Stirring up the Redfin dust…
Dustin on 05 16, 2007
In some ways it is sad that both Ardell and Marlow declined to take part in the 60 minutes episode, but at least they can both blog about it afterwards… 
I find Marlow’s analysis of Redfin to be particularly fascinating for two reasons…
First, she debunks the idea that just because they can close 8 deals a week, that is not reality:
As of today 5/15/07, Redfin has 25 real estate agents listed with licenses in their office. Total sales in their service areas of King, Snohomish and Pierce Counties of all single family homes, condos, multi-family and vacant land is 150 closed sales.
That’s one hundred and fifty closed sales. By 25 agents. In the first 18 weeks of 2007. Please check my math, but isn’t that about 8 closed sales a week, by 25 agents? So did each agent make about 0.33 sales a week?
And second, she makes an interesting point that seems self-evident in retrospect:
When Redfin fails, they won’t blame themselves, the business model, lack of planning, poor management skills or bad judgment. They will blame the NAR, the “real estate industrial complex”, and the “real estate monopoly”.
While Redfin is right to do a lot of backslapping after the segment aired, Marlow makes a persuasive argument that they’ve still got a lot of work ahead of them…
About the Author: Dustin Luther
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> Marlow makes a persuasive argument that they’ve still got a lot of work ahead of them
I don’t see that in what she wrote. She seems to anticipate that they will fail, period.
> Redfin is right to do a lot of backslapping after the segment aired
Actually, after every bit of Redfin’s fawning press coverage, an honest man would have said, “We got another break, but we’ll take it.” By this alone we can determine that Glenn Kelman is not an honest man.
I didn’t read Marlow’s article, but I’m saddened that you repeated that info here, Dustin.
Using the MLS to post publicly the private member info we share in order to denegrate a fellow member broker, is both against the principles of being an MLS participant AND the Realtor Code of Ethics.
It is an abuse of the MLS systm to use it in this manner.
Dustin,
They wanted me to come and say that the 6% was “sacrosanct”. I told them they had the wrong lady, and I’m sure you would agree. In the end they never did get Ahrends to SAY that, but they spliced together them saying that with a piece of Ahrends response to a different question, making it appear as if she was defending a given %. That is what I thought they would do with me, and it looks like I was correct.
They couldn’t get any agent to say that the 6% was sacrosanct, and they wanted that to be the thrust of the “opposite of Redfin”. They created that story by editing, when they could find no one who would come out and say that. Bad reporting when the interviewer is the one creating the “facts”.
I was tempted, swayed by the persuasive words of the show’s producer, slightly dazzled by my almost-brush with celebrity, then brought back down to earth by a PR firm hired by Coldwell Banker National who had previously worked at CBS, who told me it was a set-up orchestrated by Leslie Stahl and the 60 Minutes producers, an ambush on Realtors orchestrated to look like hard-hitting reporting by consumer advocates.
There was never any intention of presenting both sides fairly. The massaging, interviewing, the faxes back and forth, the CBS film crew at the NAR convention in New Orleans, those activities were just a show of fairness and objectivity. They had 13 minutes to make their point: Redfin Good, Realtors Bad.
Pat Kitano read the script and shares it with us here:
http://transparentre.com/2007/05/13/redfin-meets-tv-watching-america.aspx
Yellow journalism at its finest.
P.S. I told them I would be happy to come on and give the middle ground story between Redfin and their 6%. They only wanted to polarize the story, whether it was true or not.
Ardell,
I’m so sorry you’re “saddened”.
Members are allowed to use MLS stats for any reason we deem reasonable, for marketing or informational purposes.
Just a few months ago Redfin used MLS stats to “prove” they got a better deal for their clients.
The MLS releases stats and figures every month. If they didn’t, we wouldn’t know the average price of a house. As members, we have access to that information and can use that for marketing.
Quit making up rules & regs just to further your point.
Marlow,
You asked your powers that be if it would be good for you to appear on 60 Minutes. I would be very surprised if you asked your powers that be if you could post that info in the way that you did, to disparage another member of the MLS, that they would have given you a resounding yes to do so. I’m 99.9% sure had you asked first, they would have advised against it.
Using the stats all of the time to post marketshare generally, using the stats overall to show the average number of sales per agent generally, is not the same as targeting an alternative business model.
I’m absolutely positive, Marlow, that it is an abuse of privelege, and probably strengthens the DOJ case as well, for a traditional broker to use their membership priveleges to tear down an alternative business model. I don’t know about the Bain franchise, but I am 120% sure that Coldwell Banker would NOT support using the information in that manner. Read your Realtor Code of Ethics, Marlow, you know the one that makes you better than me. Not sure actually if Redfin is a member of the National Association of Realtors. But I am sure it is against the spirit of the Code to do what you are doing.
Do you know for sure how many of those 25 have been working there since 1/1/07 to support your nasty comeback? Do you know for sure that half of those 25 are not “non-selling licensee assistants” and support staff with licenses? Perhaps many are still in training.
It’s a very nasty, inside info using piece. It’s clearly wrong. If they don’t have a rule against it, they better make one fast. You know in your heart of hearts that it is wrong, because I have never seen a Realtor target an individual agent or Company using MLS info.
There IS a rule against using the info for purposes not intended, and I am absolutely positive that the purpose intended does not include using the info to grab an Alternative Business Model by the short hairs.
Greg,
Thanks for joining in… It was only after I hit publish that I noticed you had already picked up on Marlow’s article.
In terms of Redfin, I’ve watched them go through a number of reincarnations in the past three years. You’re definitely right that Marlow predicts failure, but I’m not convinced that they won’t morph into something else that makes a bit more “cents”. In other words, I’m not ready to predict failure for a company with change tattooed on their DNA.
This whole discussion is a perfect example of the reason we chose to use Redfin.
My question to Marlow, would she post statistics on another fellow agent? If she says yes, I question her ethics and if she says no, well I’m just tired of agents running around telling me why Redfin won’t work instead of persuading me as to the benefits of using a traditional agent.
I never trust someone to work for me who is trying to sell themselves by putting down the competition in place of standing on their own merits and abilities. The agent we strongly considered as an alternative to Redfin (and someone that I would recommend to sellers and buyers who are having trouble using Redfin) didn’t waste time trying to disparage Redfin, but rather discussed her own strengths, abilities, and track record. She was persuasive- and quite frankly we would have used her had we not been successful with Redfin.
And to those that say that Redfin buyers get the MLS leftovers, well we made our offer the day the house was listed in a multiple offer and three preinspection situation and got it. Just some food for thought.
Katie,
I think your response is a bit unfair in that you are responding to an issue she is not making. Marlow is not attempting to make the case that Redfin is bad for consumers… Quite the opposite, she is making the case that they are a bad investment opportunity because they are too good to consumers.
Katie,
Can we ask who the Redfin agent was? I was in a multiple offer with Kelly as the Listing Agent, and she did an awesome job. We didn’t get the house, but she did an awesome job.
Dustin,
Point is that using MLS member priveleges to this purpose makes the person doing it look bad, not the person they are aiming at. I think Katie’s comments are Right On!
Ardell, your comments suggest that Redfin wouldn’t do the same exact thing if it was to their advantage. Glenn has apologized so many times for hot-headed comments against agents that it is baffling to me that you (or Katie) could suggest that Redfin is not willing to make low-blow shots on an as-needed basis.
I’m going to hold Katie to her words that she would “never trust someone to work for me who is trying to sell themselves by putting down the competition.” However, in order to believe that, I have to also believe that she has not been following Glenn’s antics over the past year. My gut tells me that Katie worked with Redfin because they provided her the right service at the right price at the right time, not because they are somehow morally superior to Marlow.
In response to Dustin’s supposition of “My gut tells me that Katie worked with Redfin because they provided her the right service at the right price at the right time, not because they are somehow morally superior to Marlow.” I didn’t consider Marlow’s morality when I chose Redfin.
That said, Glen has always come across to me as the grandstanding type and I’m not oblivious to the fact that Redfin’s raison d’etre is to make money off of real estate consumers who either a) find the traditional agent compensation model troubling or b) just want a few thousand to go towards the closing costs. Either way, you are absolutely right in that we chose Redfin not for their moral superiority, but for the service they provide and at the price they provided it for. You see, the product and services won us over. The reason we considered using the traditional agent (who we will probably use when go to sell our house down the road) I previously mentioned was because the services and product she offered were persuasive and we saw much value in them.
[...] Rain City Guide: Stirring up the Redfin dust [...]
Katie: thanks for following up!
I definitely appreciate your perspective!
Dustin,
I think we’re supposed to know better, and take the high ground. I don’t think anyone is ever permitted to take stats of an agent or company, and use that data to make another agent or company look bad in the eyes of others out in public like this. It is an abuse of privelege, and clearly contrary to the purpose and spirit of the mls.
That said, I agree that new business models who think the MLS is merely a data source will make more mistakes, like talking about other agent’s listings on their blog
But Coldwell Banker is one of the, if not “the” most primo company Nationwide. They would never stoop to tit for tat tactics. I have an immense respect for Coldwell Banker, and more than a little experience with them and how they operate and think. And poking at an Alternative Business Model with a stick manufactured via the MLS data, is clearly not their style.
Ardell,
Perhaps you’re correct in that we shouldn’t use MLS data to run down another MLS member. Didn’t rfin do the same thing in their Feb 27 news relase? You’re smacking Marlow around pretty good, here. Perhaps you should smack the others guys just as hard? Let’s have some equal opportunity smacking!
[...] Katie commenting on RCG: This whole discussion is a perfect example of the reason we chose to use Redfin. [...]
If it is true that NAR supports all business models, and commissions have always been negotiable, then NAR’s next best move is to go on a national campaign to educate the public about the negotiabilty of real estate commissions.
Taking punches at Redfin seems like a big red herring for NAR.
Why not engage them and ask them to become NAR members?
I am going to offer the NAR Code Provision for the debate about Marlow’s Redfin stats analysis.
Article 15
Realtors shall not knowlingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices.
The question becomes: Were Marlow’s words false or misleading?
Jillayne,
My opinion is that the comments weren’t false or misleading…
I haven’t gone back to review the video, but what I do remember is that one of their agents implying that she was closing 8 leads a week (that led to a lot of back-and-forth on Robbie’s post about paying agents by the hour). While she probably phrased it such that she *could* close 8 transactions a week thanks to internet efficiencies, many of us were left with the impression that she *was* closing 8 transactions per week, and Redfin has done nothing to dispel that interpretation.
My opinion is that by going on national television with stats like that, it is very reasonable for Marlow to research this point of reference and point out that not only was this one agent *not* closing 8 transactions per week, but that their entire office of 25 licensed real estate professionals was only closing 8 transactions per week. (Unless, of course, she is the only productive person on their staff!).
Rather than being a low blow, false information, or misleading, this appears to be simple fact checking of a national event… (at least by the standards of the RE.net)
Another point of reference is that if there were any holes in her analysis, you can be pretty sure that the Redfin folks would have jumped on it right away (as they’ve done in the past) instead of selectively quoting one person’s comments.
That seems to be the most salient point yet. If Redfin put the “facts” out there, it is incumbent upon the RE.net to validate those “facts” – that is one of the most fundamental aspects of blogging.
It’s a shame that 60 minutes didn’t do the same fact checking before they did their story, but that seems to be par for the course for much of the media. Not that it matters, somehow I doubt they will do a clarification.
Redfin, for better or worse, is running with the RE.net’s evolution; accountability for one’s actions and words is one of the benefits of this new world in which we live. If you can’t substantiate your “facts,” don’t make ‘em.
(note: if the agent really does close 8 deals a week, then Marlow might consider apologizing)
170 customers in King County bought a home through Redfin, 200 across Washington state;
The above line was taken from the rfin site and is part of the executive summary they published on February 27 and updated on May 7. http://www.redfin.com/stingray/do/redfin-advantage?direct-section=buy
The above numbers were from the period starting from their launch on Feb 6, to Feb 5, 2007.
If they say they are closing 8 deals/week AND they are referring to just this market……..well, then their own numbers dispute them…
Now, lets put something in perspective. 170 transactions in a year with all the national press? There there good real estate teams, working inside established brokerages, that do that kind of volume.
VC’s should know this tidbit as rfin stumps for survival $$
Greg,
Do you smack the new agent hard when he makes mistakes getting out the gate? I think not.
Realizing that cooperation with other real estate professionals promotes the best interests of those who utilize their services, REALTORS®…refrain from making unsolicited comments about other practitioners. In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.
Ardell,
I viewed Marlow’s comment as more of a rebutt of an outrageous claim made on national tv, than a comment made for personal gain. Of course I don’t smack new agents out of the gate for making mistakes. Does Kelman fit that profile of a new agent? Let’s have a vote on this one.
This is what Glenn said “we have AN agent who CAN do that every week” (close 8 deals).
He did not say that every agent at Redfin closes 8 deals a week. The rebuttal does not address the comment made. It is a misrepresentation and an unwarranted attack.
Glenn Kelman ABSOLUTELY deserves the same courtesies we give to new agents. In fact we should be bending over backwards to give Alternative Business Models the latitude to shake things up a bit OR we should embrace the concept of change, and find economies that trickle down somehow to the consumer level on our own.
Dustin,
“but what I do remember is that one of their agents implying that she was closing 8 leads a week”
Incorrect. Kelly said nothing of the kind and it would appear that Glenn was referring to a MAN who “CAN do that in a week”. It was not a ploy for advertising, it was a statement suggesting that technology, efficiencies and support staff can streamline the process to that degree.
Ardell,
I didn’t view Marlow’s comments in a disparaging way. If you claimed you did 40 million dollars of business last year, and I researched that information and found that it wasn’t true, I would have a moral obligation to point out your errors. It’s a checks and balances, something 60 minutes didn’t do while in Seattle.
Glenn Kelman deserves NONE of the same courtesies we give to our fellow agents. He is out there making disparaging remarks, calling our profession the ‘most screwed up’ in America, and has a general lack of professionalism himself.
When he said “An agent can do that every week,” he left that out there for everyone to digest. I think it was a horrible statement, as I think it hurt him more than it helped him. Who wants to be #64 in line? I think we live in a world of Nordstrom’s business model. People will pay more for service and not think twice about it.
I think you should work for him.
Ardell, you can do whatever you want in your business model, but don’t preach to us on how we should conduct our business. It’s the same as the Government reaching in and telling you what to do with your body. It just isn’t right. Keep your comments about how we should conduct our business to yourself… they are not welcome.
Now serving #65, may I take your order please? Do you want fries with that? Oh, that will be an additional $.10 cents.
Ardell,
You continue to complete miss the point. Rfin did EXACTLY what you were railing against in their Feb 27 report……using such a small sampling of numbers that make accurate conclusions were impossible. These numbers then went straight to front pages of real estate sections around the country. I do not see Kelman as naive in this. In fact, many around the country are touting him as a brilliant “viral” marketer. Ardell, he is looking for ways to create contraversy!
I agree with you. Giving consumers a choice in who they do business with and a choice in the working style of broker (alternative or tradtional) is important. Ardell, you constantly champion good customer service and agent fiduciary responsibilites.
Please tell me how one agent writing 8 deals a week from a computer screen can be good for the consumer you so rabidly want to protect? Paying at one point (a discount) in the transaction is one thing, paying down the road for a critical mistake is another.
This is not “us” against alternative models. We’re talking about a specific model and the way that they, and the media are manipulating numbers, that on the surface look pretty good to the consumer.
Why shouldn’t they be challenged?
Is Kelman the “new guy”, or that brilliant viral marketer who got his company on 60 minutes?
Jeez, Ardell. What I presented was not “a misrepresentation and an unwarranted attack.”
I didn’t go on national TV and leave millions of people with the impression that I sold 8 houses a week, Glenn Kelman did.
I was correcting that impression by presenting THE FACTS.
This is the truth. This is the “transparency” you’ve been wanting.
Leslie Stahl said, in response to Glenn’s claim said “There is no way to independently check the number of deals his agent closes in a week…..” I was pointing out that, as a member of our local multiple listing service I CAN and I DID and they’ve only had 150 sales from 1/1/07 to 5/15/07.
That is the truth. This information is available to members of the NWMLS and I am able to use these figures for advertising, solicitation or any other reason, just as Redfin does. The NWMLS publishes those figures FOR OUR USE, encourages us to use them, to let the public know that the figures are from the NWMLS.
It is irresponsible and libelous for you to carry on in this way, defaming my character and writing about my supposed “abuse of privilege”.
No corporation gets a special dispensation from telling the truth, just because they’re an “alternate business model”.
I know you guys don’t like Redfind. Of course you all make a living out of those fat 6% commissions. Guss what? Those are going to go away pretty soon. If not Redfinf or zillow, there are a lot of other creative people out there to take the wind of your sail. Realestate agents will have to work a lot hard to make half of that money and it is going to happen less than five years.
“I think we live in a world of Nordstrom’s business model. People will pay more for service and not think twice about it.”
Think again. I will pay more for service, but it depends on how much more and whether or not I need or want the service. I think there are a lot of 35 and unders like me in the Seattle area- We grew up with Nordstrom, we love it for many reasons, but are willing to shop elsewhere? Yes, of course.
This whole situation reminds me of Peter Drucker’s famous quotations regarding change:
The only way you can manage change is to create it.
By the time you catch up to change, the competition is ahead of you.
Katie,
Do you feel that Nordstrom is going away? Do you feel that you are going to shop at Macy’s, or botiques more than you shop at Nordstroms? Do you feel that for a buck more, you might buy that piece of clothing from Norstroms rather than the outlet store because you know that if there is something wrong with it, Nordstrom’s will take it back?
I am in your age range as well, and as a GEN X’er, I love Nordstroms. I know that if I purchase something at a discount store, I have to love it as I know they are not going to take it back. Nordstrom’s make you feel good, makes you enjoy shopping there, and that experience is much more my speed than K-Mart.
I will also tell you that I am ahead of the Redfin model. Redfin is not a new model, it’s been around for a long period of time. In fact, it’s failed a multiple amount of times. The truth is this… you are selling or purchasing the largest invesment of your lifetime… you aren’t purchasing shoes, or CD’s, or some fixed cost item… you are purchasing an experience of buying a home that you will love, enjoy, and profit from over an extended period of time.
Why do people buy first class tickets? Why do people stay at 5 star hotels as opposed to Motel 6? Service… that’s why. Real Estate agents that are worth their grain of salt provide service. They respond to your text messages, they respond to your pressing needs, they respond to your inquiries with first hand MARKET KNOWLEDGE… as in… I have been to that house, and it has a really bad foundation (something you can’t see through the jaded eyes of pictures). I have been to that home and it’s right down the street from a halfway house.
At the end of the day, Realtor’s provide service that exceeds expectations. We are not competing with Redfin… redfin is competing with MLS 4 Owners, Help-U-Sell, Skyline and Chris Nye. They offer different services, basic services, something you could actually do yourself for $.40 cents in late charges from the local library.
Of course, you could do the same thing with your remodel… but I seriously doubt you will do that!
Sorry Katie, but it’s not traditional agents that are catching up, it’s the limited service models that are trying to catch up.
P.S. When I say Traditional Agents, I mean competent, experienced, trustworthy, educated and honest agents. We can be found if you ask around… but we tend not to advertise. Our word of mouth advertising is all we need.
Jason,
KMDA…I’ll be that one person who isn’t jumping on the bandwagon with a club in their hand, and I don’t need your permission to do so.
I rarely shop at Nordstrom’s. I’m more likely to shop at Nortstrom’s rack. Marlow can do whatever she darned well pleases over on her blog, and I DID NOT go over THERE to tell her otherwise. But when Dustin tracks her mud into RCG, I have the obligation to clean up the dirt.
The information she printed and being repeated is NOT available through public means. Private info sources, MEMBER ONLY data sources, should NOT be used in this manner, nor have I ever seen it done before to this degree. It is WRONG and it is not addressing something that Glenn said. When that data was REPRINTED HERE ON RCG…that made it my business. Consequently it is my right to say it is WRONG to print that info.
Jason H.
How can you possibly get up on a soap box of how trustworthy and credible you are when:
1) You announced to the world here on RCG that I broke a law, and NEVER retracted that when you were proven to be wrong, and never apologized for having done so.
2) You are a professional hiding behind anononymity ,and not putting your reputation where your mouth is, by revealing who you are.
It’s easy to talk the big talk with a sheet over your head.
Last I checked Traditional Agents weren’t offering Nordstrom style returns on house purchases.
That said, you are right when you say it’s “something you could actually do yourself for $.40 cents in late charges from the local library” and there’s my problem with the commission model. I know there are aspects of the real estate transaction that are out of my league, and that I want a licensed professional to handle those aspects- no question there. On the other hand I know the neighborhood I want to buy in, I know the street I want to buy on. I honestly don’t like someone telling me what shirt to buy at Nordstrom, just as much as I don’t want a real estate agent calling me and trying to point me towards houses that are a) not in the neighborhood I want and b) $100k more than the price range we set for ourselves. I had over five agents call me and leave messages after they had shown us a house telling me that they had the perfect house “in the same neighborhood” going for X amount of dollars ($50-100k more than the top end of our price range- the same price range we had more than clearly provided to the agent just hours or days earlier). I hung up the phone laughing or deleted their voicemails laughing- they clearly weren’t listening. Honestly how can I trust someone who is supposed to represent me and my interests, yet they don’t seem to take those interests seriously? Obviously not every agent is like this, but we met more than our fair shair of those that are. For me to find the home on the street that I want and then call the agent to initiate the offer, well frankly I think 6% is ridiculous- especially considering that whatever the house price, the percentage of commission made by the agent stays the same (unless we are talking $2mil priced co-ops with a fee based agent). My parents bought the house across the street from their previous home, why should they have to pay 6% for someone to write up the offer, show up at the inspection and then finally show up at closing?
Maybe (probably?) Redfin won’t be a lasting company, but I’ve seen something different from the traditional model and aspects of it certainly do appeal. I’d love to see a widespread, successfully operated hybrid model combining what I view as the best of both worlds. Is Redfin the consumer’s savior? Hardly, but are they causing some consumers to take a hard look at the traditional model? Yes, and that is precisely why traditional agents should be paying attention.
Marlow,
Go listen to the video and quote me ANYTHING Glenn said that wasn’t true. Glenn was talking about the future of what could happen if at least a portion of the real estate industry offered a streamlined online option. That you and other industry insiders chose to pluck out one sentence and turn it into an Alternative Business Model bashing is exactly what people accuse the industry of doing.
There are tons of articles bashing Redfin this week. Stomach one person not joining in on the lynching.
And Ardell, I’m seeing you go on an uncalled for lynching of Marlow for a concern you have yet to substantiate. I certainly don’t think that you’ve proven that Marlow words were “false or misleading”, nor do I think her comments were unfair.
You’ve proven that blogging is not the traditional medium for industry conversation when you fault another another Realtor (putting it nicely) by using the concept that REALTORS®should be “objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain” as your defense.
Marlow simply pointed out that Redfin has not found some magical source of internet efficiencies where he can process 8 transactions per agent per week. If he had, he would now be looking for his 2nd agent in this market, ,not his 26th.
Reators complaining about Redfin sound alot like Bubbleheads complaining about house prices.
Ardell,
Just becuase you hide behind a technicality of the law… by not having your company that you work for on every piece of literature and on every page of your website, doesn’t mean you are ‘right.’ I will not apologize to you for calling you out on your website.
I would expect someone like you to adhere to the letter of the law. While you can link to your disclosure of what company you work for in your web page, I still feel it’s grossly inadequate. Further, even when you are on your disclosure page, it’s not that apparent that you work for the company that you work for.
So no, I will not apologize and I do not believe that you are ‘above board’. Frankly, someone that likes to walk that fine line gets no respect from me. You like to walk in the grey area, though you pontificate on how above board you are… hardly. They don’t go together.
Secondly, I am not masking who I am. Nor am I looking for business, which is your sole purpose of blogging. I am here to weigh in on my opinion on the subject matters that are brought forth. You can find me blogging on almost every blog in Seattle. However, I find it amusing to state my opinion and then forget about it, waiting then for the next best thing.
Thank you for caring, though.
Okay, I’ll bite.
Who are you, Jason? It’s obvious by how you are lashing out defensively that you are someone who’s livelihood is threatened by alternative business models in real estate, but all I currently see is a first name and initial.
Your identity is certainly masked to the casual reader like me.
Katie,
I am sorry to tell you that you have not worked with an agent that I would deem an equal (in regards to service). I offer the Nordstrom style of service, do no advertising, and base my model of business strictly on referrals and word of mouth (I know, the same thing.) When I have made mistakes in the past, I completely foot the bill for my mistake. I bend over backwards to correct the situation, and those people that I do such for are my largest contributors to the referral network.
Let me ask you this. When you go to a firm, almost any firm and ask what the pricing of attorneys/contractors/engineers are, what do you get? You get a sliding scale… the most experienced vendors are the most costly. While you could go out and get your license, or purchase your own home without the help of a Realtor (Or real estate salesperson), you probably want the best service available on the largest purchase of your lifetime. Then again, some people don’t and feel that they can do all the research… thus going to a limited service company or a limited service agent.
A good agent will not rant about themselves, nor push you one way or another way. A good agent is a consultant, someone to consult with you, offer you advice, teach and give you information you need in order to make a sound judgment. They will then walk you through the process of a home purchase, not pushing your limits, etc.
I have had many clients that give me criteria of what they are looking for… and I send them listings daily on their exact search criteria. When they see something they like, they contact me. I check in with them from time to time, and I will write something about homes that they show interest in (after previewing), but I never call someone and tell them the perfect house is on the market unless it meets ALL of their criteria. Further, I have never shown someone a home that is out of the price range they felt comfortable with. If anything, my clients ask me to show them homes that are out of their range, or ask me to revise my criteria. I am a stick in the mud in this regard. If an agent shows you something that you don’t want, then I would question their motivation.
Katie, you seem to be a smart woman, and it shows in your posts. I don’t think anything is out of your league… but I do think that it’s wise to pay for the quality of service that you expect. My motto: Underpromise, overdeliver.
Truly, a Realtor’s job is not finding the home any longer. We have entered a paradigm shift in which we have gone away from Realtors being the gatekeepers of information. However, our value only just begins with finding a home. I posted about this the other day, but I did a study on the people that sold their home through Redfin. They sold it for $440k, when they had it listed for $450k. Comparable homes in less desirable parts of the neighborhood were selling for $330 a sq/ft. They sold for $309 sq/ft. They were also on the market for a month in a half when the average market time in that area is less than 10 days. I contend they could have easily received $325 a square foot, paid the fee for using me, and walked away $7k richer in 40 less days. Even after paying my 3% fee. They still had to pay a buyers fee of 3%.
It’s not 6%… it’s 3% to the listing office and 3% to the selling office. I have worked with buyers for 3 years and they still have purchased anything. Yet, we go out at least twice a month looking for homes. Do I fire them? No. Do I change my strategy? No. I continue to work with them as if they just started looking. Do I get paid before they purchase? No. I am on the hook for more costs that I could possibly recoup… but I do get referrals from them.
Your parents shouldn’t have paid 6%… they should have had an agent facilitate the transaction for a reduced fee. Agents, all ethical agents, would do that for your parents. I would hope, I should say. There are dozens of action items to do to ensure a successful closing between a signed around P&S and closing… the inspection is one small piece.
I do agree with you that it makes a traditional agent look at their value that they bring to a transaction. And for those with a solid value proposition, it forces us to sharpen our tools.
Good luck with the house search!
I’ll take the bait as well? Who are you Jason?
FYI- I’m just a lowly consumer and I don’t have a blog! I had a personal one a long time ago, but I stopped blogging awhile ago.
biliruben – Okay, I’ll bite.
I am not threatened at all. I am disgusted that people work with these alternative models and then complain that the service isn’t great. Then they go off on how horrible the industry is… it’s just not right.
If you had never had caviar, and someone fed you salmon roe and told you it was caviar… how could you judge the service you received?
The other aspect of these alternative models is this: THEY are MUCH LESS sucessful in closing the transaction. In other words, you are less likely to have an offer accepted when you fax an offer in. When your agent PRESENTS their offer to a seller, you have a much higher liklihood of that offer being accepted. Alternative models don’t account for this. A lot of offers fall through, are never accepted or fall apart under these alternative models.
My point is this… Don’t judge me and my competent colleagues on your bad experience. You are probably comparing Talapia to Copper River Salmon.
Mmmmm… I love Copper River Salmon- I’ve had it at some great restaurants in Seattle, i.e. Canlis, Palisades, but often times I buy it at Costco!
Jason, you bring some interesting points to the table. Whether or not I agree with them or am persuaded is irrelevant, they are well put and duly noted.
http://realestate20.wordpress.com/2006/11/02/how-is-redfin-doing/
Katie,
Copper River Salmon is what I am!!!
Wait, that sounds fishy…
I really don’t have any idea what you are talking about, Jason. I’ve never seen the complaints you describe.
I had a great experience with a novice full-service realtor when I bought. She ran around for 6 months, showed me more houses than truthfully I wanted to see, and definitely earned whatever crumbs her office tossed her of the full 3% they collected from the transaction.
Being a bit more knowledgable, however, I probably wouldn’t go with that sort of model when I go to buy again in the next few years. The next purchase and sale will be significantly higher in value, but I would rather do much of the work myself and may not hire a realtor at all. My tentative goal is to spend 40K less than if I were to be foolish enough to go with one the Marlow’s of the real estate world. That’s a huge chunk of cash and well worth a few headaches if I can pull it off.
But don’t worry; I won’t castigate the full-service broker if those headaches are larger than expected. To tell you the truth, I can’t imagine a rational person who would. Please give some details with your experiences of these irrational buyers complaining about the faux-caviar.
Mr. Bili Ruben,
I actually hear the complaints all the time. Some examples include:
1. I am working with my agent and it seems that they are only available during the evening hours. And by the time we get to see the home, it’s sold. It’s not really their fault… homes are just selling too quickly, but I am frustrated with the process alltogether. I wish I would have bought five years ago. I am thinking I will just spend more time on Sunday’s looking at open houses.
***Their agent was a part time agent working for one of those ’slap your license on the wall and don’t get caught doing anything illegal” places. No service, no time, and no committment on the agent’s behalf. After all… they were working 45 hours at their primary job.
2. We really received no representation. We offered a good offer but the seller didn’t even look at it. We had to find the home ourselves, and then we ended up paying $40k on the sewer because we didn’t have an inspection of the sewer line.
***They used a limited service company and the agent they were working with didn’t present offers. Also, because the house was in West Seattle where the earth is a bit less settled, the agent didn’t know that they should have the sewer lines inspected. The other bigger issue was the agent didn’t catch that the sewer had to be snaked at least twice a year from the previous owner. A true sign that there is something systemically wrong with the sewer line.
3. We sold our house and it was so glorious as we received more than our asking price. However, two days before closing, the buyers asked for an updated Form 17 (Seller Disclosure Statement) becuase we didn’t fill in all the blanks and they had repeatedly asked for a new one with our agent, but our agent glazed over it thinking they had already signed off on it. However, when we revised it they walked away and we had to get a bridge loan on our new home we purchased and we ended up lowering the price on the house to sell, but we figure we lost $15-$20k.
***The agent should have ensured the property report was completely filled out. They also should have communicated, but because they were limited service, they felt it wasn’t their responsibility. Redfin has 70+ listings right now… how much individual communication/attention are you going to get?
4. Sellers sell home on 2nd day of listing after putting it on with limited service company. They negotiate a lower price, and then get six offers over the next three days. If we had waited a few more days, or priced our home more agressively, or didn’t negotiate, we would have been much happier.
***Again, discount agent that didn’t know the business. They probably lost out on $40k on a $400k home… by paying that additional 2%, they would have made $32k more.
Now, there are times when you can actually do well as a FSBO… and there are dream transactions… but it’s something like chance. Chance favors the prepared. With a professional on your side, watching the paperwork, coordinating closing with the buyers/lenders/escrow/title/home warranties/inspectors/appraisers/banks/underwriters/sellers/other agent/movers/stagers/photographers/back-up offers/etc… you are more likely to be prepared for things to go right, or wrong. Either way, you are in good hands.
Does this make sense?
Katie,
It’s ok to say you are convinced and you have changed your mind about the real estate industry… or at least a member of the RE industry!
J
I’m getting the impression you are a full service real estate service provider, Jason. I’m trying to be careful, because Ardell might be around, and, alla Kevin “Don’t call me stupid!” Klein in A Fish Called Wanda, it appears some get upset when you call them Realtors.
As such, I find it just a bit disingenuous to claim you don’t feel threatened by other business models that are actively attempting to eat your lunch. Be it cavier or Starkist, you are still going to starve without it.
Mr. Ruben,
Much like there are many different types of stores… some are Nordstroms, some are Payless Shoes, some are Bruno Magli… all have a place in Society. There is no tried and true system that will be a one size fits all. The competition with these new companies will help seperate the services we provide.
More sophisticated buyers may chose a less traditional agent… a high end home will almost always use a full service agent with a strong marketing plan. Some new buyers will tempt fate with the limited service companies and then switch over the a full service company.
Not all fit one shoe… capitolism, survival of the fittest, whatever you want to call it… the underperforming agents will go by the wayside thus strengthening the full service agents. We will have much clearer lines of service. Limited, Discount and then Full Service.
Color me naive, but I postulate that full service agents are here to stay, as long as we continue to provide value that others can’t. I am absolutely certain that I can… will everyone else catch up?
I hope so.
Agreed. I think there will still be a niche market for a full-service agent.
Those so rich that they can afford to not be bothered with the details, though spending the equivalent of a full year’s salary to pay what could very well be a poorly trained high-school drop-out doesn’t seem like it would make sense to too many people, so the cream will hopefully rise to the top. Maybe you’re the cream, maybe you’re not, Jason. Maybe you are top 15%, which is very good, but only the top 10% survive to cater to the extravagant. Then you will have to change your plan or starve. Maybe you will have to go work for Redfin.
[...] (If I’m refraining from too many opinions on this article, it is because my biases are so numerous I should probably not hit publish… (1) In the past I was “asked” by the NWMLS to take down RCG’s home search because we were not an “agent” site, but rather a marketing vehicle for multiple real estate professionals (It now sites at “http://www.annaluther.com” in order to comply). (2) My employer is having their own set of issues with the NWMLS. (3) Yesterday’s article and comments were probably not well received by the staff at Redfin…) [...]
At the end of the day, can’t we just accept that Redfin, like many other discount brokers, charges less and offers a level of service that is great for some population of buyers and sellers. Just as there are different kinds of legal services from online lawyers to discount lawyers to white shoe lawyers, there are all kinds of real estate services.
Redfin isn’t that special. They just have their clients do more work and charge less. Why all the drama?
Biliruben,
LOL!! I am a Realtor now. I do not get upset when someone calls me a Realtor. They do. But you don’t have to watch you Ps and Q anymore. I made it easier and re-upped.
re: post57
Kate, well said.
[...] What are the limits of the MLS? By Jim Duncan Does listing a property in the MLS prevent any other Realtors from talking or writing about the properties? Spurred by this (very) wide-ranging conversation on RCG, and this comment in particular, The reality is that talking about someone else’s listings steals their business. It’s true. If I write posts about the best properties out there, it is likely some people will call me to buy them. … Lacking a client relationship, I have no authority to have an opinion about an individual’s home to the general public. [...]
Kate said: “Redfin isn’t that special. They just have their clients do more work and charge less. Why all the drama?”
God bless you Kate. THAT sums up my thoughts completely. And I’m a Realtor. My own blog post on the Redfin/60Minutes thing was titled “Redfin, 60 Minutes, Whatever” and that’s exactly what I think about it.
As one of the other agents that 60 Minutes interviewed prior to choosing Deborah Arends (and I have a feeling my comments to the producers determined their choice of her) I can tell you that it was pretty clear to me that they were approached by Redfin about the story so they could have a national audience of advertising just prior to their launch of a national release of their services. I figure that Glenn Kelman was directing quite a bit of it as I found out that he had given 60 Minutes my name directly – and I don’t know him like Ardell seems to. I think he’s just seen some of my writings on this blog.
The 60 Minutes producers interviewed me for upwards of 6 hours and I went back and forth with the 60 Minutes producers on several topics, including if commissions were negotiable (they are), and they chose to just leave that kind of information out of their story. In fact, if anything, it was a lesson in real estate 101 business models for the producers. It was during these conversations that it crystallized for the lead producer to choose someone that was a “prototypical” agent who drove a flashy car, who did the traditional model of advertising, and who would look a certain way on television. They were looking for mediocre although I would say that Deborah Arends has my respect in having garnered excellent market share in the area where she focuses. Having had to wait a couple of days after the airing of the show I hadn’t blogged about it but I’ve been interested to see what everyone else has had to say.
I do believe that Redfin is going to run into some issues down the road and I would be very interested to know what they pay for E&O Insurance premiums and what their deductibles are. If they’re listing for $3k (up from $2k) and they give 2/3 of a buyer’s agent commission back, I’m curious how they’ll cover those costs when a big lawsuit comes their way, and how they’ll continue to pay the stock options, health care, benefits, and other perks they offer to their staff, including agents. Self-employed agents, which is the majority of us out in the real estate world, don’t have VC funds backing us up this way. That was part of my discussion with 60M, of course you can throw a huge discount back when it’s not really your money. Profitability is something that any company should be concerned with and tech companies I worked for in the past had profit margins of upwards of 80-90% depending on the product. Agents have to try and run a successful and thriving business based on a roughly 1-3% range of profit margin in an industry with numerous competitors. I could do 8 deals a day too if I had the staff that Redfin employs and has someone else (VC $) pay for. They’ll also likely stick to larger, more profitable markets and avoid places like small towns in Kansas where they couldn’t possibly afford all of the benefits they offer their staff because the prices of homes can’t sustain them.
Marlow, I’m with you to a point. Although I don’t mind the alternative business model as much and it just provides me with a good point of comparison for my own services. As I told 60M, if I wasn’t an agent and was back in my tech selling days, I would certainly consider Redfin as an option for myself in buying or selling – but I would do that with the knowledge that it would be a calculated risk. I’d have to take on a lot more and if I didn’t know enough to know how to read a title report, order the right inspections, or how to read a Form 17 properly, then I get what I paid for. Although I realize a lot of people are a bit more litigious than I am and somewhere along the way one or more of these folks is going to sue Redfin when they feel screwed, even if they did it to themselves.
Reba,
Glenn gave them my name also, and I gave them Marlow
Sounds like they got tossed around a bit before landing.
The 60 minutes story continues to be interesting…
I emailed Deborah after the airing to let her know I’d happily give her a place to voice her opinion of the 60 minutes segment, but she never got back to me. It’s too bad… I’d be interested in hearing her reaction as well.
Yes, Redfin isn’t all that special. Neither are limited service brokers or part time hacks. The problem as far as I see it is that they put a stink on the profession that’s hard to get away from. There’s no doubt in my mind that buyers and sellers represented by *good* agents make more, lose less, are less likely to wind up in court and enjoy a much lower level of stress in the process. The problem is that one is twice as likely to find a hack in the traditional RE agent pool as a “good” one and when the Redfins/discounters can offer the same crappy service for less why wouldn’t someone make that choice? I’m also convinced that higher standards for licensing will raise the bar enough to get the hacks out and improve the overall quality of the agent pool to the point where Redfin/discounters can’t compete. We’ll never convince the brokers that hiring every rookie licensee that can fog a mirror is bad for the industry in general. Their business model has nothing to do with real estate, it’s about renting out desk space. I think the impetus needs to come from agents but my past life experience as an elected official in an engineers union tells me that organizing agents, much like engineers, is the functional equivalent of herding cats.
I spoke to Deborah Arends right after the segment and also offered her a bully pulpit to write from her perspective on her television experience. Though she was very pleasant, it was obvious she was also very busy and could not see the value of continuing the 60M discussion, especially in our obscure limited-audience blogs. She got what she wanted out of the experience, but really had to get back to selling real estate, thank you very much.
Some may not like her traditional hands-on, downhome approach to real estate sales or think her postcard campaigns and PT Cruiser are corny, however her success in the business is impressive.