REDFIN RELEASE:
"A Very Tough Day Today Redfin laid off roughly 20% of our employees."
Real Estate Services is not a commodity. It's not like buying stock, booking a flight, buying a book or scheduling a vacation.
It's a personal service. Redfin was created by people who thought they could create a very profitable corporate offering (IPO) using real estate as their vehicle. They used people's hope and greed to generate motivation for employees, investors and customers.
The percentage of people who buy and sell homes without the help of a professional real estate agent has changed very little over the years. (The National Association of Realtors says that independent sellers accounted for 12 percent of all homes sold in 2007, down from 18 percent in 1997.) Some people dispute this number and say it is 20% but the point is Redfin's hope was that they would capture the segment of the market that wanted to save money by doing the work themselves. Redfin planned to benefit from this perceived growth. That perception never turned to reality as the overall market shrank and customers realized the benefit of using a professional agent.
If the internet and commodity trading of real estate where going to replace real estate agents it would have by now. The thinking was because it happened to Travel Agents it will happen to Real Estate Agents.
Travel agents where replaced for the most part because sellers (Airlines, Cruise Lines, Hotels, etc.) squeezed the agents out as the internet made the complicated process of booking and payments rather simple for the buyer. Buyers were motivated to find the best price. Back in the 80s my cousin created the first computer program so travel agents and airlines could talk to each other (Crosstalk.) It made everyone millions until communication became generic and accessible to everyone. Now prices are so tight airlines struggle to survive. Speculators thought real estate would follow the same path.
Buying and selling the space where you live, raise your children, entertain your family and friends, live and die in, is not the same as booking a flight to New York to fit your schedule. There are finances, families, emotions and dreams involved. What was Refin thinking?
Redfin's IPO will never happen. The employees and investors who thought the stock would make them rich now need to rethink their dreams. Redfin is now last pop of the Real Estate bubble.
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