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RainTV - Glenn Kelman - CEO of Redfin

Interviewed by Sara Washburn

Posted by ActiveRain Real Estate Network on 08/13/2007 11:48 AM

Comments (27)

raintv, glenn kelman, redfin, inman connect

27 Comments on RainTV - Glenn Kelman - CEO of Redfin

AUG

2007

Glenn is, without a doubt, charming.

It's nice to see him talk like a CEO of a real estate brokerage instead of the "poor me,they're out to get us" of the past. Glenn's learning...he definitely is learning.

I liked how he defined his nice and markets. He'll be criticized as "skimming the top" but who cares? I'd call that excellent positioning to a targeted niche. Redfin's challenge will be survival. The marhgins are so thin that they will have a difficult time earning a profit.

Can you imagine if this guy ran Prudential California?

Hey Brian. I'm not from California, so I don't get your comment. Can you explain for the rest of us? Is it a positive or a negative reference? Thanks so much - Sherry

He's comfortable in front of the camera and though I am a traditional real estate professional I believe that we all have to work together as a whole in the industry. We do what we do and they do what they do. I don't have to like what they do or how they do it. I have to love what I do because I do it better.

It's positive. PruCal is the the largest real estate brokerage in California and is owned by HomeServices, the Warrne Buffett-controlled company. I think Glenn understands his market niche well. "Geeks with nice houses", as he described it to Kris Berg in this Bloodhound podcast, are a price-driven consumer. They'll sacrifice personal attention, pricing expertise, and performance to gain that low price.

When I started in the mortgage business, we were disciples of FNMA Desktop originator. Our unique selling proposition was speed to good borrowers. In essence, I was saying that we'll change the world through new technologies and pass that efficiency to the consumer- just like Redfin is saying (except they compete on price).

Ultimately, I think Redfin will fail because they "geeks with nice houses" market is tiny. If he brought his efficiency through technology approach to a real fiduciary, like PruCal, he'd knock the ball out of the park. I've been Glenn's biggest critic until I realized he was saying much of what I said 13 years ago. He's using technology to compete on price; I used it to compete on service.

We're all in it together; Redfin's interviews are getting better although I personally didn't like the 60 minutes one.

Brian Brady - great feedback.

I still believe the traditional full service Realtor(R) will prevail. I understand their model but I prefer a buyer to see a home in person and meet the Realtor(R)..if not then there is no relationship... This market will dictate who will survive. There will be a few who latch on to their idea..Just as Sally said we don't have to like it but we love what we do and I am wondering if the people who work there feel the same. We do it better.

We do it better.

Without a doubt, Neal

Great job with the interview Sara. Glenn is certainly at ease with himself. My question is why do folks always think it has to be one model or the other that survives? Why can't it be both? It's not a war. The real estate market is huge and companies that charge less have been around for decades. RedFin is just more tech oriented BUT so are traditional brokerages these days. Fortunately for me there are NO wealthy geeks in Poinciana Fl.:)

I can't say that I'm all that familiar with Redfin, but I do think that Bryant is right. Traditional real estate companies aren't going away and discount real estate companies are here to stay.

Bob Mitchell

ValueList Real Estate Services, Inc.

I've tried it 4 or 5 times now but can't seem to get the video to work. I would like to see it...

I think there is plenty of room in the market for all types of business plans. I do wonder what their long term survivability is though, if they don't plan on turning a profit for at least another year and a half. They are going to burn a LOT of cash to get there. And their market niche, while profitable, is small... and then their margins aren't that high, either.

I think a lot may depend on other discount brokerages. If they start to fall by the wayside while business is slow, I think it might help Redfin. If discounters stay strong in the weak market, it could be bad for Redfin. Of course, it their business model doesn't produce results, or worse creates bad results, they could crash regardless of the remainder of the market.

If one of their "rich nerds" finds out that the neighbor sold his home and got a higher net, they might cool to the model.

I just watched the 60 Minutes again....this interview seems to show a bit of improvement on his part.

I do not target nerds I target all sorts of consumers. I do not profile my clients before I work with them. Everyone is created equal.

I do not profile my clients before I work with them. Everyone is created equal.

That's not really true, is it? i discriminate all of the time. I won't target borrowers with less than a 620 credit score. I won't target borrowers with dubious income documentation. I won't target borrowers who want to borrow less than $200,000.

That doesn't mean I won't help those borrowers if they come to me. I discriminate and so should you. Businesses of all kinds discriminate. McDonald's discriminates against healthy people. Insuarance companies discriminate against smokers. Hell, Active Rain discriminates against Luddites.

There is nothing wrong with discrimination- its called niche marketing. Glenn's problem, in my opinion, is that his niche is too small to be profitable.

Some of the issues involved in homebuying are not simply finding the house on your own. The model will prove difficult over time because the buyers really need the experience of agents. It is an Art and a Science and while technology will make it easier - it also makes things more complicated.

Glen's build it and they will come philosophy is the same old thoughts right before the dotcom bust. The internet is a tool but it can not sell houses.

They just got another $12m in VC funding, I guess they burned the first $10m. I seriously question their business model and I'm one of those discounters. We focus on the listing and marketing side as opposed to the buyer side. I can't see how reducing your take by 66% and basically running a traditional office model (yes, I know they don't have local offices, but they do have local agents that need paid) will work. Today's offices are finding it harder and harder to get by and are diversifying into auxillary servides such as mortgage, title etc to pay the bills.

Time will tell, but I think they have issues. Buyers will always need representation and someone to show them around and provide local knowledge. I say cut the listing commission but maintain a fair selling side, be it a percentage or flat fee large enough to survive on.

Dale Rainey
Broker
1.877.854-7848 x114
dale.rainey@ulistit.com
http://www.ulistit.com/

AUG

2007

Brian,

Ok...maybe it should have been worded differently...you are right ...his niche is way too small. But as far as far as discrimination goes..there is a fine line as to what it entails...yes...we do it but I certainly do not think of it that way. I do not think about it that way when I speak to clients as to whether or not I am discriminating..but I am sure when they decide who they want to use they might pick based on discrimination.

I don't understand why even a "rich nerd" as Glen puts it, would make the largest investment/committment of their lifetime without ever stepping foot in the home - or as an alternative, agree to pay $250 to view more than one home.

I also wonder how sellers feel about giving a large split of the commission to the buyer. In the 60 Minutes interview, they cited an example where the buyer walked away with $20,000.00 (2%) at closing. How did that make the seller feel? In my mind, if anyone gets a discount on the commission, it should be the one who is paying it - the seller.

Redfin's sellers have to do their own open houses and show their home to prospective buyers themselves. In my opinion, this is not in the seller's best interest and is not adequate representation.

This "virtual" approach works OK for mass produced items like books or DVDs, but homes are all different, even new ones. Would you hire a lawyer, a doctor, or other professional who wants to "phone it in"?

The smells, sights, and sounds of a particular area simply cannot be accurately depicted over the internet. Real estate is all about "Location, Location, Location" and there are many things about a home that you simply can't tell from a picture or a description. In my area, buyers want to know what the area/home smells like, how the water tastes, what the mosquitos are like, how much highway noise is present, and so on. Does charging the buyer for multiple private showings discourage them from viewing the property before they make a committment? Are they actually purchasing homes without first viewing them in person?

While I don't begrudge Glen's right to try a new business model, I am concerned with the track record of the company and the attitude they displayed in the 60 Minutes interview towards traditional REALTORS®. I understand that his company was fined $50,000.00 for denegrating the listings of others by the Northwest MLS (Wall Street Journal article 5/15/07 by James R. Hagerty).

Redfin has at least one misleading statement on their website. They claim that traditional REALTORS® do not give their clients post-close guarantees (scroll down to the bottom of the chart). That is simply not true! Many of us do give our clients guarantees.

If Redfin wants to relinquish their ability to access MLS data - OK, but don't use MLS data and then refuse to adhere to MLS standards and rules. They can't have their cake and eat it too.

When I became a REALTOR®, I agreed to follow the code of ethics. Without our ethics, we are nothing! I don't view Redfin's MLS violations as mere "mistakes" - I take them seriously. In my opinion, the actions of Redfin promote a negative attitude towards all professional REALTORS®. It seems they want the advantages, but not the responsibilities.

Brian, though I agree that the "rich/nerd niche" in a geographical region it may be enough to sustain Redfin if they can compete effectively in many markets, as Glenn said. If they are competing on price then the only way to become profitable is through volume. It will be interesting to see they can move enough product across the US to make the Redfin real estate model work.

AUG

2007

Hi Sara!

Great, great job! I guess we don't have to "worry" about Redfin in Miami!

NOV

2007

I am soooooo lost on this what

HUH??

JUL

2008

Re Neal Bloom's comment "I still prefer a buyer to see a home in person" - but of course! There is a misunderstanding here (which I also had at first.) People who use Redfin do get an agent to open homes and they do look at them. Anything else would be crazy. The only part that is online and self-serve is the research and some of the initial paperwork. In other wrods, they actually recognize that some of us buyers do our own homework anyway, so why should we pay an agent to research and suggest listings when we can do that on our own?

SEP

2008

Thanks for the post,

They've opend up shop here in Chicagoland & aren't really doing any business. I think ultmately it will fail....at least here anyway.

OCT

2008

It may be a moot point now. Deathwatch is on for Redfin, as they just laid off 20% of their employees.

NOV

This is November 2009 and it's the first time that I have seen this video. I hope they are doing well. I actually think Mr. Kelman did a great job in his interview. Thay are focusing on a certain niche market and by so doing they are pricing out a vast majority of potential client. I think they should consider repackaging their brand and franchise it to small independent brokers across the USA. This will definitely be a good revenue source for them

DEC

This interview is MUCH better!

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