Brief comment on RedFin

Wondering what this “RedFin” thing is?

Two things –

1 – Robert Scoble notes it “I wondered why everyone was searching for “RedFin” and then I found the RedFin blog and saw that they were on the famous American TV show 60 Minutes last night.” (italics mine. Robert clearly knows that he is writing for an international audience, something all real estate copy should seek to emulate)

2 – There is an extraordinary amount of conversation in the, but this is the most succinct comment I have yet seen about RedFin.

The fact that Kelly Engel didn’t take the time to physically look at the property her clients were buying is more a commentary on the level of service she offered as a Realtor than on Realtors overall. I suspect Redfin is a better fit for her as an employer.

One point that I thought was the most interesting was Glen, the Redfin CEO, mentioning how one of his agents does 8 deals a week. I think this translates into 5 hours per client from start to finish which shows the tradeoffs clients need to make when choosing between discount brokers and full service Realtors.

My conclusion is that Redfin is great for people who want the Home Depot remodeling experience. No doubt, it can save them a lot of money but there are differences when dealing with a tele-agent versus an on the ground one.

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  1. Mike Montague May 14, 2007 at 15:20

    If you bought a home for $100,000 in 1970, it was the equivalent of $514,948.50 in 2006 dollars. This is pretty much on par with overall inflation.

    If average commission rates remained constant over that time (which they have not – they have gone down), Realtor income per trade would have grown at no greater pace than the cost of living. Net result = no real value raise in pay over 35 years. Try to put that past any Union in the US, I dare you.

    In 1970 real estate commission rates over 6% were the norm. Today’s average rate is slowly dropping and runs between 5% and 6% across Canada and the US. The net real value income Realtors earn per trade is dropping. Commission rates are not fixed and fluctuate based upon the demands of the consumer just like home prices do.

    The cost of licensing for a Realtor was around $200 in 1970 and is closer to $5000 today. Brokers carried all liability in 1970 and agents paid little or no expenses. Today’s realtor is personally liable in a transaction, pays desk fees board fees, office fees, long distance fees, printing fees, insurance, ongoing educational expenses and more on into the thousands of dollars each year.

    Add to that, internet fees, cell phone expenses, marketing expenses and on and on. There is no pension plan no medical plan or any company benefits built into the job. 80% of graduates leave the business of Real Estate in the first two years mainly due to the high cost involved.

    I wonder how Leslie is making out compared to 1970 and who she might call when she needs to trade her seven figure NYC digs?

  2. TracyTC May 14, 2007 at 15:26

    You can argue all day and night about who is right or wrong on the discount broker issue, but I think the counter-redfin camp is missing a major, bigger point. The most important press last night on 60 Minutes went to redfin, and the public is going to be paying alot more attention to this business model.

    Instead of spending a lot of energy arguing to be right, traditional realtors need to understand the new consumer expectation and meet it head on. Don’t spend your time trashing WalMart. Start talking up Nordstrom. The right online listing tools (primarily a good, interactive IDX product) can make every agent and company website a redfin website. Start taking steps to lower your overhead, while continuing to extol and demonstrate good customer service.

    At IDXdirect, we believe there is still a major sweet spot to be found where client prospecting is automated (and costs kept low), while traditional commissions can still be kept intact with great high-touch customer service on the other side of the prospecting continuum. Realtors should accept the fact that consumers and their shopping preferences are changing and take advantage of this sweet spot while it lasts.

  3. Scott Cheffer May 14, 2007 at 17:47

    I think the real issue should be, “Who owns the listing?”

    If I sign a listing agreement for 120-days with a Realtor, and that person lists the property on MLS, the Realtor gets 6%. If they split it with Redfin, and Redfin rebates the money to me, OK. Redfin can keep 1%. Of course, an individual ‘buyer’ agent would keep 1.5% under normal circumstances after splitting with the house.

    I also thought I heard Redfin ‘handles the paperwork’ for the mortgage. Are they also a mortgage broker or banking agent? If so, they are getting other fees. (Did I hear wrong?)

    Well, we are only getting into the high-tech vs. high-touch debate. If the price of oil ever comes down, we may find out more.

    Scott Cheffer, Ombudsman
    Title Company of America (TM)
    Oakbrook Terrace, IL and

  4. Kenneth Fach June 1, 2007 at 08:14

    Since most agents are part-time, who cares if they make enough money or not, since they have other income coming in. Don’t think that the only income that a REALTOR makes is purely from real estate. Many agents are getting income from other sources, and why not. You can have MANY jobs and still hold the job you have. At one time, I was a tax consultant, REALTOR, Spanish teacher/translator, secret shopper and did stuff online. Hey, we have bills to pay, and America mean WORK, WORK, WORK.

    Kenneth Fach, REALTOR
    Weichert, REALTORS-Anchor, Tallahassee, Florida
    Direct/Cell/Text 850-339-5753

    Each office is independently owned and operated.

  5. Jim Duncan June 1, 2007 at 08:35

    Ken –

    thanks for stopping by and commenting.

    I have yet to work with a part-time agent who

    1) could competently represent his client as well as a full-time agent
    2) was a well-versed in local and national issues – both politics and real estate that are applicable to real estate representation
    3) could market a property effectively.

    The market shift will likely weed out a lot of the part-timers who do such a disservice to their clients and the profession.