Redfin Redux

By
Real Estate Broker/Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY License # 49FA1074963

Now that Greg Nino and Bob Haywood have blogged recently about Redfin I thought I'd add my own 2 cents. Why not? I'm a Redfin Partner Agent. I blogged a earlier this year about the firm when I wrote Why Redfin Won't be Redflop

I was contacted by Redfin's area manager, Michael Daly, earlier this year around March. He found me through my Active Rain profile. It has translated into about 10 closed sales for the company thus far in 2009. I paid a 30% referral fee, which included a small commission rebate to the client in each transaction. We have another 4 deals under contract and about half a dozen serious buyers we are working with. 

Now, before I go on, let me ask you: would it kill you to have 10 sales referred to you in the next 6-8 months? No advertising, no bird-dogging, just an email telling you to contact Joe Buyer. Yeah, that would really suck. Another Active Rain horror story. 

I have met Glenn Kelman, CEO of Redfin, twice. He's a nice enough guy, certainly committed to the oft-heard "Transparency" mantra, which I believe they are serious about. Glenn is also clearly regretful of Redfin's initial splash, which was arrogant and adversarial toward the industry model. This haunts the company more than anything else. It is their Original Sin. And you never screwed up in your first year of real estate. Right. But some of the things they are criticized for aren't what they appear to be. Their anti-short sale stance is ill advised and bad publicity, but they didn't complain when I sold one. They want to stick with prices above a certain number, but if you go below it they either waive or reduce their referral fee. Those BASTARDS

I dislike firms which are called alternative models in polite company, not because of their methodologies, but because their agents suck. Crummy agents crew up deals. Bad agents tend to gravitate toward alternative models because of guaranteed pay, their gimmicks, or both. What is different about Redfin is that their agents don't suck. As a matter of fact, the people whom I have dealt with are pretty good. 

This isn't to say that as a partner agent I drink Redfin Kool Aid in the morning. I don't think everything they do is wonderful, and if I have an issue, I contact Michael Daly and we speak. Glenn Kelman's door is opened if the need arose. One thing I'd like him to do is make the site a little warmer and fuzzier. He can be such a CEO sometimes. I'm in sales. You can't deny the emotional part of the biz. 

But some things they do will improve the industry better if we stop half a second and learn. 

  • It takes guts to survey every client and publish the results. 
  • They do IDX and home searches better than anyone I have ever seen.
  • They track every single referral. No one gets lost, misplaced or forgotten. 
  • Bad agents get sacked. 
I've seen some lousy gimmicky firms. They've had their shtick but they never portended the changes coming to the industry. Redfin is, I believe, different, and not because I get referrals from them or because I believe they were smart to refer to me (well, a little). They will not re invent the industry any more than any other firm. But they will make a contribution of value, they will have staying power. They will outgrow their need for venture capital and be profitable organically because they are smart and open to ideas. 

Now- if you disagree, then I'll lay down this challenge: if you have a Redfin horror story along the lines of some of the gimmick firms we've seen come and go, email me or post a comment. I don't have one to tell after 9 months and 10+ deals, and that, in my view, is the true metric.  

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Comments (42)

Miriam Bernstei
Rochester, NY

Phil, a 30% referral and a "small amount commission rebate" would you disclose what you that would be?  Of course you are the broker and owner of your company, but for agents with splits in offices this doesn't make sense, 30% plus commission rebate plus office split equals = ?  Are you saying that your websites wouldn't pull those buyers in and save you over 30% of the commission?   Their website says a 15% rebate is that correct? So that it is 45% payout for each lead?   Their website also has statements that are misleading.  All of their agents have 20plus years experience?  At Redfin there is no sales pressure and in a chart it states that with a traditional agent there would be pressure?  Are the numbers of transactions important rather than the pay?

Dec 22, 2009 06:39 PM
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

...having read the above and reading the comments from other agents/brokers above, I GET IT!

I can see how the words roll off your tongue when you are making comments about other brokerages---now I GET IT! I really did not like being accosted by your vitriol on other posts but now I can see that it is all a part of your act....I am really surprised that AR allows this kind of behavior and even FEATURES your disregard for others.....peasants indeed! .....maybe you can eat a little "crowe"  while you are at it.

Dec 22, 2009 09:20 PM
Maureen McCabe
HER Realtors - Columbus, OH
Columbus Ohio Real Estate

Miriam wrote:  "Phil, a 30% referral and a "small amount commission rebate" would you disclose what you that would be?"

Isn't the rebate from Redfin and it comes out of the 30%? 

I saw a couple of people say they are Redfin referral agents yesterday so I looked at it and that was my understanding.

Wondering what comment # 22 is about. 

 

Dec 22, 2009 09:38 PM
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

Maureen- The 30% includes the rebate. I'm not sure what #22 is about either. 

Miriam- It is 30% in total. Lots of brokerage websites have silly things in the content. Are you saying there is no sales pressure in our industry?  Because I hear it all the time from new clients. Look at the Westchester partner agents in your area. That is not a bad group of licensees. Certainly not the group employed by a now-defunct outfit that was scorching the earth a few years ago in their minis. 

Karen-Thanks for the link. I commented on David's post and offered my input. My children are still young. What's it like having your son in the Industry?

Christine- as I stated, Redfin's initial mistake was the presumption that the majority of the process could be done online. I give them credit for adapting to reality instead of squandering resources with an unworkable plan. 

Robert- I hear ya brother. But you'll always have to weed out a few tire kickers. 

Lane- I mind it when the industry is disparaged. But all too often our injuries are self inflicted. 

Dec 22, 2009 11:05 PM
Bob Haywood
McGraw Realtors - Owasso, OK
BobHaywood.com

J. Philip - I am glad that you jumped into the Redfin discussion with your own blog.  This highlights the whole purpose of AR.  Good discussion concerning real estate from a variety of view points.  The fact that you are a Redfin agent adds to the dialogue.  I appreciate your openness!

Gregory comment #9 said, "I read the blog about Redfin and it was an attack on the company."  If you were talking about my blog, you need to go back re-read it.  My blog was focused on how Redfin has the potential to change real estate as opposed to Zillow.  My intent was not to attack the company, but rather to highlight the change that may be on the horizon.  The discussion that followed was excellent in regards to the Redfin model.

I still hold that Redfin's rebate to the buyer is going to have issues in states where buyer incentive is prohibited...but they may have that figured out already.

 

Dec 22, 2009 11:53 PM
Maureen McCabe
HER Realtors - Columbus, OH
Columbus Ohio Real Estate

Bob Haywood Don't you think Gregory #9  (Gregory Bain) was referring to the Houston agent (isn't his name Greg too?  Greg Nino? ) duh right there in the first line.   He's not fond of Redfin and very open about it, I don't think I read all of his latest featured post disparaging Redfin but wasn't that the first one in this recent Redfin trilogy?  Is it a trilogy written by three different authors?

I did not think your post was attacking Redfin. Some of the comments?  but you are not responsible for their comments.

I've done a couple of blogs to consumers about Zillow, not posted to groups, not looking for comments from the peanut gallery and got comments disparaging Zillow from other members.

Dec 23, 2009 12:34 AM
Gregory Bain
Mezzina Real Estate & Insurance - Little Egg Harbor, NJ
For Homes on the Jersey Shore

Bob, Maureen is correct. I did read your blog also and my comment was that Zillow has been and will continue to find an in into listing and sellingreal estate. And, I might add that the Zestimate has been stolen by the NAR and will be common place for home owners to use that data to sell their homes like a used car and the blue book. The owner will see the high and want more because of the special care he gave it while the buyer will look at the low and consider it way too much considering the condition of it. I am sure you have seen the pictures of what a home looks like to each of the various beholders.

Redfin is not my concern. The NAR has already given away the farm when they accepted the DOJ's interpretation of fair trade. The only thing our annual dues pay for is all the executives in the glass office building that send lobbyist to Washington and that Economist. My concern is making a living to provide a home for my family. And, if Redfin wants to send me a referral so I can do that - great.

Dec 23, 2009 12:55 AM
Bob Haywood
McGraw Realtors - Owasso, OK
BobHaywood.com

Maureen and Gregory - sorry...I hadn't read Greg's blog yet.  My apologies.

Dec 23, 2009 12:57 AM
Miriam Bernstei
Rochester, NY

No Phil.  The site implies that if you go with a traditional broker there will be pressure vs. Redfin where there isn't.  That is not correct, not all traditional brokers apply pressure and in a market like this even Redfin agents might apply pressure.  There are five agents in Westchester, I don't know any of them but that does not mean much as there are many agents thoughout Westchester. This model is slightly different than Foxton's actually I get a significant amount of leads from the RE/MAX worldwide network and they don't take a cut at all.   

Dec 23, 2009 01:51 AM
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

Miriam- do you have a link? 

Redfin is nothing like Foxtons. I've done business with both. When I sold Foxton's listings it was a challenge to get cooperation. 

Dec 23, 2009 02:13 AM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Let's be honest.  Anytime we as an industry let someone take OUR real estate listings, OUR MLS IDX link's, package that information,  provide it to the consumer and than charge us for the consumer relationship.....we are the fools. 

Because someone has had closed transactions from that relationship should be nothing to brag about.  The consumer would get the information from your agents websites if there was not a parasite bleeding the business away from them.

It amazes me how agents can be so foolish as to think that paying for leads from their own listings is a good idea. 

Amazing.

Dec 23, 2009 02:22 AM
Gregory Bain
Mezzina Real Estate & Insurance - Little Egg Harbor, NJ
For Homes on the Jersey Shore

Miriam, that's not completely true. RE/MAX charges you a membership fee (it was less than $500 per year when I was with them) and agent y charges agent x a good 35% referral fee from my experiences with them. You earn 90% after the office pays the 10% franchise fee and the broker charges you for your share of operating expenses. If the broker decides to do some office advertising - you pay a share of that, too.

RE/MAX follows a very traditional method of recruit enough agents and the bills will get paid. At the NJAR Triple Play there was three booths for RE/MAX trying to recruit. Heck, they were handing out big, bigger, and body bag sizes of bags to advertise the name. I'm not knocking it. I am just adding to your "no pressure" slant.

There is no such thing as "NO PRESSURE" in sales. You produce or die.

Dec 23, 2009 02:24 AM
David Cahill
Century 21 Cahill Associates - Boston, MA

I love that Redfin sacks the bad agents.  I do not hear of many companies that do that and I think it's great.  If someone is not performing or making a bad name for the office, they should be terminated!

David

Dec 23, 2009 05:21 AM
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

When buyers agency arrived there were Realtors who cried that the end of the world was near, same goes for the MLS on the internet, limited service brokerage, Trulia, Zillow, and how did I leave out giving it all away to Realtor.com. It seems that the real estate world is still doing okay, and the end of the world did not come. Same goes for Zip and Redfin. More business models means more opportunity for us, and greater choice for the buyer or seller.

Dec 23, 2009 07:09 AM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Commenter #32 needs to get his facts and figures right before he goes and slams RE/MAX.  I hate it when people talk ignorantly.

Dec 23, 2009 01:19 PM
Gregory Bain
Mezzina Real Estate & Insurance - Little Egg Harbor, NJ
For Homes on the Jersey Shore

"I hate it when people talk ignorantly."

 

Me, too.

Dec 23, 2009 11:00 PM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Gegory Bain, RE/MAX has never charged a 10% franchise fee.  I have never had a RE/MAX Associate ask for more than 30%, more like 20-25%.  Those referrals did not come from my listing efforts.  Those referrals are not from a VOW.  If you want to tell a lie, tell it to people who don't know any better. 

Dec 24, 2009 01:45 AM
Gregory Bain
Mezzina Real Estate & Insurance - Little Egg Harbor, NJ
For Homes on the Jersey Shore

I'm not telling any lies, Damon. Maybe you should read the tiny little print at the bottom of your RE/MAX logo - "Each RE/MAX® Licensed Brokerage is independently owned and operated." It is also found at the bottom of every other franchise weather it be Century 21, Coldwell Banker, Prudential, etc., etc.. etc..  Of course it is also a good reason why customers are always surprised that the lack of quality control found at franchise offices. One office is great and the next "not so much". If you are happy there - stay there. Maybe you are in the good office?

'tis folly to be wise.

Dec 24, 2009 09:17 AM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

The office Franchise fee is 5% if you are not grandfathered in.  That has not changed.  I think the public is pleasantly surprised when dealing with most of the franchises out there. 

Dec 24, 2009 04:17 PM
Gregory Bain
Mezzina Real Estate & Insurance - Little Egg Harbor, NJ
For Homes on the Jersey Shore

Your office may very well only charge you 5%. Mine charged me 10%. Then we got 90% of the remaining commission, since he took his share of 10%, that left an 80% percent commission cut. I was charged for everything from the cost of payroll for the sectretary, copies, lights bill to the 1-800 number. Signage, advertising, etc. were only some of my costs. Or, I could accept a 50/50 cut and still pay for my advertising and signage.

It could be that the public is "pleasantly surprised" when working with you. Me? Don't worry, I don't care if you call me a liar on the internet.

Merry Christmas.

Dec 25, 2009 01:57 AM