The Fur Flies Over New York Times Article About Redfin, Online Brokerages

Redfin appeared this weekend in Damon Darlin’s New York Times article about the conflict between online home-buyers and traditional realtors. For the past two days, the article has sat atop the charts as the most e-mailed, ahead even of news that Australia’s crocodile-wrestler died of a stingray shot to the chest.

And now the fur has started flying.

In blogs about the article, traditonal real estate agents are compared to drug-addicted prostitutes and encouraged to pursue careers at Burger King. Elsewhere agents accuse Redfin of manufacturing controversy, then wonder aloud whether they’ll be murdered by Redfin buyers (belying claims that reluctance to show properties is “an absolute absurdity”). Others predict that our business will collapse because our prices are too low only to have the same person later wonder whether our prices are too high. On the news-rating site Digg, the NYT article has over 250 votes, and over 50 comments.

We all had fun being part of the story. Bahn Lee spent an hour on the road with Damon, driving to a customer meeting in Bahn’s 1991 Mazda Miata. Allie Howard and Rob McGarty told the journalist about the crazy, early days of Redfin Direct, and I was quoted saying something David Eraker once said to me, about being able to find out more on the Internet about pez dispensers than about real estate.

(Note: in an earlier version of this post, we had compared predatory tactics for procuring cause to praying mantis mating habits, mostly so we could include an interesting photo, but after realizing this seemed hostile toward all agents rather than toward a particular tactic for limiting consumer choice, we are removing the comparison and the photo. We apologize to agents unjustly tarnished by the comparison.)

Discussion

  • Nana Bonsu

    Yes, perhaps there is a case to be made for traditional real estate agents offering variable commissions based on the SERVICE that is offered. And rather than being rigid about it, the traditional agents and their associations such as NAR should take a serious look at improving their current system to take advantage of the innovations out there. For folks like the couple in the NYTs article that do most of their own searching for that one property they like, it does not make much sense to charge them a full 3% commission. On the other hand, most people probably do not have the time to look online for that one property that fits their budget, and they are certainly not looking to be the highest bidder. Such folks may require the personal touch a traditional agent can offer. Rather than fight with traditional real estate agents (to drum up business?), I think Redfin should work to offer the broad range of specialized services (perhaps including traditional agents) that consumers desire for commensurate prices that are fair to consumers. Based on the description of what you do, I think it is only fair that Redfin give back two-thirds of its sales commission to its customers.

  • Tom Ritchford

    I’ve been in New York for over 20 years. I’ve dealt with brokers countless times, admittedly mostly but by no means always rentals. In each case, I have been given no “service” of any kind. Brokers consistently lie to you; they make no attempt to bargain for you and won’t even relay counter-offers (they’ll just tell you they will).

    In dozens of dealings with brokers, I cannot think of one organization that did anything useful for me or my organization at all. Things would have been far better without the broker as a corrupt intermediary.

    If your services, whatever they happen to be, are really so valuable, why not allow a fair, open, competitive market and see what the actual percentage becomes? The reason is simple — because your cut would rapidly fall to less than 1%.

  • Tom Ritchford

    On re-reading, I realize that I’m conflating you as RedFin (a discount broker, which I approve of) with other real estate brokers. My apologies! My comments were intended to reflect the broker “cartel”, not you.

  • Colorado Seller

    Great concept. I’ve been waiting for someone to shakeup the Realtor ™ business for a long time, and get the payment a bit more closely aligned with the service.

    So my question is, who is doing something like this in Colorado? I have a house to sell next spring.

  • http://www.davidlosh.com david losh

    Glen, Glen, Glen,
    thank you for the personal e-mail. The fact still remains that my my listing at 1809 North 145th does not include pictures on your site. I know they were uploaded to both the NWMLS and to my personal web site. There is also a house a few blocks from my listing that is a screaming dirt deal at $299950 that also is not on your search site.
    The reason I checked was that you seemed concerned that your site may not be including all the properties that are for sale in the Seattle area. My little foray into your site has shown me it does not. My web site on the other hand includes all of the web sites of the major companies in the Seattle area. Clients can pick and chose the web site that works best for them. I do know from my own experience not every site has every listing. Some companies try to direct buyers to certain properties that are company listing or that fit a profile.
    Without being sarcastic, I know there is no fur flying about your company. I know that in the past few years of this very hot market thousands of agents have flocked to what they think is an easy way to make money. Us old guys collect what we can and wait for the market to go down. When that happens all of the palm pilot, sit in front of a computer, and look at it only when the client calls agents fade away. Your business model is a part of that crowd.
    Now seriously, if some one comes to me with an offer that makes sense and wants me to write it up for 1%, I’ll do it. I’ve done it more than once. Somebody wants me to carry an offer I can do that. As I said before, I would rather make money today than not. It only makes sense. The same for a listing. I agree, the days of the list em and leave em agents is over. If somebody wants to list a property for not enough money at 1%, I’ll do it. If some one wants me to list a Phinney Ridge remodel with a view for $499950 at 1%, OK, bring it to me.
    I’m in the Real Estate business. I work every day. I try to make money every day. Some deals are harder than others. We all hope over a career it evens out. I’m honest, fair, tough, and my clients get the very best representation that this industry has to offer.
    You get my time and attention, and for sure you will make more money using my service than almost anyone else.
    I say almost because I know agents that work harder than I do. There are agents that are much smarter than I am, but here in Seattle there is a core of a few hundred agents who are the best of the best.

  • http://www.fannation.com Krish

    How do you feel about ezdigs(http://www.ezdigs.com/index.shtml)? As more competition comes in using the same online discount (or no brokerage at all) brokerage model, what is redfins plan to stay a step ahead? Obviously, you’re feature set and customer service are great examples of differentiators….