I called Redfin Today And......

Kind of reminds me a bit of a local company that used a different business model in our area. During the boom the broker was the top agent/broker in the area. The very next year he was not only the lowest, his company was bankrupt. As I said in my earlier comment, an informed intelligent seller/buyer with a reasonable amount of common sense will make the right decision for their particular situation. And a lot of customers will appreciate the fact that we helped them get that $140,000 home on the way up and will hire us when they sell it later for $250,000. Keep it personal and build that loyalty. Why does that little local restaurant have a line outside the door. Because they greet you by name and treat you like a friend. Yet, the big franchise outfit down the road is now boarded up and out of business.

Change is threatening to anyone who is firmly planted in the status quo.  Technology and the internet in particular have created an evolution in almost every business and business model that had existed for decades.  For a long, long time, the residential real estate business has operated in a very consistant, predictable way.  

There have been countless internet start-ups that were actually great ideas...think Pets.com, Webvan, etoys, Lycos....but for whatever reason, crashed and burned.  However, ask the proprietor of your local bookstore, if they're still in business, about the effect that Amazon has had on their business.

I'm not suggesting that Redfin is the next Amazon, but I do know that many buying clients who I work with tell me that they can use any RE website to view properties, but they find Redfin to have the most user friendly platform.  I also find that many potential buyers, mostly under 30, list Redfin as their agent when they come to my broker open houses. 

What this is telling me is that we cannot rest on our laurels in expectation that the full service model that we have successfully utilized for a long time, will continue to be the model of choice in the future.  On the other hand, I don't want to write an obituary for it just yet either.  A reminder of how fast things can change is to look at the de-emphasis of print advertising in the past few years.  I suspect that most of you could not have fathomed that change only five years ago. 

Information is power and these days, the public has access to most of the information that was previously kept out of their view. 

The bottom line is that while there will always be a place for full-service brokers, there are going to be a growing number of clients whose highest priority is that they value what they view as saving money upfront.  Whether they are actually benfitting financially in these transactions is open to debate, but appearances can be everything. 

There is room enough for all ethical business models in the real estate arena.  Which ones will prevail and which will disappear is open for review.  Let's take another look at this puzzle in five years.

This is all pretty interesting Greg.. and the choice of their music... ROFLMAO...

imho -- I love competition, a true meritocracy.  I think successful upstarts can shake up this arena that needs dramatic change.  But then again, I started my own company because I was tired of the status quo and nibbling around the edges.  Consumers want change, they want excellence, they want transparency.  However that gets created, as long as it's a fair, level and open playing field, I'm all for it.  Personally, I think they have the most incredible listing detail website on the planet.

Amen!  And guess what?  Some sellers are not real impressed with Redfin, their services and their agents so when they get several offers...even if the buyer thinks they are getting a check back...it won't matter if they don't get the house they want after all.  Not all that glitters is gold!

Sounds like they won't be in my area at all.  I haven't had one home purchase this year over $180,000.  If they do decide to market to consumers in a devastated distressed market they'd probably get some calls from consumers wanting that rebate of their hard earned devalued dollar.

Greg,

I am a Redfin referral agent, which means that I work an area where they don't have a dedicated office and get business referred from them. I pay them a referral fee. Buyers get a small rebate. I don't work for the company. I agree that their earlier splash was arrogant and ill advised; Glen Kelman, whom I have met twice, admits this but he can't un-ring that bell. 

They have a good website, and the consumers in our area love them. I've been impressed with them thus far, and I want to address, as an independent broker owner, your observations. 

1. The $175,000 price thing. There is very little in my market place for that price, so I suspect that is why they have chosen the markets they currently work. I have worked with Redfin co op buyers for below that price, and if/when it closes, I will not be charged a referral fee. Seems fair. 
2. I remember seeing something on their site dissuading people from buying short sales because of the red tape involved. I remember you blogging that you didn't want to work with short sale buyers either. 

   
   

   That was actually the first blog I ever read of yours, and if I judged you by that posting, I wouldn't have the high opinion of you that I have (full disclosure: I subscribe to Greg's blog, I recently friended him on Facebook, and I think he is a very likable, funny guy). I think the rationale is they can't offer their clients the Redfin Experience if the deal involves the clear prospect of a multiple month red tape nightmare with a a possible clueless gnu on the listing side working their first short sale. What's good for the goose is good for the gander, and I don't think you can knock them for having the same opinion of short sales as you have. 
3. The 800 number might close at 6pm but no agent closes their phone at that time, and I sure don't. I know the local manager, Michael Daly, and that guy is as much of a workaholic as I am. The transaction coordinator thing, I think, is a relic from their genesis. If a transaction coordinator from Redfin called and told me they were taking over I'd hang up. My clients, my deal, period. 
4. Buyers can switch agents if they choose. I can also "throw back" a buyer if I don't feel they are a match to get them a better match. This can be because of personality, change in geography, or any other valid reason. It is the same with any other brokerage. I don't see an inconsistency. 
5. I never heard of that and have never been held to that standard. I think they are managing expectations of consumers. 6 showings in 2 hours is reasonable, but I certainly wouldn't punch my clock if we had 6 showings in 90 minutes. Moreover, I've never been asked to. 

I've decried discount operations in my area who have employed crummy agents seeking a salary, because those agents often suck. Referral agents like myself aren't on salary, and we are held to pretty high standards, including having all past clients (redfin or not) surveyed with the results posted online. That takes balls. 

There is more to say but I'll post something on my blog when I have more time. 

i just worked with a very competent Redfin agent.    If they bring me buyers for my listings, I don't really care how much they rebate their clients. 

Having been a traditional real estate agent, broker, VP Operations and broker/owner for 10 years before joining Redfin earlier in 2009, I understand why so many of you are skeptical of new, non-traditional business models that look like they could impact the income structure of the business.

You will notice that most of the negative, fear-based comments, including those of the generator of this blog are from agents in a market where Redfin does not do business or they have not had the opportunity to work with a Redfin agent. Once you do, we're confident you will be impressed with our technology, our fanatical customer service and most of all, the regularity in which we bring buyers to your listings.

Here in New York, one of the most entrenched traditional markets in the country, agents have been inquisitive about our business model, yet have been, for the most part, very welcoming. I suspect that, once we have an opportunity to expand to your market, you will appreciate working with us and realize that not every style or business model is right for every consumer. Your business may increase because there will be a segment of the market that will use our services that your listings may not have reached otherwise.

And yes, as we grow, we have and continue to make mistakes every day...haven't you? We are constantly  exploring new ways to reach more consumers, please more customers and strengthen our partnerships with other Realtors.  I have seen many of the "mistakes" that have been levied above committed by traditional agents who have no accountability because the are independent contractors. Our agents are employees who are held to performance standards as well as to the standards of our customers, who regularly complete surveys on their experience with our agents and team members. ALL of these survey results are posted on our site, not just the ones we want you to see. Check it out if you have not already at www.redfin.com

Again, I understand the source of many of these comments, and look forward to working with many of you in the not to distant future.

Blog comment #76 says, "I have seen many of the "mistakes" that have been levied above committed by traditional agents who have no accountability because the are independent contractors."

NOT TRUE. All agent actions are fully accountable by the BROKER of record where the license hangs and in most cases the local board, state license committee, and the ever so popular NAR.

I have nothing against different business models. My complaint is with my association that made settlement with the DOJ over sharing our listing information. The DOJ is wrong and the NAR is wrong.

@Greg

Here are more answers with no bullshitting! :)

Re: Circling the wagons. Having a featured post about Redfin on the front page of Active Rain will attract people from both sides of the debate. I did link to this post on Twitter but I'd hardly call that circling the wagons!

Re: #1. Why do we need more money? We need more money because, while profitable, we didn't have any cushion/margin of error. So we raised money to give us a cushion and to make a few big bets. Some of those bets include expansion, some are technology related and some involve hiring a lot more agents (we've doubled the number of agents in the last three months.)

Re: #2. What are the stats for agents before they join Redfin. For this we haven't run the numbers. If we did, I think they'd be low. But keep in mind Redfin doesn't attract top producers. If you're an agent who can kill it on every front: marketing, sales, customer service, etc. there's no reason for you to come join Redfin. If you're an agent who isn't a fan of selling themselves or doing their own marketing, but loves helping clients, then Redfin is a great fit. For those agents, we'll turn them into top producers because they can focus 100% of their time on helping customers. They spend 0% of their time on marketing because our website sends them a steady stream of active buyers. 

Re: #3. Why did we attack other agents. We came out very pro-consumer. There were practices that we saw in the industry that we didn't like and called them out. In hindsight we've learned that the best way to deal with those issues is to work with agents one-on-one, or talk to their broker, or to just set an example and build the real estate company we think consumers want. We've very sorry about our actions in our early years but that was three or four years ago. I think if you met any of us in person, or you read what we have written recently, you'll find us to be much more humble. 

Re: #4. How are we going to come to Houston? The cities/neighborhoods/suburbs in Texas that have higher dollar values we'll come with our own agents. For the areas where prices are lower we'll partner with agents and send them referrals.

Re: #5. Answering your questions. I'm happy to answer all your questions, not trying to evade any! Also, I'm not answering these questions to promote myself (I'm not an agent) or Redfin (I suspect very few customers find out about Redfin via Active Rain). I answer these questions to take the mystery out of what we're doing. I think if everyone knew more about Redfin they'd find it less scary.

Re: Backstabbing. Very sorry for how we initially approached the industry. Please accept my apology for what we did in the early years. If we started again today we'd do things differently. Keep in mind we were also attacking ourselves. We now have hundreds of agents working for Redfin or are affiliated with Redfin (like J Philip Faranda). 

Re: Competition. We love competition too. Competition is good for consumers. It gives them choices and gets us all to improve. 

Re: whatever you believe in you better be right about it. We have no intentions of straying from the honest path of being true, fair and open. I just sat down this morning for an hour with a few traditional agents to talk about Redfin and am having lunch with another one. There's no secrets here. We're happy to share exactly how we do business. We firmly believe in transparency.

Remember, they not only have to cover agent salaries, but a huge IT overhead which may or may not be calculated into their "profitability", all on 4 grand gross commission or so per deal. Those "nice non marketers" also can't sell. Kelman says so. To wit:

http://www.bloodhoundrealty.com/BloodhoundBlog/?p=7922

Redfin's referral agents blow the doors off their salary folks. Good salespeople "connect" or "click" with clients because we have hearts.  I find it telling that agent productivity is not a hiring criteria. Say what?

If I am Kelman's VC I want to know why he hasn't rolled out the referral/partner agent business line in every market. The deals close faster and probably with a higher net after not having to carry at least grand a month in benefits. If J Philip is an indication, looks like there is 1.25-2% for the partner, maybe .5% client rebate max and maybe a 3/4 point to Redfin with no addition costs laid on top of their fixed overhead. I would be screaming to get more revenue off my $50 million machine. Or. cut my losses and sell to Google for a day or two of PPC ads.