Last Friday, Redfin announced it was taking a two-week break from accepting new listings. According to Glenn's post on the company blog, this was done in part because many Redfin agents had been working long hours for weeks on end without any time off. In other words, they were working as real estate professionals.

My first reaction was that it seemed odd to cite one of the basics of the real estate profession as a reason not to accept new listings. But as I thought about it a little more, things seemed to become more clear.

First, if a company is experiencing higher-than-normal demand, it would seem logical to staff to meet that demand. If the company doesn't increase staff, that normally would indicate the demand is expected to be only a short-term phenomenon. Or that the demand doesn't exist.

Second, no one takes two weeks off and still expects prospective clients to be waiting when they return. Most people don't have sufficient patience to wait any more than an hour for a return phone call (and they probably shouldn't have to wait that long, to be honest). Expecting them to wait two weeks at the height of the summer to list their homes is more than a little optimistic.

Third, why would a company continue to plan expansion when they can't manage the business they already have?

In the comments below Redfin's posts, Glenn said it wasn't "good news" they had to do this. I only can imagine.

Redfin's ideas clearly have some resonance with the general public, as evidenced by those defending Redfin on my blog and theirs - even if the defense has little to do with the announcement. One reader even went so far as to imply Redfin is doing this so as not to add to the inventory in the areas they serve. Um, sure.

At some point, though, critical questions should be asked ... if not by the VC folks throwing cash Redfin's way then at least by the public. 60 Minutes' fawning advertisement did nothing to answer what is so unique about flat-rate listings and rebates to buyers (the short answer: nothing. One even posted a comment to Redfin's original post.)

Imagine going to the supermarket and seeing a sign telling you no new customers were allowed for two weeks in the interest of providing excellent service to those inside the store. Would you wait outside for two weeks to buy your groceries? Or would you go to one of the dozens of other stores capable of providing excellent customer service at higher capacity?

Seems like a simple choice to me.

 

46 Comments on Redfin's Summer Vacation

JUN
18
2007
373,824 Points 63 Featured Posts Localism Sponsor Outside Blog

What a great Post! Thank you. I bookmarked it becasue I want to really digest your comments and maybe do a follow up. Excellent information.

Sincerely,
William



 

12:50pm • #1

GIVE THESE GUYS A BREAK!

Its a new business with a new model:

Yes they have big challenges:

1- NAR acting in all States to ban discounting, cash back (NAR is a bigger and more corrupting lobby than the defense industry)

2- Agents boycotting Redfin listings

3- A lot of demand and not 1.4% of the US population being trained in the 6% frat/sorority

A/R has not given them a break! Commisions are AT LEAST 1.5X 2004 levels and so many posters here have an I'm entitled atitude....the new NAR slogan isn't "hme prices never go down" its "commisions never go down, just the average experience of your agent"

Redfin may not succeeed, but if anything I hope they give the greedy in this industry a good kick in the arse for better service.

cheers

1:04pm • #2
2 Featured Posts

Jonathan,

How much has Redfin received in Venture Capital?  It just seems bizarre that companies out to change the real estate world have to rely on Millions in venture capital. 

1:05pm • #3
26 Featured Posts

But Jenny, it's not a new model. Many companies offer rebates to buyers (and actually have their agents show the property in the process). Many companies offer flat-rate listings. That's the point. It's not new. It's well-established territory albeit with significantly better PR. Take a look at their service offering and tell me what hasn't been done before.

And why would Redfin deserve a break no one else in this industry receives? You survive or fail on your merits, plain and simple.

 

1:09pm • #4

The break is from all the moans and groans on this board...

The collusion of NAR with its lobby to lock discounters from markets/ MLS etc... and the boycotting of discount listings by agents who tell their clients they work for them- haha

 

 

1:15pm • #5
26 Featured Posts

Paul and Michelle - not sure. There's a blog out there that tracks this sort of thing, but I don't remember ever seeing the numbers released.

Jenny - somehow, I can't imagine this post is the cause of all the moans and groans on AR. :-) Also, I don't recall ever suggestion anyone boycott anyone's listing - doing so would be blatantly anti-trust, for one, and I don't believe in it, for two. 

1:38pm • #6

What a GREAT POST!!  I am going to share your entry with quite a few people!  Thank you!

 

Jeff

http://www.agenthill.com

 

1:45pm • #7
400,495 Points 179 Featured Posts Localism Sponsor Outside Blog

Jonathan - thank you. As always, I appreciate your insights and analysis.

Jenny - I don't observe that kind of collective attitude here on AR. I think most members embrace the challenge of alternative models. We welcome competition. There's is plenty of room and opportunity in the market. And since when is working hard and diligently to represent our client's best interests considered 'greed?'

1:46pm • #8
2 Featured Posts

Jonathan,

That's my whole point concerning the venture capital.  I could certainly (and many other Independent Brokerages) offer the same services at the lower rate if we were backed by millions of dollars in venture capital.  

In fact, it sounds pretty cool to hire some agents to sit in an office all day long making appointments, blogging about changing the world, filling in the blanks on a contract and posting pictures of homes on a website.  It seems a lot easier. 

It's certainly not a new business model... it's just a new business backed by a lot of money (which has juice for all of the PR).

Does anybody know the blog that tracks the venture capital money? 

(I've found on a couple of news articles that the venture capital backing Redfin is over $8,000,000 so far.)

 

2:05pm • #9
606,945 Points 244 Featured Posts Localism Sponsor Outside Blog
I've actually been in the process of reaching my goal of 40 listings and then I too will not be taking anymore. Of course I'm a one my show and it's my money so I can do that. Very interesting post.
2:11pm • #10
3 Featured Posts

Great post, I wish I could take a 2 week vacation that would not cost be clients as well as referral fees to have someone else finish up my work. 

Imagine the poor agents whinning about needing time off because they are just working to hard in their little cubical answering phone calls and actually talking to clients.  What a joke.

Must be really hard on them to punch that clock at the end of the day. LOL.

2:23pm • #11
Outside Blog

Jonathan,

 Thanks for your post and the follow ups.  It brought a smile to my Monday!

2:27pm • #12
211,059 Points 34 Featured Posts Outside Blog
I would think that a model like their's would be able to handle everyone being able to take vacations much better than most individual agents working by themselves.  There must be something much bigger beneath the surface here.
2:28pm • #13
185,911 Points 28 Featured Posts Outside Blog

Interesting that an article about a real estate company stirred up such anger and venom so quickly.  I don't have to slam the folks who charge less than I do, that's their business plan and it has nothing to do with me and the service that I provide. So why do the folks who charge less feel compelled to slam the more expensive agents constantly?  Mercedes doesn't slam Chevrolet and Chevrolet doesn't slam Mercedes, after all.

Thanks for the information, Jonathan.  I agree with Tim-something strange is afoot at the Circle K-and I would love to know what the VC folks are saying as they read the news!

2:54pm • #14
111,681 Points 6 Featured Posts Outside Blog
That's weird. You'd think they could give some agents time off while the others worked. I don't get it. Ah well, must be a good reason for it. Perhaps they are deciding if they want to work with sellers at all anymore. Maybe they strictly want to work with buyers.
2:55pm • #15

Personally I'd like to thank Jenny for her opposing views.  Its nice to see a different perspective.

Creative thinking is what advances humanity (think of the Wrigth brothers)...so we should always be careful how we approach different perspectives that don't fit within our comfort zone (like Redfin for example).  We don't want to get stuck in tradition to the point we don't grow and improve...

3:03pm • #16
I have consulted with so many companies, nobody ever stops its cycle for even a day.. Staffs rotate to carry on the business as usual by assigning different shifts, etc... It seems that the management has to get a grip of its management system.
3:15pm • #17
434,714 Points 70 Featured Posts Outside Blog

JD,

Now i know why My REDFIN experiment is a FLOP! The concept is all wrong!

 

They`re sealing their own faith per se!

NEXT!

3:16pm • #18
263,656 Points 59 Featured Posts Outside Blog
Good post & some valid points have been made from both sides.  I'm guessing this is going to explode with comments sooner rather than later. 
3:23pm • #19
369,686 Points 62 Featured Posts Outside Blog
Who else needs a break and won't be taking listings for the next two weeks.  Heck, I'm tired of bills, too.  I won't be paying them for the next two weeks, so I can reflect upon my dept.
3:35pm • #20
26 Featured Posts

Promise I'm not ignoring everyone else ... your comments are very much welcomed. But I have to go back to Bryant first ...

Putting a cap at 40 is cool, and probably makes sense. But do you have any fear of the loss of momentum ... the vacation syndrome ... where you take a week off and it takes three weeks to get going. In other words, if your listings sell and you're suddenly well below 40, how long would you anticipate it will take to amp up and get back to the 40?

I've been hovering around the 20 mark for most of this year and it's been challenging, especially for a one-man show. But I'm not sure I'd reach a point where I'd start saying no, not unless I literally was working 20-hour days.

3:37pm • #21
179,728 Points 2 Featured Posts Localism Sponsor Outside Blog
It su re w ill be interesting rto see where th is thing goes. To Refin or no to Redfin?
4:22pm • #22
4 Featured Posts
Isn't that interesting?!  Turning away business for two weeks???  I can't imagine.  I, don't know about this whole "Boycott" people keep mentioning.  It is something to consider though.  When you hire someone to work for you in whatever capacity, their reputation comes into play.  The ease of a transaction is very important to my clients.  The knowledge of an agent is very important to my client.  All of these things should be considered by anyone buying or selling realestate, or anything else, for that matter.
4:22pm • #23
26 Featured Posts

I have to share this quote from Glenn Kelman (with thanks to the Realtor Genius for a great post ...)

“A long time ago we had to decide if we were going to match BuySide’s price and we decided not to. We decided to compete on quality of customer service, not on price.”

When such a statement is made by any agent in the traditional model, we're usually filleted in short order for arguing in favor of what's perceived as "nebulous" service over sheer price. And yet here's a quote from the head of a group supposedly leading the real estate revolution, sounding very much like the rest of us.

 

4:28pm • #24
606,945 Points 244 Featured Posts Localism Sponsor Outside Blog
Jonathan, Margaret Rome taught me a great technique of putting Sellers on a waiting list. She does that and is very successful with it. I've never done it and may not reach 40 listings. But if I do I will try it.
4:37pm • #25
26 Featured Posts
Interesting idea, BB ... sounds post-worthy, actually. :-)
4:41pm • #26
1 Featured Post

Likely they are not taking any additional listings becouse the listings they have will not sell, they are not getting new customers from them, and the people who own those homes are bitching at Redfin becouse the Reality is that it takes a lot more than a Wal-mart mentality and a Wal-mart check out clerk to get a home sold these days. 

They are not doing this becouse everything is so great that they just cannot handle it all, they are doing this becouse things are so bad they cannot handle it all.

Just my guess as that seems to be what is happening with the discounters in my corner of New Jersey.  They are cutting back, trying to conserve resources and wait out the market so that they can get back to a time when they can make money again.  After all the discounters don't make any money off a listing even in a good market.  They make they're money off of the buyers who are generated from having those home listings, it is why they discount, well that and becouse they have nothing of value to offer a home seller other than price.

James Boyer

Keller Williams Realty

Summit, NJ 07901

Serving the Real Estate Markets of Morristown, Morris Township, Madison, Chatham, Short Hills, Maplewood, South Orange, Parsippany, and surrounding communities

5:01pm • #27
All work and no play makes Johnny a dull boy.
5:05pm • #28
226,895 Points 29 Featured Posts Localism Sponsor Outside Blog
Thanks for this post. Don't agree that NAR is a more corrupting lobby than the defense industry.
5:09pm • #29
5 Featured Posts
Interesting. I didn't hear that they are taking a two week vacation! How nice. Wish I could to enjoy the summer weather! This seems rather strange to me.
6:19pm • #30

Great Post!  Sure hit a nerve with a few.  I'm scratching my head over how Jenny thinks we Realtors are able to boycott listings???  The whole home buying process is much more buyer driven than it ever was in the past.  If a listing is in the MLS, it shows up on Realtor.com (the most travelled web site for home buyers), and every other web site that uses IDX.  If a home is listed, it will be seen by a buyer even if a Realtor wants to boycott it.  What I see happening in our market is that most homes listed by discount brokers are way overpriced and are being boycotted by the buyers themselves, not by Realtors.  Every Realtor I know is willing to write an offer on any home that their buyers are interested in.  Turn away business because it's listed by a discount broker?  Are you kidding me?

6:33pm • #31
224,760 Points 2 Featured Posts Localism Sponsor Outside Blog
Gosh, a 2 week vacation for me right now would be awesome.  Gee, is anyone minding the store at Redfin?
6:42pm • #32
408,296 Points 74 Featured Posts Outside Blog
I have no problem with someone elses models..its when they bash ours.
6:48pm • #33
116,167 Points 3 Featured Posts Outside Blog
I agree with Neal no problems until they bash my business model. There is enough business for all types of real estate business plans. The best will always thrive
7:16pm • #34
1 Featured Post
Sounds to me like they have some glitches in the system. How can a seller feel confident (while listed) that Redfin is able to 'man the fort'. And, yes, people will not wait around for them to get their butts in gear.
7:30pm • #35
832,494 Points 213 Featured Posts Localism Sponsor Outside Blog Hit Router

Funny.  When one of my agent would take a 2 week vacation, they had to literally "start over from scratch" when they came back to work.

Something doesn't add up.  Businesses don't stop operating for two weeks. Actually, it appears that they are simply not taking new listings.  Why.  They don't show homes, they just list them. 

In the famous words of Dr. Henry Lee, "Something not right".

 

7:46pm • #36

I've lived through several real estate cycles (since 1975) and can state based on experience that all reduced commission "systems" fold as soon as the hot market they originated in dries up.  After all, if Redfin or any other "up front fees" listing broker is unable to sale a property the owner is out any prepaid fees when market conditions require that they relist with a "traditional" full-service agency.

I note that Redfin excludes the non-sale of a property from their so-called "100% Satisfaction Guarantee" with full refund of all fees paid if dissatisfied with their service.

Our business is based on cooperation - something the discounters are unable to offer.  Their listings sell when none others are available, but are not even shown by MLS agents when numerous full cooperation properties are listed.  (Yet other point that "60-minutes" forgot to mention!)

7:51pm • #37
1 Featured Post

I love Lenn's comments, and she is right on target re: Dr. Henry Lee.

As for r-fin... (say that quickly!) - I agree that there is some obfuscation going on here... They might be low on funds, might be getting ready for some other direction, or might just be too busy... BUT, if a company closes its doors because it is "too busy", very soon it will not be "too busy". Competition makes companies better, or they close their doors. Perhaps this rule is in effect right now at r-fin.

8:01pm • #38
126,028 Points 5 Featured Posts Localism Sponsor Outside Blog

Jonathan,

It's a shame that this little news item didn't find its way into the recent CBS "Sixty Minutes" segment on our industry.  Somehow I doubt that Lesley Stahl will be bringing it to the public's attention any time soon. 

10:42pm • #39
121,298 Points 6 Featured Posts Outside Blog
Wow, I must have missed that news flash. They are taking 2 weeks off of listings. That is weird. I wonder what is going on there!
11:28pm • #40
186,786 Points 12 Featured Posts Localism Sponsor Outside Blog
Interesting!  Definately will be an advantage to agents that are working in areas that they are prominant in.  Can you imagine if Century 21 or RE/MAX or any of the other large brokerages just stopped taking new listings because it's too busy????
11:35pm • #41
JUN
19
2007
344,262 Points Outside Blog
Closing for 2 weeks just all seems really odd. Really really odd. Oh well they are a different business model, so ...............................
12:17am • #42
2 Featured Posts

ROFL!  This was an awesome article Dalton!  :-P  Made me smile and thanks for the update.  After that 60 minute COMMERCIAL they had I was waiting for the fog screen to blow past and see when their cards would fall.

Am I just another bitter real estate agent whom thinks Redfin is just a low rate trash company!!!  Providing a get in get out quick buck service...  I never said that just ment to imply it ;-)

1:30am • #43
Hit Router

wow, great post (and very cute doggie!)

you are absolutely correct.  Redfin hasn't made it my way, but I compete against a large flat fee company that offers horrendous customer service.  Word has spread and it really isnt a competition at all

10:49am • #44
2 Featured Posts
Interesting information.  I previously worked for a discount brokerage until they closed up shop (sound familiar?) and now I am with a full service brokerage that I love.  I have found that there is room for discounters and certainly don't feel threatened by them.  It seems to me that the majority of people want a name they can trust and full service to go with it.  I can't provide that full service on a discounter's budget.
9:04pm • #45
JUN
20
2007
1 Featured Post
I don't believe one type of brokerage fits everyone. For those Buyers and Sellers that are focused on saving commission can use the discounters while the ones that want more hands-on from their REALTOR can use the full service brokerages. No ones twisting arms.
7:26am • #46

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Jonathan Dalton

Glendale, AZ

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RE/MAX Desert Showcase

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Phoenix Arizona Real Estate Blog, presented by Jonathan Dalton of RE/MAX Desert Showcase and Dalton's Arizona Homes. Check back often for market analysis and general thoughts on the state of real estate in Maricopa County. Free listings search with no registration!


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