results of that thought process.
Just not practical. Sometimes there’s a good reason why things are the way that they are. People need to be free to proceed at their own pace. Real Estate involves “informed consent” at every point in the process. “Informed consent” involves every person having the time they need to absorb the info at hand, without the pressure of a meter running.
The only pressure for a buyer is another buyer.
I’m with Ken #24 above. When dealing with limited service companies, a seller often leans on the full service buyer’s agent. The full service agent has personal knowledge of the area, local practices and is physcially available to address challenges during an escrow. Some challenges could be everlasting if not handled with tenacity, grace and experience.
Furthermore, RedFind encourages dual agency. From a legal standpoint, these aren’t in the consumer’s best interest.
The smart consumer who uses the internet to shop for a listing agent is smart enough to research licensing records, understand their legal rights and responsibilities, weigh their options and make the right decision for them.
And finally, this industry is about marketing oneself. RedFin has a leg up by calling attention to themselves. Either way, people will know who they are.
Personally, I think that the Redfin model works for some people and not for others…. just like FSBO. Traditional agents attack the redfin model for the work that the agent is actually doing but in MANY traditional offices agents have an escrow / transaction coordinator who does most of the tasks described above from a traditional agent. Getting paid for physically showing up and driving around is a poor argument for justifying your fee’s… just because it’s tradition… that’s even worse.
Even truly successful traditional agents believe in this alternate model if you look at the lead investors on catalisthomes.com in california… Hal Ellis from commercial giant ellis & grubb and Bill Millichap from Marcus & millichap…. both traditional agents in made millions from traditional real estate commissions.
Even ColdwellBanker is experimenting with this via blueedge.com
There will ALWAYS be room for full service agents charging full fee and there will ALWAYS be alternatives. The difference in the future is that the alternative are taking a larger maket share as evidenced by the 2006 NAR report… 12% FSBO only… 8% MLS only (still FSBO)…. and 9% Alternative / discount. That is 29% market share total.
All that will happen is traditional agents who live off their 5-8 transactions a year making 47K WILL be gone and forced to get a real job, will those successful agents (like Ardel & Russell Shaw) that are left over will do more volume, charge less and make more money than ever.
Redin is just really good at PR spin and it’s funny that agents get so upset. The NAR does the same look at their quotes regarding FSBO’s going down… when actually their market share is increasing since MLS only is still a FSBO, so that is 20% of the market… not the 12% that NAR and agents so proudly tout. Or that fact that NAR claims agent represented properties sell for more than FSBO’s but yet last month’s REALTOR magazine specifically stated… median selling price… FSBO – $187,200 but then; FSBO, who then listed with agent – $192,000. FSBO still nets’ more than agent transaction… yet the NAR & thousands of agents will claim differently… blatant “spin”.
Instead of feeding the redfin PR machine… agents and the NAR should focus on proving their value in a real estate transaction and learn how to separate the “6%” to 3% service from my service & 3% marketing costs or whatever other creative / make sense manner. Do not justify the costs due to the ineffiencies of being an idependant contractor who spends most of their money trying to stand out from all their fellow agents. The mortgage business has always competed on price & service… agents are now just feeling that pain.
I see that many people are confused about what an agent will do and their costs of doing business and would like to pay an hourly rate instead.
Here is a calculator that details some of the major steps of the transaction, estimated time spent and costs and translate that into an hourly rate. Use that with your agent and work out an hourly rate deal.
http://www.forsalebyownercenter.com/tools/agentshourlyratecalculator.aspx
Ardell, you make it sound as IF HOURLY method is just not feasible. I know once people get into hourly mode, they will use less and less of agent time and maybe just do the research themselves. How do lawyers make it possibe to draft an agreement and charge 2 hours of time.
Even Surgeons do hourly rates(that is how insurance pays them for a certian procedure). If the patient calls at 2:00 am, they dont start the billing timer(insurance companies wont pay). It is considered part of the service(procedre which was done 2 days ago).
I understand there is a place for traditional brokers, like there are stock brokers now, but I hope companies like Redfin would change it, and by the time I am ready to buy my next home, I shall not have to pay that BIG commision.
FSBO Center,
I checked out the calculator and it’s a very interesting tool. It definitely puts a listing agent’s work in perspective. However, I think it’s default hours are too generous. Seriously, does it take an hour to take & download digital photographs of a house?
Preparing a listing agreement two hours, please!! One hour on a yard sign, yeah right!!
I’d bet good money the average listing agent spends nowehere near the 39.9 hours the calculator uses by default. A buyer’s agent showing lots of houses, sure, but not a listing agent. And even if they did, how much of that work is done on the phone while wearing pajamas? It ain’t exactly rocket science.
Bolla,
I did both sides of a $1,100,000 property for $3,000. I”ve done one side of a $200,000 property for $5,000 and I’ve done one side of a purchase for $15,000 and represented people who both sell and buy for $20,000.
Maybe somewhere in my decisions, hours are considered. Hours are not the only only factor most times, but hours are clearly considered. But there is not a time record. At the end of the day I will rebate a difference if warranted. At the middle of the day, sometimes we renegotiate what we agreed to on day one if things don’t play out as expected because the buyer changes their objective.
It is still better for a buyer to know on day one what the cost will be, and not some open ended total based on hours. That is just too scary, and what happens when I have 20 hours racked up and they still don’t have a house they want to buy? Are they supposed to pay me for that 20 hours regardless at that point if they don’t want to rack up any more hours? Just doesn’t work bolla, from the consumer perspective. It’s just too scary a proposition to have a meter running regardless of results.
My clients are happy with the way I do it. My question then would be why would I consider another method, if my clients are more than happy with the way I do it now.
Situations where I don’t apply an hourly thought process are when someone is going to buy X and I show them Y. Y is a much better house and they are amazed that they can get Y for the same price as X, or close to the same price as X. When someone is jumping up and down for joy that I was able to get them Y for the same price as X, it is not about hours. Isn’t it better to always know that the agent is applying a fair method of commission, one that you and they agree with from the getgo?
Last I heard those who tried hourly gave it up. Show me some examples of hourly working, and I’ll listen. I keep an open mind. But to date it has not worked, though some have tried.
Bolla,
Reminds me that my former brother in law once said, back in 1994 or so, that he would only hire a buyer’s agent at an hour rate. He would not consider any other method when buying real estate. He recently bought a property, first one since he said that. He is a black belt (level 10) actuary Princton Grad.
I’ll give him a call and see what he did when push came to shove in his recent purchase. If he found someone willing to work hourly or even tried. I don’t know the answer. Will be interesting to see what he actually did.
I agree with Marc. Breaking down cost for service just never comes out right. An hour for a yard sign. Around here I order yard signs online. Takes about 20 seconds.
And THAT is what the consumer wants. When I used to have to go out with a rubber mallet and construct the freakin’ sign and bang it into the frozen ground. When I used to get bleeding fingers from attaching all of the riders with those crappy hooks that cut into my fingers. Yes, it took an hour. Now it takes 20 seconds…OK make that 60 seconds to look up the map grid
, and costs $45 bucks to have it put up AND taken down at the end. Where did the seller save something because technology made the process more efficient. That is the answer people want. Where did THEY benefit from the process getting easier due to technology.
There are many aspects that got easier due to technology, and some that didn’t get any easier at all. Where is the consumer advantage to these new technologies in the Traditional Business Model??
Ardell,
What do you think is a reasonable estimate of the number of hours the average listing agent spends on a transaction in the Seattle-Eastside marketplace?
Anybody else have an opinion?
Hello Marc,
I’m giving the benefit of the doubt to the agents and gives a reality check to the FSBO. Hence the reason users can edit it as they please with or without their agent.
The calculator is also designed to demonstrate to FSBO’s the worst case of what they should expect to do and the time it may take them to do it during work hours and weekends. That way they can make an educated decision if going FSBO is right for them or not.
As you mentioned much of the work is done in PJ’s over the phone which is the same thing that redfin is doing (at an office)… which is why they can pass the savings.
Again the reality with traditional real estate is that they are not getting paid the large commissions for the transactions that they are actually doing…
they get paid for the time & money spent looking for the next transaction.
Herein lays the problem.
This is what companies like redfin / catalist / blueedge / c21 clickit / etc will eventually be able to cut down the acquistion cost of finding a qualified, committed client to something reasonable and eventually be able to pass those savings down to customers.
That’s what Cendant & Home Services are trying to do… buying all the large companies with massive advertising expenses competing against each other for market share. They buy them at a low multiples because balance sheets are screwed up due to advertising costs, they then eliminate the advertising expense of both companies and wrap it under single corporate advertising cost and the company goes straight to profitablity. In the meantime, these companies are trying to pocket the savings but eventually they will be prepared to fight on price.
No different than what Cerebus will do to Chrysler.
This calculator is interesting. Considering that when I add my value to the transaction, I come up with an hourly rate of $68 dollars. This is of course, before I pay my broker their share. Now calculate in the cost of doing business inclusive of gas, car payments, fax machines, printers, email, computers, keyboxes, cost of printing flyers, professionally designed flyers, MLS dues, Realtor Fees, continuing education fees, marketing costs, previewing homes for comparables, monthly maintenance costs on automobile, health insurance, life insurance, Federal taxes, E&O insurance, B&O tax, transaction fees, legal fees, business cards, cell phone, yard sign, open house signs, food for broker’s open, food for open house, networking with other agents, booty’s for wet days, housekeeping costs, yard maintenance costs, home warranty costs… all HARD costs… well that brings my hourly wage down to $20 an hour… of course, I work 14-16 hours a day, six days a week, month after month, with little vacation time.
As someone that works for MSFT, you can work 40 hours a week and pull in $75k. You can guarantee that if you do your job, your will keep your job and you don’t have to pay to work there. Heck, after taxes, you are probably netting $60k per year. As a real estate agent making $75k a year, they would net $17-19k per year. Then again, you have no guaranteed job, no guaranteed listing (unless your mother wants to sell her home), and no security.
There are pros and cons to being your own independent contractor.
I think I am worth $150 an hour. Does that mean that I can charge my clients a 5% LOC for myself, and then another 3% SOC for the cooperating agent?
I don’t think so…
But then again, I provide FULL SERVICE that exceeds every hour of your calculator.
Marc – I double, if not triple FSBO’s calculations in hours.
Of course, you are paying for my experience as well. As a full time, full service agent I preview homes, I visit every home that comes on the market in my neighborhood, I view all homes that I can with a CMA (even if they are pending or sold if possible), I am constantly educating myself with technology and ways to make my business more efficient, I read every article about real estate, talk to economists weekly regarding the market, talk with other realtors with regards to networking continuing my excellent reputation in the community… to the point that agents show my listings becuase they WANT to work with me (Unlike avoiding FSBO and REDFIN listings like the plague), and continue to add value to the transactions years after it closes. Need a plumber? Sure! Need advice on what do to in a remodel job? Sure, I will be right over. Need electrical work or a landscaper? Sure! Just call me, I will have your answer.
My business model is not the limited service companies model. I provide service above and beyond expectation!
The cream always rises to the top…
Kudos to you Jason,
It would certainly seem you bring a level of expertise and effort worthy of fair compensation. So I ask you, how many hours does the average listing agent spend on the average listing?
Hello Jason,
You sound like you are doing an excellent job at what you do and I assume you do alot more than 8 transactions a year… but there is no way you are personally spending 120 hours + working on just ONE listing?
Again, as I mentioned in my post above… don’t confuse your time spent prospecting / looking for clients as working on an actual time spent on an individual transaction because… a buyer or seller doesn’t care about what else you have to do to run your business.
The inefficiencies of the RE business model is what these companies want to take advantage of and once they lower their client acquisition cost and initial operating cost of web development and branding… they will do very well. More important, once they have spent enough money in getting people to re-think and accept alternate real estate models… they will succeed (remember my previous comment 29% is already alternate models). Just like banks did with tellers and ATMS.
I personally love this comment:
“…that agents show my listings becuase they WANT to work with me (Unlike avoiding FSBO and REDFIN listings like the plague)”
This is obivious that agents DO steer buyers away from certain homes but will agents continue to be able to do so as the industry becomes more transparent? If a consumer hires an agent (who now has fudicary responsibility) and the consumer wants to see a home and the agent doesn’t show it… the agent MAYBE in violation of his fudicary relantionship… but more importantly, the consumer is left with a bad taste and will move on to another service.
Note that the 2006 NAR report indicated that 28% (steadily increasing even in a market where agents should have been the gatekeeper to new upcoming listings) of the time a buyer found a home they ultimately purchased on the internet / on their own so that buyer who found a property online they love… and you don’t show it… they will simply call another agent or service who will.
Again, this is proven by the 2006 NAR report which indicated that 70% of buyers selected their agent based on who called back “first” and seemed most responsive. Not the agent with the most experiance, not the agent who previewed the most homes, not the agent who had the nicest business card.
I’m not ripping on you personally, it’s a general commentary on the state of the market. The younger generation (first time buyers – 25% of the market) expect and demand instant gratification in everything that they do, so they will work with who ever can do it faster and cheaper, including a real estate.
Lastly, if you consider that 1 of every 86 people in the US is licensed in RE, that’s alot of people who know and have the experiance to do it themselves to save some money. This maybe a good reason why many brands including the traditional shops (Coldwell Banker / C21) are experimenting with alternative models.
FSBO and Marc,
I don’t have the statistics to know what the industry average is on a general listing. I do know that there are agents out there that charge 4% LOC in order to offset the costs accrued with servicing a listing. I would venture to guess that the calculator on FSBO could be accurate. I am not here to brag, but I think the least amount of time I have spent on a listing is somewhere around 80 hours, and that was a piece of vacant land that a friend begged me to list far outside the city limits.
FSBO, I do no advertising and spend little time ‘getting’ new business. I do take my clients out to coffee, dinner, and to events… one might consider this time marketing. If so, then I do spend some time on this on a weekly basis. However, most of my time is spent servicing my current clients.
You are absolutely right about the issue of Gen X and Gen Y buyers taking the agent that calls them back the quickest. However, I try to avoid that situation by meeting with a buyer prior to this time. It doesn’t always suceed, but then I have an e-mail accessible phone and work with a company that allows activesync with my email. Therefore, if I do receive and email or a phone call, I can respond very quickly, if not within 5 minutes.
The Nordstrom service is here to stay, as we all conclude. When I look at testimonials from Redfin, I see a lot of first time homebuyers that say “The transaction went smoothly as I would expect”… well if you only ever shopped at the local Fred Meyer with terrible service, you probably would never know what the Nordstrom’s service is.
My value has never been in finding the home for the buyer… my value has been evaluating that property, doing research on that property, helping to facilitate that property with a desirable buyer price, and then ensuring a smooth transaction.
The truth is this… my biggest referral sources are clients that nothing in their transaction went right… that’s right, EVERYTHING went wrong, and yet they are the ones talking about me here, there and everywhere.
I somehow think that there will be support groups for clients of these limited service companies when things don’t go right!
David Losh-
I know who you’re talking about. He’s fortunate that the widow he ripped off didn’t have any sons and I’m waiting with bated breath to see what SCCAR and NWMLS do about a particularly egregious incident of him going around a buyer’s agent to do both sides of a deal. My gag reflex still kicks in at the memory of seeing him blow his nose,fisherman style, into a potted plant at a SCCAR installation of officers some years back.
Ardell-
I’m an agent at Preview Properties in Marysville and JD Blackwell is my real name. I’m not terribly worried that the nice folks who enforce the Sherman Anti-Trust Act are going to be interested in me. Like you, my commissions run a gamut for much the same reason; not every job requires the same effort and expenditure of time. Regardless of what that commission is, each client gets the best representation possible. What I won’t do is offer a cafeteria style list of services for clients to pick and choose from that they get invoiced for at closing. First off, they aren’t the real estate professionals, they haven’t a clue what they need and secondly, I won’t compromise my standards or expose myself to liability for doing only what the client wanted instead of what they needed.
Marc,
I honestly have no idea. I’ve been working for 35 years and rarely have I kept hours or punched a time clock. I just don’t think in terms of hours. If I do an Open House, do I count the time from when I start making flyers to the time I get back home, or just the three hours the Open House was open?
If I spend a day helping an owner get a house ready for market, do I count the time when we stop to eat and chat?
If I have a client over to dinner and we watch Sopranos and he signs the listing contract before he leaves, do I count the 4 hours we spent together, or the 30 seconds it took for him to sign the contract?
I’ve already started on my next one and haven’t kept track of the hours, but some day it might be an exercise to try to keep track of the hours from the beginning. Many are both buying and selling and we talk about the listing while we are looking at property to buy. Hard to separate the hours when someone is both buying and selling.
Is there a point to the question, since I don’t ever intend to charge by the hour? Should I charge a different rate when I’m helping to strip down wallpaper vs. doing an Open House vs. meeting a Redfin buyer at the property? How about when I’m thinking. When I’m getting feedback trying to figure out our next step. When I’m taking the info from the feedback and deciding whether or not we need to reduce the price. Can I charge for thinking? How about when I’m answering 20 phone calls from agents wanting to know if the property is still available and talk about the listing and they haven’t even shown it yet? Can I charge for that, or should I hang up on the agents and say call me AFTER you have shown the property. What about talking to the neighbors who call on the listing who want to talk about the property. How about the appraisers who call me after it closes because they need info on the comp they are using for a neighbor’s refi. Should I keep time records every time the seller calls me. People have this big to do list, but some sellers will talk to me every day or email me 5 times a day and some don’t want to talk at all unless there’s an offer to talk about. Can I charge more for a property that is in escrow for 5 months vs. one that is in escrow for 20 days? Can I charge for the time I am biting my nails trying to reach a seller so I can present an offer and he’s not answering his calls or emails? Can I charge for the time I talked to the neighbor when some kids took off my sign and threw it on his roof? Can I charge for when the next door neighbor calls me at 10 p.m. because someone who showed the house left a light on upstairs and it’s shining in his bedroom window? Can I charge double time to drive over there and shut off that stupid light if it is 11 o’clock at night? Can I charge for the owners who lock themselves out of their own house and call me to let them in with the key in the lockbox? How about the time it takes to call 911 when I stop by and the owner is laying in the foyer in her nightgown bleeding and all she can remember is that she told the f’n movers to get the h*ll out of her house! Can I charge for the 15 phone calls I got from the seller while they were deciding whether or not they wanted to move in the first place? Can I charge for the ten hours spent on the phone with the sellers girlfriend who wants to talk about what ifs three times a week for over an hour each time? Can I charge for the three years of phone calls the owner made to me every time they were making a home improvement, to make sure it was an imrovement they would get their money back on when they sold?
Average hours? I’ve never seen “talking to the seller” on the list of “stuff” we do, and believe me, it often involves more hours talking with the seller than doing the job itself. Don’t other agents ever have to talk to their clients? How come talking to the seller is never on the list of stuff we do to sell a house?
JD,
I absolutely agree that what the client needs is not a unilateral election of services.
Ardell,
Simply put, my answer to your questions concerning what you can charge for is “yes, you can.” Lawyers do it every day. In 6 minute increments. However, I’m not advocating for or against hourly representation in real estate transactions.
The point of my question is to determine the value of a listing agent’s service. The Redfin agent who admitted she worked 5 hours on a deal and received $12,000 was attacked mercilessly on this blog and elsewhere. In light of this attack, I’d like to determine the hourly rate charged by the average listing agent. FSBO Center’s calculator defaults at 39.9 hours which I suspect is too high. Jason H said his minimum is 80 hours and the ceiling on his “average” listing is three times 39.9. I’ll call that 120 hours.
If we take the median price of a Seattle area home, $465,000, a three percent commission would be $13,950. Divided by 39.9 hours, that works out to $349.62 per hour. Sadly, Jason H gets a mere $116.25 per hour when he goes all out for a client.
I have been involved in more than a 200 residential real estate transactions since 1999 either selling, developing, financing, providing legal advice, or some combination thereof. Based on my experience I would posit that the “average” listing agent spends no more than half of FSBO Center’s suggested 39.9 hours working on his client’s listing.
At 20 hours, that commission works out to $697.50 per hour. That hourly rate will get you the best legal mind in any field of law and dang near the best physician in any practice area.
But, in real estate, it will get you an average listing agent. Can you or anyone else tell me that’s “fair” compensation with a straight face?
The Dell of Internet Real Estate – hmmm, i like it i like it!
I did a rough count of hours that includes time before the property goes on market and came up with the same 80 hours. So maybe there is something to that number.
If I use “the 6 minute rule” and apply it to emails, as an example, I just had a transaction (buyer not seller) that had more than 2,000 emails back and forth from the time I met the person to the time they closed escrow (five months). The email time alone at 6 minutes each would be 200 hours, if I have that right. Reading email coming in, charge 6 minutes. Answering that email, charge 6 minutes. 6 X 2,000 divided by 60 equals 200 hours. Is that how it would work using the attorney time keeping method? That doesn’t include showing property, writing offers, phone conversations (4-5 in this case) escrow, etc… In this transaction using that method, the pay rate was $46 an hour if all we did was email.
Mine were all emails but I expect the ones coming from the other side were text messages that showed up as emails on my end. People who text message often send you messages all day long, or at least while they are at work
I find the communication is great. Most of my clients have a minimum of 400-600 emails back and forth even for an easy transaction. Buyers do email more than sellers though, in my experience. Seller emails are more often initiated by me. Buyer emails are more often initiated by the buyer.
Marc,
We get a lot of calls from agents about our listings. A lot of them only preview the property without a buyer. Wouldn’t the seller get ticked if we charged him for the time we talked with other agents who had no buyers for his house if it were detailed that way?
How about when people in the same office are talking to each other about the new listing?
I remember getting a time record from an attorney that had three attorney’s talking to each other about the client’s monthly statement and showed billing hours for all three attorneys. I was furious at the time. Don’t you think that is asking for trouble to bill that way?
Not working Marc. I did the average transaction of 400-600 emails including those between lenders, escrow, title company, ordering warranty and to and from client and that’s 60 hours just for emailing using the 6 minute rule.
Ardell,
I agree 100%. The scenario you describe concerning the three attorneys would make me furious as well. I can only hope you didn’t give them more of your business.
It’s called customer service and I’ll admit that many attorneys don’t practice it well. The same goes for many professionals in many fields, including real estate agency. I’m sure you can think of an agent or two who was less than fun to deal with.
The one thing you overlook is the effect hourly billing has on the level of communication. When my hourly clients call me, it’s not to chat about the weather. They tend to focus on the business at hand. That said, the salesman in me knows that the value of a client who feels he has confidante rather than a mere attorney. When and where approriate, my monthly bill will include a generous dose of “no charge.”
To me, it’s all about providing an approriate level of counsel and charging a reasonable price. I would venture to guess that 400 to 600 emails goes far beyond what an average agent provides his or her client and far beyond what an average client should expect from his or her agent.
I will leave to the readers imagination the amount of time it takes to read and draft 600 emails and whether that is a viable estimate.
I think that Marc makes an excellent point regarding just getting an average agent for a premium price. Additionally, once you have “hired” the agent and found a home, there is no way to fire that person, as during the transaction is when you will see their true colors. Sure good agents earn their keep but as Marc mentioned, consumers maybe paying a premium for just average performance.
What most agents fail to talk about is that your job is really about “emotionally supporting” the descision the buyer / seller is making and constantly re-affirming to them that everything is o.k. when there is a problem, or that it’s “normal” for the delays, that the requested repairs should be made, the low appraisal is the actual value, etc. This is what I believe Ardell is pointing out.
But the real question is do consumers care? Are they worried about the amount of time or money you invested with sum of all your other clients? Probably not… and they are surely not interested in picking up the cost for the work and time you spent with “other” clients.
The good thing for agents is that Redfin probably won’t be the big winner in all of this… they are simply laying out the ground work for another more efficent, smarter company.
Just like Alta Vista, Northen Light, WebCrawler did not win the search engine wars… they only laid the foundation for people to understand that they NEED a search engine and were willing to use one and thus created the peoples DESIRE to seek the best option. Once consumer “accepted” the technology / practice / business model a better solution came out and win big, i.e. google.
Remember when bank ATM’s came out? How about “high cost” cell phones? Botteled water? Internet? Fax Machines? $4 dollar coffee’s?
Who would have thought about paying for “free” water, why would we ever need a phone in our car, why would I buy an expensive fax machine, when I can’t communicate with anyone else? Why would I subscribe to Compu Serve when nobody I now is on there?
The press Redfin is receiving and these blogs theards are only laying the foundation to consumer “acceptance”. Soon consumers will realize that there is NEED for these models (especially as many realize they don’t have enough NET equity to sell using an traditional agent) and some other company will come in and win big time.
Once the alternate / discount / FSBO models reach 40%-50% market share (currently at 29%) there will be a critical mass of consumer adoption and there will be no more “traditional” model.
Sure, there will be still agents who charge 3% per side and / or expect 3% per side but it won’t be the majority like now, just like the majority of people don’t shop at nordstrom or wear prada BUT do drink bottle water, use a fax, have a cell phone and bank using an ATM.
The guy I referred to in my comment is not a Real Estate agent by choice. He is a Real Estate swindler who preys upon buyers and sellers under the umbrella of his LLCs His LLCs are what he uses to keep his personal assets secure.
He uses the legal system as one of his tools to boost profits. He claims ignorance of issues in court or in dealing with government agencies. If he were a Real Estate agent he would have the burden of due diligence.
It’s interesting to me that you would assume a Real Estate swindler would go to the trouble of getting licensed in the State of Washington. All he has to do is call redfin who will do nothing but write the deal or list the property for, get this, a discount.
David,
Is he a FSBO run amock
I blame all of those get rich quick seminars for guys like that.
Forgive me if I appear cynical David, but my observations lead me to believe that if you’re making enough money, the MLS, NAR and brokers won’t be terribly aggressive about enforcing standards on you. I see a lot of token actions against small independents but nada on some bad actors who really do need to be reined in. I’ll keep harping on my mantra; fewer, better trained agents held to a higher standard doing more full transactions can do it for less and make the FSBO/limited service model untenable.
[...] First it was the 60 Minutes “controversy” and now the Northwest Multiple Listing Service has fined Redfin $50k and asked them to stop publishing “Sweet Digs.” [...]
[...] PS – I got my new monitor this weekend. Thanks again everybody, for your monitor insights in your remarks to my last Redfin post. [...]
I just got on this site …..interesting reading! Boy, no posts for the last month! I am in the market for a home. I was about to sign up for Redfin but am having second thoughts after reading all the comments. I need to research this further. I did wonder why KE did not respond to the criticism. Probably Redfin made an executive decision to not get further into the fray. It does not help them.
Redfin vs. Deborah Arends UPDATE…
Remember all of the hullabaloo back in May regarding the 60 Minutes piece about the changes the internet is bringing to the real estate industry and how Redfin is an innovator and one of the driving forces and champions behind……
How does this company get some much media support, I’m amazed.