If I Can Change, and You Can Change, Everybody Can Change!

There’s plenty of talk on Twitter and the web about my saying in an interview with the Globe & Mail in Toronto that the real estate industry is still “screwed up.” I first said this a long time ago on 60 Minutes, in response to a question I’d been asked over and over again.

I was asked again last year at an Inman keynote if I still felt that way. I said that I regretted my tone, and was grateful to those in the industry who’d forgiven me for it. The moderator, Brad Inman, persisted: “is the industry still screwed up?” Well, I thought to myself, I sure can’t say no, the industry is just fine. So I said that respectfully, politely, humbly yes, the industry is still screwed up.

In recounting that discussion last week to the Toronto journalist, I emphasized how Redfin had changed, how the industry has changed, and how I have tried, with varying degrees of success, to change: to be more collegial and constructive, focusing on customer service as well as technology, blending what has always been good about the industry with what we like about our approach.globeandmail

It has been a tough balance. We want to be honorable members of our industry, and a good partner to our fellow brokers, but we also want to be an advocate for the consumer, and for the industry to keep getting better. The whole dialog blows up when self-critical statements about how harsh I used to be are recycled as new opinions.

Even now that the journalist published a transcript of his notes, the focus is on our saying that there’s a problem, not on whether there actually is a problem, let alone the solution.  If we stop arguing over whether there’s anything wrong with real estate, we can start talking about how it could become better. Here, scribbled down during breaks in a conference, are a few ideas:

  1. Pay agents in a way that doesn’t creates a conflict of interest with their customers, particularly when the customer is buying a home. Paying for a closed deal regardless of whether the customer is happy tends to maximize closed deals at the expense of customer happiness.
  2. In fact, dump the whole coffee-is-for-closers culture, which makes brokerages feel like the Coyote, and our customers feel like the Road Runner, pecking at listings then running for cover. As I’ve come to know brokers better, I’ve been surprised at the genuine pride brokers take in their service. But I’ve been surprised too at just how deeply ingrained the sales mentality is in our culture. Before Redfin, I’d always thought that attitude was a relic of the 1970s, a caricature from Glengarry Glen Ross. But even now at industry events, I feel like a sissy when I say our agents are customer-service people, not salesmen. The audience sniggers. Outside of real estate, it’s hard to find a business with hundreds or thousands of employees without a published set of values or mission statement. Yet that’s sometimes the norm at brokerages. As a new generation of agent strikes out on Bloodhound Blog, Active Rain and Agent Genius to build her own, service-oriented brand, this attitude will change.
  3. Spend money on technology, not lead-generation: The reason Redfin charges half what most other agents do isn’t because our agents make less: almost all the agents negotiating deals for Redfin in 2009 earned six figures, with benefits, vacation and all their dues, telephone bills, and travel costs paid. We just spend a lot less time and money buying leads and chasing customers, so we have more for ourselves and our clients.
  4. Thin the herd: brokerages often make money by hiring the most agents, not the best. For real estate to be a profession like law or medicine, we have to profess to an ideal, to put our customers’ interest ahead of our own, and then ruthlessly exclude people from the profession who don’t uphold that ideal. Historically, we’ve excluded almost no one. But now that the number of agents has dipped, I’ve heard brokerages for the first time boast about agent quality. Let’s run with that idea. It’d be better for everyone if we had 500,000 well-paid agents, not a million half-starved ones.
  5. Invest in the rest:  you can only get agents to commit to what a brokerage stands for if the brokerage makes a commitment to the agent: providing for fundamental needs like health-care, offering as best we can some basic level of financial security in hard times, creating a team-oriented atmosphere, delivering high levels of training and career development. To get the best young people to launch a career in real estate, we have to begin to compete with employers like Google and Zappos, who have made a cult out of treating their employees well.
  6. Get religion about publishing data. We’re indignant that 4 of the 5 most-trafficked real estate websites show only a fraction of the homes for sale but it’s our own fault for being ambivalent and persnickety about sharing data. It is abundantly clear that consumers want data; we should be the ones to give it to them. The DoJ-NAR settlement opened a floodgate, but there are still plenty of rules around how many listings we can show on a page and how consumers register. To compete against Google, we need the simplest and smallest rulebook possible.
  7. Be transparent about agent performance: consumers should be able to shop for agents as well as houses on our websites. Redfin surveys every customer, and publishes every response on our agent’s online profiles. The Houston MLS does the same, with some limits. Plenty of brokerages want to do this, but worry their top producers will walk over one bad review. Let ‘em walk. There isn’t another consumer product or service in the U.S. — and certainly not one that can cost a consumer $50,000 — that isn’t subject to some kind of consumer review. The truth will set us free, from lame billboards and late-night TV ads and all sorts of hucksterism.
  8. Stop bickering and focus on the customer: the industry can’t fix its relationship with consumers because it’s still so busy arguing with itself: about what agents should pay brokerages, about what brokerages should give agents, about who promotes whom. Every time I start to think that real estate will sort itself out, I go to a conference of brokers and panic, because I’ve never seen so many professionals invest all their passion in topics that have nothing to do with the customer. If we focus on the customer, we’ll be unstoppable.

So those are some ideas on how the industry — and Redfin, too — can change for the better. Except the ideas aren’t really our ideas. Late at night, over drinks, most everyone in the industry seems to agree that some day we need to have fewer agents, focused on the right things, and kick-ass websites of our own for connecting consumers with reliable  information. The only difference of opinion is how long we wait to begin making those changes. We think the time is now.

(Photo credit: Canadian Pacific on Flickr)

Discussion

  • http://www.robertmbyrne.com Robert M Byrne

    Your points are well made. When you highlight the “rules” it is important to note that they are there to protect the lesser performers in the industry. Those agents who produce below average results year in and year out, but are in fact the most profitable for brokerages. It is like something out of a Kurt Vonnegut short story where ballerinas wear sandbags so they can’t jump higher than the average person. In a large national franchise during the year 2007 12% of the agents, listed as associates of that brand, were not involved in a single transaction. Customer satisfaction is the way the industry will change, yet consumers need social proof that there is a better way. Once enough consumers move, brokerages will follow.
    Best, RMB

  • http://www.SanDiegoJeff.com Jeffrey Douglass

    Glenn,

    Thank you for an interesting article about out industry. Coming from a “big box” broker to running a small brokerage I can confirm item #8.

    Real Estate needs to be about the customer, not the agent or brokerage. The winds of change are blowing, but I’m not to sure fundamental changes are afoot and won’t be until the consumer demands them.

    Thank you for being an alternative option and certainly an advocate for more productive agents.

    A wide variety of business models is what will best serve the Client, choices are always good.

    The big boys will continue to advocate dual agency, hire almost any agent in the hope of making a deal, and partner with escrow, title, mortgage, and affiliates to make an extra buck at the expense of the consumer. Beside shedding themselves of thousands of square feet of office space, little has changed.

    So I have to agree with you, the industry is still screwed up. Let’s hope for a better future.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Jeffery, great point, and I agree that a wide variety of business models will serve the customer best. Agree too that brokerages have focused changing the square footage of their offices more than anything else.

    Robert, I think I’ve read that novel… Cat’s Cradle? Breakfast of Champions? The Sirens of Titan? Well anyway, those are the only three Vonnegut books I’ve read, and I remember the sand-bagged ballerina…

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  • Pauline W

    I love your points and the Redfin philosophy. When we were buying, we used Redfin because we were so astounded that a ‘typical’ agent would be rewarded for pushing us to close a deal and perhaps overpay.

    As for being in customer service rather than sales, it’s not sissy, it’s the right way to behave when your clients are making huge financial and life-changing decisions. I would love to change career to real estate but have always been put off by the hustling, sales nature of the trade.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Hi Pauline, thanks for using Redfin! Fortunately, I’m comfy with my feminine side, so being a sissy isn’t necessarily a bad thing for me anyway.

    If you really care about the same things we do and you want to do great things, send a note to jobs at redfin dot com and we’ll see if there’s a fit…

  • Pauline W

    Thank you, that thought had very much occurred to me. I need to take care of getting my real estate license and then it would be a pleasure to explore Redfin careers further.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Email me when you do: glenn (at) redfin (dot) com.

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  • http://walawrealty.com/ Craig Blackmon

    Glenn — great post. I don’t want to brag, but we are ALL ABOUT point number one on your list. We charge a flat fee to all of our clients, and for buyers we then rebate the entire commission back to the client. As noted by Jeffrey, consumer choice is the lever that we can use to move this very large rock (the existing RE industry) in a positive direction.

    In any event, keep up the great work in changing the world! Those of us in the trenches appreciate it.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Great comment! A flat fee is something we considered for home-buyer but we worried it would be difficult to explain.

    • http://agentinvitation.com/ Don Stewart

      Hi Glenn – I think that many agents are becoming more client focused, less afraid of discussing value for money, and are happy to be judged by their performance. They are not just trying to grab commissions, they want to build a professional practice. Real change happens from the ground up, not the top down and I see some very encouraging signs.

      Best.
      Don Stewart

  • http://www.Kens411.com Ken Brand

    Great points. Progress is being made ever so slowly, but seem to be accelerating. I believe the Tipping Point for positive change will be when and if, consumers have a way to fairly rate and compare their agents.

    I understand, although I haven’t seen it, there are some services that will serve up who the most active agents are in a particular neighborhood, zip code, price range, etc. I think this is the wrong approach, I know plenty of top performing agents who are great, I also know that listing and selling lots of houses doesn’t mean that customer service/experience/expertise is assured.

    Thanks for sharing your thoughts. Cheers.

  • http://buckingtherealestatetrend.com Susie Blackmon

    Brokerages completely forgot the customers, except for how many then could churn. From my own personal experience the lack of concern for the customer is reprehensible.

    So, I’m independent and look forward to being affiliated (maybe) with a company that is not all about the rah-rah annual cult-like meetings with no sincere regard for the customers except for … how many.

    Thank goodness the days of hoarding information are ending.

  • http://www.BootCamp4RealEstate.com Sheri Moritz

    Congrats on the success of Redfin. I remember seeing the 60 minutes interview and relating to much of what you said. Everything in the blog is so well spoken and all the idea can be incorporated to help us all change for the better. Thanks for the reference back to Glengarry Glen Ross. That is a great movie!

  • http://iciclecreekrealestate.com Geordie Romer

    Glenn- While I agree with much you have said about the industry, I think there are some gaps that need addressing.

    “Pay agents in a way that doesn’t creates a conflict of interest with their customers”

    Agreed. How does the industry pull this off? Flat fee? Billable hours? Buyers don’t want to pay for services, so how do we change the industry to get both parties to pay for their services?

    Where does Redfin get money to pay its agents? From A. Sellers and B. Venture Capital How does this fit into the equation?

    “In fact, dump the whole coffee-is-for-closers culture”

    I honestly think that most successful agents are customer service oriented. Those who aren’t, don’t really make it.

    “Spend money on technology, not lead-generation”

    Agreed that the tech spend should be bigger and smarter at most brokerages. Do you think there is a lot of money going to buying leads? “Lead generation” in my mind is anything that brings business – marketing, PR, SEO. I’m not sure how you run a biz without it.

    Thin the herd: “It’d be better for everyone if we had 500,000 well-paid agents, not a million half-starved ones.” Agreed.

    Invest in the rest: Agreed

    Get religion about publishing data. Agreed
    Be transparent about agent performance: Agreed.
    Stop bickering and focus on the customer: Agreed

  • Glenn Kelman

    Geordie, thanks for your thoughtful comments. I agree that most agents are service-oriented, but I’m not sure their brokers are… and I think brokers should build their own sites rather than paying something for leads from a different site.

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  • chris johansen

    I could not agree more with every point. I have been echoing the same thoughts here in Northern Vermont but it has fallen on deaf ears or creates such a huge disagreement that I just decide to keep my thoughts to myself. I have studied Red Fin for years and wished that there were plans for an office in the Burlington Vermont area, if so I would fedex my resume in two seconds. I can’t wait for the changes coming because they are and sooner than later

  • http://www.aagrealestate.com Anthony Gonzalez

    Glenn – Great points and so refreshing to read. As you clearly know we are very disjointed in this business and the Redfin model might just fix the old big Broker ways once and for all. I read that you’re coming to the Garden State and I’m very much looking forward it.

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  • http://www.pangeare.com Josh

    This kind of reminds me of the Jerry McGuire part where he said there should be more of a focus on the athlete (buyer). Make it more personal and instead of using the money for lead generation, like you said, use it for existing customers. I like it. Thanks for posting.

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  • Iris

    i agree to the fact that customer choice comes first and then the rest. as customers are the end users, so we need to give their choice first priority.
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