Redfin began it's adventure into the Real Estate world in 2004 which was a very different time than today: home sales were easy; everyone had a real estate license or was a loan officer; houses were selling quickly and an irrational exuberance permeated the world. Then Redfin came along with some new ideas about working with clients (buyers and sellers) and this model was an immediate hit with some of the public. Obviously, Redfin had found a need and filled it. Good job! Yes, and the media rewarded Redfin's CEO, Glenn Kelman, with interviews, print articles and a wonderfully provocative spot on 60 Minutes. I recall how many of my colleagues were angry and frustrated that yet another "business model" had entered the marketplace. So why would the current real estate community be so angry?
Here's the truth: Redfin stuck its, well.........red fin in the eye of a real estate establishment that has done business in much the same way for 50 years. There has always been a certain amount of public resentment against the real estate brokers and agents because selling a home can be a very expensive proposition. I can remember the venomous debates that raged in the media, on blogs and in my office about how agents don't earn their commission or how the real estate agents really don't represent the interests of their clients. Redfin touched a nerve and rightly so! Amongst these debates, one commentator said, in a moment of utter clarity, "when an industry is in decline, the players always eat their own young!"
In a brilliant PR move Redfin announced it's layoffs in a VERY PUBLIC way: in much the same way it announced its arrival four years ago. It's ironic that Redfin is getting more publicity by doing what so many other brokerages have done more quietly: reduced the size of their workforces. The larger irony is that when most agents leaving the business receive no benefits, severance pay or publicity, Redfin's CEO stands before us to say his employees are being offered severance packages and that it wasn't the business model that caused the difficulties: it's the economy! Well, it IS the economy. Pretty simple stuff.
Mr. Kelman is one smart cookie. He knows the market will come back around someday. He also knows that there will always be a market for Redfin's brand of service. More fundamentally, I believe that when the real estate industry emerges from this financial crisis, traditional brokerages and levels of representation are going to be very different than today. Already, I see signs that the consumers have taken a hammer and chisel to the components that make up a real estate transaction and have broken it into its component parts (Redfin has done this in a small way). Having done so, they have found that the traditional agent might not be what they need......no matter how hard the traditional agents say so.
In closing, I wish Redfin the best and I hope the employees who lost their jobs find something new in this tough economy.
Photo by LarimdaME
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