Glenn Kelman, Redin CEO, likened what Redfin is doing in real estate brokerage to what Amazon did in book retailing in a USA Today article, published earlier today. The Seattle-based company has attracted some $20 million in venture capital and projects itself to be profitable in all of the markets it serves.
Founded six years ago, Redfin rattled traditional brokers' cages when it hired Glenn Kelman as CEO. Glenn adopted a "maverick" posture, debating Move.com's Allen Dalton and appearing on TV program 60 Minutes. I met the man last summer, in the speakers' lounge at the Inman Connect San Francisco conference; he was the featured speaker at Bloggers Connect. My first thought was that Glenn was quite likable. I couldn't understand why he was "crying victim" to traditional real estate brokers. The fact that Redfin agents are REALTORs led me to query why he didn't temper his victimization and just sell real estate.
Glenn acknowledges that he "broke a few eggs" in the USA Today article:
All has not been rosy, though. Early on, Redfin alienated many in real estate by attacking business as usual in the field.
During a 60 Minutes TV interview last year, Kelman called real estate "the most-screwed-up industry in America," which led to harsh criticism from brokers in blogs and at real estate conferences.
"We saw ourselves as a crusader for consumers, but we poked fingers in the eyes of the traditional real estate industry," Kelman admits. Now, Kelman says, he's more diplomatic, learning "to be an advocate for consumers and still work closely with other brokers."
Last fall, we saw a much different Glenn Kelman:
1-Long criticized by Greg Swann on BloodhoundBlog, Glenn wondered if Greg would collaborate on some ideas with him. I commented about the 180 degree turnaround at World Wide Wealth Advisors:
The answer? Both Glenn and Greg share a common philosophy that real estate brokerage, as is practiced today, is broken. While their respective approaches to the problem differ, they do agree on that one thing.
2- Glenn willingly opened his kimono on Guy Kawasaki's blog and outlined the challenges Redfin was facing on the road to profitability. Score another point for Glenn for acknowledging the problem Redfin was having.
3-Redfin added a service that had them acting more like a full-service brokerage then an alternative compensation model, was criticized, then fired Carol Hian, a San Diego-based Redfin Blogger, for violating its culture of respect. A responsible move, indeed.
4- Recently, Glenn Kelman delivered the keynote address at the BloodhoundBlog Unchained Social Media Marketing Conference, sponsored by Zillow.com. He gave a two-hour presentation about the Redfin business model for all agents and brokers to see. It was nothing short of excellent! What I found to be most interesting was that broker/owners lined up to speak with him after his keynote; clearly, the broker/owners were interested in maintaining profitability.
Now, Glenn's a Bloodhound and I'm laughing my ass off in delight. I've come to like, respect, admire and never underestimate Glenn Kelman; neither should you.
I met a young real estate agent today to discuss working with his buyer clients to obtain real estate financing. A sharp young man less than six years out of the Naval Academy, he admitted that the Redfin website offered him better search tools than the Sandicor MLS. He described how he used it for his investor clients. This astounding revelation confirmed what the USA Today article revealed- young folks like to use Redfin. That is bad news for the 50-something real estate brokerage community.
I have no doubt that their existence stokes the ire of traditional real estate agents. Lenders like me just don't understand this. We compete on price every day. While solid advice and superior execution are qualities that distinguish lenders, price, nonetheless, is an issue for many consumers.
Disarm a customer with a value proposition that diffuses the Redfin claim of superior negotiating skills. This shouldn't affect you. Rather than banding together "as an industry" to criticize the Redfin model, compete against them by carefully demonstrating that your negotiation skills are far superior to theirs (stop lumping yourself in with everyone else) and develop on-line customer-facing technology that rivals Redfin's. The consumer of tomorrow wants the best real estate agent for her! If you can demonstrate that you are that agent, rather than Redfin, you'll limit their market share to "geeks with nice homes" (Glenn Kelman's quote).
So...what's it all mean? It looks like Redfin is here to stay. Their superior website search is something that the fragmented real estate brokerage community has not been able to emulate. Their task-oriented employees are projecting superiority of performance to the clients. Most importantly, they're attracting the home buyers of the future.
Glenn ain't going away.
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