Redfin vs. Establishment

Redfin creates Red Faces

With Redfin I think they create red faces in the market, mostly from competitors, not their very own clients. With all the debating taking place (see last few comments) about variations of service levels and discussion about saving $20,000 in commissions but losing $100,000 in price for an agent’s (implying Redfin or similar models) lack of negotiation skill —an argument I disagree with—maybe the only way for consumers to feel like they are being well served is to set their own benchmarks for the people they entrust to help sell and buy homes. Realtors have exceptional value, but as an industry have allowed foolish internal cultural policy to dim the light. Instead of setting benchmarks for delivery of value that consumers get, industry insiders have to spend copious amounts of time trying to tell each other why a model will fail. If you want meaningful debate, invite consumers on a panel telling why one model worked for them vs. another. APB to Brad Inman…. try that.

No industry benchmarks

The real issue, in my opinion, is that consumers are given no tangible and bonafide benchmarks for placing value received for commission they pay. Why should consumers pay an identical commission like the “negotiable

A Two Week Moratorium for Redfin Critics

[photopress:wedding_1.png,full,alignright] You are cordially invited to a two week Moratorium on “Sticking it to the Man”. I know Greg and others have been having a lot of fun poking at Redfin, but I would like to announce that Glenn Kelman of Redfin is getting married this weekend.

Glenn and I discussed not discussing anything we discussed at our little tete-a-tete. But I would be remiss if I did not publicly congratulate him on his upcoming nuptials. Let’s give him the gift of being able to focus on his Once in a Lifetime Event, by applying the old adage, “If you don’t have something NICE to say, don’t say anything at all”.

I remember the first time I heard about Redfin. I was at a listing appointment and a young couple thinking about selling their condo in Issaquah said, “Did you see this really cool site?” They pulled up Redfin on their computer and showed me how they could “fly around” looking at property. They LOVED it. You can hardly run into a buyer, especially younger ones, here in the Seattle area who have not heard about Redfin. That is a fabulous accomplishment and it is time to give credit where credit is due.

So if you have something really NICE to say about Redfin, say it here! If you don’t have something nice to say, then let’s keep it zipped for a couple of weeks, and cut the guy some slack, so he can enjoy his pre and post wedding time.

Congratulations Glenn!

John Cook Interviews Redfin CEO: Redfin is "crazy-good"

Dustin pointed out that John Cook over at the Seattle PI just published an interesting interview of Redfin’s CEO, Glenn Kelman (Direct link to the mp3).

Before I jump in, I should point out that I run, a site that is faintly a Redfin competitor. That said, that both Redfin and ShackPrices are much more worried about our customers and competitors with lots of money than we are about each other. I’ll try my best to stay unbiased.

Up to this point, Dustin has been under the impression that Redfin is very insular (He’s even gone so far as to say “arrogant”). I get the impression that Redfin has some interesting technologies, but they are still looking for their path; Glenn is doing a big marketing push on a site that has only had cosmetic changes (to real estate buyers) in the last year. Throughout the interview he raves about his site. I think he says exciting ten times and “crazy-happy” or “crazy-love” at least three times. If you check, their news bar clearly shows that they’re on a marketing push (it also shows they still don’t have an interface person who can tell them to use that valuable space more effectively).

Glenn then talks about how addictive (crazy-addictive?) he finds the Redfin site. Personally, I get much more excited by the technologies behind PropSmart and Trulia. Those sites seem to have added to cool aerial photos with some real focus on the user interface. Redfin gives you great information about individual houses and even shows you the lot line, but it doesn’t give you any medium- to big-picture information. Neighborhood and city pricing information is worth much more than a single house’s historical sales (and this is coming from the dude who has only historical sales on his site).

I think it is interesting how an interview can really bring out the best and worst in somebody by just letting them talk. More articulately than anyone else I’ve heard from Redfin, Glenn describes the company’s lack of focus. For instance, he talks about how every state is different and national websites can’t accommodate that. Next, he talks about how he’s going to expand down the West Coast and all over the country. He talks about how cool the site is and how technology is changing, but gives digital photos of houses as an example of this trend (that was cool 5 years ago!). Even in vegan-city Seattle, I want to know where’s the meat to go with this fluff? When asked what’s driving traffic to Redfin, Glenn says “because it’s an awesome site.” I think I would have gone with “aerial imagery, property outlines and past sales data.” And if they don’t add to that list, they risk becoming just-another-mapping-site.

A while back, Anna wrote this article that showed how Redfin wants it both ways with real estate agents… and it is interesting that while Glenn is new to the staff (he started in September), he inarticulately describes this same conundrum that Redfin faces.

He says,

we’re not trying to serve the real estate agents… sell people out to real estate agents… what we’re trying to do instead is serve the consumer directly…

But when pressed by John about how Redfin makes money, he says

How do we make money now? People sign up for a real estate agent… The real estate agent and Redfin share the fruits of that.

Which essentially means “by selling customer names to agents.” I’ll give him credit – I hate the housevalues model and find it to be really sleazy and maybe there really is something to be said for waiting until someone requests an agent. However, they are not, as he says, “trying to do something totally different.” Redfin is just leaving more money on the table and, possibly generating higher-quality leads. I’m going to read into this, though, and say that they don’t plan on working with agents for long – note his question to himself “How do we make money now?

Dustin says “it is not hard to read between the lines that he’d really like to squeeze those agents out of the business if only it wasn’t for those “great” relationships he’s built up with a few of them.” I agree. Late in the interview he emphasizes how he wants to balance the business model:

… balancing our business model. We’ve got real estate agents that are partners, that we still value enormously, but we want to make sure we keep the focus on the home buyer and seller who is the customer.”

Word to agents: now that we have funding, you are not a priority.

This is my favorite part:

If you walked into Redfin, all you would see are engineers and a customer support person.