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.
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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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)