Archive for the ‘Most Comments’ Category
February 26, 2007
Redfin announced big news today, publishing MLS data that indicates our agents negotiate significantly better than their counterparts at traditional brokerages.
Last month at Brad Inman’s big real estate conference in New York, Realtor.com President Allan Dalton accused Redfin and other critics of a “massive level of disingenuous communication,” because we ignore the likelihood that traditional agents offset higher commissions by negotiating a better price (skip to minute 9:00):
Already our surveys had established that most of our customers get service that they believe is better or much better than what they got from a traditional real estate agent. But forget the touchy-feeley stuff: every day we heard that our customers would lose our commission refund and more at the negotiating table; it is the centerpiece of the traditional industry’s argument against Redfin.
And we agree, that the price of a home fluctuates with market conditions, increasing the importance of a real estate agent’s pricing guidance and negotiating ability.
But our problem with commissions is not simply that they’re too high; our problem is with the commission itself, because it pays the buyer’s agent more when his clients pay more. In other words, rather than being offset by better negotiations, the buyer agent’s commission actually causes worse negotiations.
This is why we decided to pay Redfin agents a salary with a customer satisfaction bonus, not a commission. Agents do what you pay them to do, we reasoned, and we believed our agents would be more likely to get the price our customers wanted.
After a year in the market, we decided to put our theory to the test, by querying the Northwest Multiple Listing Service for data on every home or condominium sold via a brokerage from February 6, 2006 (the date of Redfin Direct’s launch) through February 5, 2007. Since we didn’t offer a service for sellers or support areas outside King County until much later in the year, we limited the data to King County and we only evaluated our capacity as buyers’ agents.
But we still had the problem that Allan highlighted, namely that there is no “set base” price for a home.
So we compared what buyers’ agents negotiate for — the final price — to what the sellers’ agents ask for — the asking or listing price; some sellers’ agents may ask for too much, others for too little, but, since all our customers are all shopping in the same store, looking at the same listings, all King County brokerages are negotiating against the same set of asking prices (note that evaluating a seller’s agent is problematic, since the seller’s agent only competes against the prices she sets herself.)
The results were striking; Redfin customers paid on average under asking price, whereas customers of all other brokerages paid on average over asking price. The difference in negotiations was .9% of the home price, equivalent in King County to over $4,000, on top of a commission refund of nearly $10,000.
What makes this noteworthy is that the data did not come from Redfin, but from the MLS, from the brokers themselves who contribute to the MLS. Any brokerage can validate the data by following the instructions available in the appendix of our report.
Already, the Seattles Times reviewed the report and picked up the story in yesterday’s big Sunday spread.
Perhaps there is another way to evaluate whether traditional agents negotiate better than Redfin agents; until there is, the most likely conclusion is that Redfin agents negotiate better than their more expensive counterparts.
February 8, 2007
A friend descending into Southern California once looked down on the vast grid of tinkling lights and said it was as terrifying to see as the mind of God.
I used to dislike the way LA made me feel insignificant, but now it’s almost a relief. If Gertrude Stein once complained that the problem with Oakland is that “when you get there, you’re there,” she might have said about Southern California that you when you get there, you feel like you’re not there at all. What makes all the taco trucks, the Korean strip malls, the freeways, the birdbath pools and look-alike houses not only bearable but actually and suddenly quite beautiful is the ocean on the other side of it all, serene as far as the eye can see.
Now Redfin is launching in Southern California, the largest real estate market in the world. In one magnificent land-grab, we’ve more than tripled the area we have to cover: Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties. To start, we’ve hired three new agents, who (if SoCal is anything like San Francisco was) will probably spend their first few months on the job waiting for action from the Web site, and e-mailing the rest of us to tell us they’re going loco.
Or maybe things will pick up a little faster: we’re closing a whopper deal in San Diego today, and we’ve already got a few others in progress. We’re supposed to show up on TV tonight in San Diego, and the LA Times published a nice spread about us today (smiling picture; intensely regretted & insanely provocative quote, which Kevin Boer has already called me out on); we got on the radio and a podcast too. Another positive development is the Southern California bloggers already are talking trash about us.
As usual, they call us discounters, when we’re not offering a discount on a traditional service, we’re offering an online service at a different price, with a different business model and 95+% customer satisfaction. Amazon.com is not a discount bookstore. Redfin.com’s goal is to be different and better too, not just cheaper.
And hey, did you notice that Redfin.com has smaller icons, and it’s running faster today? We put some serious hardware on company plastic, squashed our file sizes and got down and dirty optimizing our code. Some day, we’re going to have to write a post on the tradeoffs between Flash and AJAX, which we’ve had to learn about as we go. The big issue we’re still working on — crucifixion by comments, please — is Safari support, which we lost when we switched to Virtual Earth.
For now, please tell your Southern California friends about us, and thanks for all your support.
January 8, 2007
At real estate’s big Inman technology conference in Manhattan, Redfin squared off with Allan Dalton, Move.com’s President of Real Estate, in a keynote session entitled high-touch vs. high-tech, about the differences between online brokers and traditional real estate agents.
Move.com runs Realtor.com for the National Association of Realtors, publishing listings nationwide. It has also threatened to sue Redfin to change our logo, which, after some ineffectual begging, threatening and groveling, we are now changing.
You of course will be wondering only who won? Well I can’t say, for several reasons:
1. I’m not sure who, which probably means I lost.
2. I wouldn’t say I won if I had.
3. Allan and I both blathered, though he blathered well.
I met a few industry veterans in the morning for breakfast, who promised me Allan would toss chunks of ahi Redfin to the delirious crowd. They told me to watch a video of Allan comparing Zillow’s astounded Lloyd Frink to a carnival barker guessing someone’s weight:
This is probably why, the whole time I was under the lights with Allan, I found myself looking at Lloyd for support, who alternated between nodding sympathetically, and diddling with his mobile device.
In the green room beforehand, Allan was very kind, telling me in a wonderful Boston accent that his daughters loved my home-town. He looked comfortable in a tie, and a sweater over the tie, and a coat over the sweater (whereas I had just gotten my hair cut by someone who I am fairly certain had never cut white hair). Allan said he represented all Realtors, including Redfin, the way someone might say, “we’re all God’s children,” to a deranged child. Then he explained how we would destroy me on stage.
Allan went first, touting executives from Google and Amazon who have joined Move.com. He talked about negotiating skills, not service. He said he was in favor of consumer choice; then he said that anyone claiming a consumer could save money from reduced commissions was on dangerous ethical and legal ground.
Before I could pipe up, he told me don’t be defensive: he wasn’t talking about Redfin. Then he started bludgeoning me with “THIS IS THE MOST IMPORTANT TRANSACTION OF PEOPLE’S LIVES.” The rest of the conversation alternated between the boring (me) and the somewhat disparaging (Allan).
The moderator, Brad Inman, asked if Redfin had faced opposition from the industry; we said yes, acknowledging that sometimes we’ve made it worse for ourselves by stoking the controversy. Brad asked how Redfin could do better at negotiating a $2-million deal in the Berkeley Hills than a superstar agent: we told him we could do $40,000 better (but not that coherently).
The battle was joined. Allan and I wrangled over whether we could cost the customer more by screwing up the deal. I said the most basic premise of Redfin’s business is that we have to be the best, not the cheapest. It was an aspiration that seemed to settle Allan and the crowd; it’s something we all understand.
Then Redfin antagonized everyone by saying that what’s wrong with the industry is the commission structure that pressures agents to pressure clients, and the desk fees that pressure brokerages to recruit more agents than the market needs. If we don’t reform ourselves, and take out all the sales baloney too, people will come to hate real estate agents the way they hate tobacco companies or Big Oil.
Then it was over. Many people afterwards congratulated me, for nothing in particular, which was very kind. The floor cleared, and I started to chat with a New York board member whom I rarely see but was eager to impress. “How’d you do?” he said. A Hamptons broker with a magnificent head of hair and a Bluetooth embedded in his ear interrupted us to say, confidently and happily, that I had bombed.
Random bonus, from a friend of Redfin: this magnificent obituary of a frenzied gardener.
August 17, 2006
Have you used the Redfin Direct commission refund as leverage to get a better deal from a traditional agent? If so, drop us a line. We’re doing a litle Freakonomics study here in Seattle and San Francisco. Whether you’ve used Redfin Direct or not, we’re also interested in any crazy interactions you’ve had with traditional agents about Redfin.
As you can see from this picture of another satisfied Redfin user, a lot of the people who hit our site can be tough hombres when it comes to negotiating, so we’re sure you’ve got plenty of juicy stories about what happened when you tried to get a better deal.
You can leave a comment here or just drop us a line at glenn (dot) kelman (@) redfin (dot) com.
July 25, 2006
Redfin’s day in Congress was like a lot of days at Redfin: filled with swashbuckling controversy and juicy intrigue, unavoidably goofy and improvisational, tinged with a Quixotic sense of futility.
Mostly it felt like a schoolday field-trip without a chaperone. Going to Congress was fun. The whole place seemed set to a music we couldn’t hear. The halls are filled with handsome young people in impeccable suits, and the clocks are outfitted with lights and alarms to warn of impending votes.
The staffers often seemed elaborately bored by the droning testimony but eager to pounce. Everywhere, everyone seems to know everything that’s going on, tracking bills coming to vote by BlackBerry, watching hearings by Webcast, whispering in one another’s ear.
The whispering was constant and congenial, with the ranking liberal Democrat Maxine Waters and the stolidly Republican chairman Bob Ney sharing a joke while the local yokel-dokels and the legal stiffs rattled on about Grand Rapids, Michigan or obscure points of law. I felt bad for them having to listen to this stuff, day after day, and was relieved to see how well they got on, despite all the reports of increasing partisanship.
It was also hard not to feel a little awe. Most public buildings I’ve been in, usually to argue traffic tickets, are a combination of old-train-station grandeur and the run-down, cut-rate decor of a high-school classroom. I was worried the hearings would be all the latter, with card-tables and government-issue plastic chairs, and a gigantic clock on the wall.
But the hearing rooms are grand, with tiers of committee members arranged in concentric semi-circles above the testimony table. The gallery behind the witnesses was packed to capacity with realtor-pin-wearing supporters and staff attorneys toting binders of committee-member profiles. There were overflow rooms, photographers with gigantic lenses that they still managed to put right in your face, and remote-controlled TV cameras.
Two panels spoke. The first consisted of Department of Justice & FTC anti-trust attorneys and an analyst from the non-partisan General Accounting Office, who were polite but firm in their findings that realtors and listing services violate anti-trust laws designed to protect consumers. The second, which Redfin was on, consisted of six members of the industry, including the President-Elect of the National Association of Realtors.
Each witness read a prepared five-minute statement, getting the gong the second he or she went over (lights on a small display controlled by the chairman and visible only to the speaker turned yellow then red). Surprisingly, many witnesses were cut off with pages of testimony unread. A carbuncular Texas discount broker, talking a mile-a-minute, finished 1:30 early and then looked around for a second as if he couldn’t believe it.
For our statement, which you can read here, we copied the intro off the script of the Lending Tree lady next to me, because we’d forgotten to include the pro-forma niceties to “Chairman Ney, Ranking Committee-Member Waters” and all the rest.
While I spoke, I tried to look deeply into the congressmen’s eyes for effect, then lost my place and kept talking anyway. So I have no idea what I really said. After I was done, it seemed like a long way to go for a speech that was already over. Except it was far from over.
Every congressman except the powerful but soon-to-be-retired Congressman Oxley was ferociously pro-realtor. And once Oxley was gone the entire hearing became a bloodsport, with Redfin in its customary position at the center of the fray. All the congressmen directed most of their questions towards us. As each one lit into Redfin, the realtor crowd moaned with pleasure.
The Democrats of all people cited states’ rights in their refusal to act, while the Republicans seemed intent on protecting the realtors rather than free markets. Their opposition was impenetrably uniform but also outlandishly varied: do online brokers discriminate against those who lack Internet access? Since realtors are often divorced women starting second careers, aren’t we hurting those who need jobs the most? If lawyers’ fees have increased recently why shouldn’t realtors’? If your service is so great, why isn’t your business bigger? Since you’re not out of business, how could you complain?
The Grand Inquisitor was Congressman Artur (yes, that’s how it’s spelled) Davis, a brilliant former prosecutor whom other committee members gave their time to so he could sustain his attack. No one seemed remotely disturbed by the fact that consumers who buy online can be discriminated against without legal recourse, or that MLS rules limit competition.
It was all political theater, as everyone knew what we never figured out: that Congress would leave it to the DoJ to go after the realtors. An FTC lawyer told me before the hearing started that just having companies like Redfin testify was already alarming to the realtor lobby. “They did a big letter campaign,” he said (the committee members often waved letters at us from concerned realtors in their districts).
Everyone was very nice to us afterwards. Chairman Ney came by to ask if we’d ever testified before, and Cindy Chetti, the fantastic staffer who hooked us up in the first place, said that the congressmen were talking among themselves about how fun we were as a witness. A DoJ attorney gave us her card.
This would all be cause for unmitigated celebration if the fellow witnesses hadn’t been so solicitous of us afterwards: “Are you OK? Really? Really? Wow. I mean wow.” Even the intern in the committee office who was watching my luggage looked up from his Webcast when I came in and said, “Oh man.” Only then did it dawn on me we’d gotten into an argument we couldn’t win. The Lending Tree legal team of six lawyers and PR experts felt so bad when they saw I was by myself that they offered a lift to the airport by chartered van.
We drove past the Washington Monument, encircled by 50 pretty flags, and the Jefferson Memorial, lonely in its perfection, and soon we were enveloped in the dense green of FDR Drive along the upper Potomac. It was very beautiful. But we were all already so immersed in our BlackBerries that we could not see to see.
P.S. One weird, funny note. In mangling the answer to one question, we explained how we came to testify before Congress. “We didn’t make any donations, Democrat or Republican,” I said, “We just read an NYT article and called Clinton to tell him we wanted to come.”
The whole room froze, thinking I was casually referring to President Clinton rather than the urbane, knowing attorney/consigiliere for the subcommittee, Clinton Jones (whose name we found on a Web site and who seemed to find it quaint that I wanted to shake his hand before the hearings began).
Puzzled, oblivious, we all just moved on. Mr. Jones whispered into Chairman Ney’s ear, and both of them had a big laugh…
June 19, 2006
In the early, crazy days of Redfin Direct, when the whole office went bananas every time we got an offer (which was usually bogus, and was often breathlessly announced in the middle of a meeting with skeptical venture capitalists), we encountered plenty of resistance from listing agents. Some called customers about to close on a property and said such awful things that the customers sat on the floor and cried. Some sent us deranged, vengeful e-mail, comical with misspellings.
Mostly, the listing agents just tried to scare the crap out of our customers. It got so bad that we occasionally went on home-tours posing as Redfin customers, and secretly recorded what listing agents said (for a TV news magazine story being prepared later this summer). It was like watching a movie where the bad guy is so ridiculously bad that you just start laughing. The cloak-and-dagger stuff was fun too.
The Wall Street Journal (subscription required for full story) picked up on the action in a story published in last weekend’s paper:
Cem Sibay, a business-development manager at an Internet company in Seattle, sought a rebate through Redfin. Mr. Sibay says he and his fiancee, Tam Pham, arranged to see a condo about six months ago. The agent representing the seller, Ron Waxman of Coldwell Banker Bain, was initially friendly and helpful, Mr. Sibay says. But Mr. Sibay says Mr. Waxman’s attitude changed when Mr. Sibay mentioned that he planned to use Redfin as his agent. Mr. Sibay says Mr. Waxman then refused to show the condo to the couple again and said he would advise his client not to consider any offer they made.
Mr. Sibay and Ms. Pham gave up on the idea of bidding for the condo.
When reached for comment Wednesday, Mr. Waxman said, “I don’t remember that at all.” He said he stopped working as an agent last year; then, a few minutes later, Mr. Waxman acknowledged that he was still working as an agent and declined to comment further.
Here’s Tam Pham, Cem’s fiancee, pictured alongside Redfin’s Rob McGarty, who worked with Cem and Tam on the condo:
The WSJ article goes on to say that Cem and Tam stuck with Redfin, won a house that is now closing, and are due to receive a refund in excess of $10,000. Judging from its picture, the house they ultimately got seems a lot better than the condo:
And that’s the real story. That things have started to turn around. Some time in May, we began taking ten, twenty offers a week. The winning percentage of our clients when competing against multiple offers increased to above 40%. Every deal we did, the agent we talked to was surprised at how comprehensive our service was from offer to close and how experienced and professional our agents were. We started sending thank-you notes, and now we’re even including gift cards for the agents as part of a charm offensive to win every agent over in Seattle and San Francisco.
The overwhelming majority of listing agents take their profession as seriously as we do, and always act to advance the interests of their clients, but even now there a few listing agents who just don’t care. They hate our model, and wish our customers would drop dead. Unfortunately for those listing agents, our customers tend to be highly qualified buyers who are usually going to submit the best offer (especially since they have $10,000+ in commission refund to sweeten the deal). So in the rare case when a listing agent is hostile to one of our buyers, we just call the seller. You can tell during these calls that the seller is hopping mad, and can’t wait to get off the phone so she can chew out her listing agent.
We’ve created a special place on the Internet to bust those agents. It’s called the Hall of Shame, and it’s right here on the Redfin blog. If you’ve got a listing agent who tried to kibosh your offer, tell us about it in a short e-mail (glenn (dot) kelman (@) redfin (dot) com) and, if the story checks out, we’ll post the agent’s picture. Our first electeee is the agent who was hostile toward Cem and Tam, Ron Waxman.
Welcome Ron to the Redfin Hall of Shame.
May 27, 2006
Seattle TechCrunch is turning into a deranged mob scene, with over 250 people signed up after only a day.
When was the last time a party like this came together? You’d have to go back to P. Diddy’s 2004 birthday, as covered by no less than three reporters from The Gray Lady, back when Harold Raines was promising “to flood the zone” on major events… (legally licensed from the NYT)
Some Dreadful Man Misled Her Again, No Doubt
The New York Times, November 9, 2004
By JOYCE WADLER; WITH MELENA Z. RYZIK AND JULIA CHAPLIN
You know the aggravation you have when, say, the ARDMAN bat mitzvah is scheduled the same day as the JONES bat mitzvah?
It was kind of like that Thursday night when the premiere of JAY-Z’s concert film, ”Fade to Black,” was held the very night of P. DIDDY’s birthday coronation, or as the invitation termed it, the Royal Birthday Ball. The buzz on the red carpet involved what everybody was wearing to the Diddy party. Mr. Diddy tends to be rather tyrannical at his events. His invitation — which specified that guests had ”a duty to fulfill” and must dress ”like style icons” — even provided a list of approved designers.
Mr. Z., on the carpet at his own event, was taking it so seriously that when a reporter complimented him on the black great coat with a plush collar, striped shirt and fluffed polka-dotted tie, he got a little upset.
”Oh, no, no, no, no, no, hold on, don’t get it messed up,” he said. ”I got another suit for Puffy’s.”
Mr. Diddy, for his part, showed up at Mr. Z.’s event in track suit and sunglasses. He was in a particularly good mood. When the Hot 97 D.J. SUNNY started to ask him a question, he grabbed her mike. Then, in a voice that reminded us of MARILYN MONROE crooning to J.F.K., he starting singing. ”Happy birthday to me! Happy birthday to me!” he sang. ”Happy birthday, dear Diddy, happy birthday to meeeeeeee!”
There was a shout from somewhere on the line.
”Diddy, I didn’t know you sing!”
”Yeah, I sing. I do it all, baby! ” Mr. Diddy said.
Then he turned his attention back to Sunny’s mike.
”Hot 97, here’s your boy Diddy. I’m here supporting my man HOV” (that would be Jay-Z).
But to the Diddy event, at Cipriani Wall Street.
”In the faraway land of P. Diddy’s royal kingdom where there are grand soirees all the time, there is one grander than all, the Royal Birthday Ball,” the invitation read in part. ”Your code of dress shall begin with silk, velvet and other luxurious fabrics and end beautifully in hand-tailored suits and gorgeous dresses flown in from the fashion houses of Paris.”
The invitation did not stipulate that on the red carpet PARIS HILTON should pull her gown so high that everyone could see she wasn’t wearing any underwear. But that after all is what makes her a fashion icon.
Another elegant moment on the red carpet: TARA REID’s black gown slipping and exposing a breast.
Anyway, it was a grand event.
Violinists serenaded guests at the entrance of the cavernous old bank building. Inside, canopy beds and claw-footed bathtubs had been set up to suggest Mr. Diddy’s notion of royalty — or a back issue of Penthouse. Guests were subjected to a barrage of giant pictures on the wall of the life of P. Diddy: Mr. Diddy with his daddy, Mr. Diddy with NOTORIOUS B.I.G. Mr. Diddy, microphone in hand, stood on a raised platform and babbled on about — who else? — Mr. Diddy.
Among the celebrants: VICTORIA GOTTI in a black strapless gown that looked as if it had been ripped from one of her bodice rippers, MARIAH CAREY in what appeared to be a wedding gown, BRUCE WILLIS, GEORGE HAMILTON, VIKRAM CHATWELL, SANTE D’ORAZIO, ZAC POSEN, DONNA KARAN and BETSEY JOHNSON.
Ms. Hilton, in the early, relatively sedate hours of the party, could be seen chatting and smiling sweetly at P. Diddy’s mom, JANICE COMBS.
(”Oh, what a nice, sweet little girl,” we could see a mom saying later, though not a mom like Ms. Combs, who was wearing a 30’s style white satin gown and white fur stole — and is nobody’s fool.)
Soon after midnight, the room became a sea of cocktails spilling and champagne flutes flying.
NAOMI CAMPBELL danced in a hooded pink evening gown while USHER skulked a few paces behind.
TOMMY HILFIGER, in a gray top hat and three-piece suit, looked a bit dazed.
Eventually, a giant tiered birthday cake was wheeled out and several barely dressed women jumped out and sang — what else — ”Hey, P. Diddy!” Then several modelesque women plucked petals from the rose sculpture and hurled them at him.
”More alcohol!” Mr. Diddy yelled.
April 26, 2006
Redfin has become Seattle’s most-trafficked brokerage site through $100 a week in Google ads and word-of-mouth. We love it because it’s inexpensive and honest but every day we run into people who say Redfin? What’s that? We’re buying some ad space on Zillow and a few other sites, and now we’ve worked up a few ads.
Maybe you can tell we came up with the ads on our own. So we wondered if you could help us tune ‘em up? Leave a comment and tell us which one you like best.
But wait. Maybe you think you can come up with something totally different & awesome on your own? Then show us what you got! Post a short, punchy tag-line as a comment, and we’ll flow our fave into an ad that we put up here next week. Even better, you can also design your own & link it in. Winner gets $500 and a place in our Google-like hall of fame. We’ll even run the ad and tell you how it performed (include your e-mail when you comment so we can track down the winner).
Come on, it’s a $500 prize, what have you got to lose? GO CRAZY!
February 9, 2006
Redfin appeared today in the New York Times.
The article was the 2nd-most e-mailed article on the New York Times’s site.
The article also discussed Zillow’s launch. We were glad to see that Zillow seems to have no intention of being an online broker, since that’s what we do. In fact we may advertise on Zillow, or, assuming good accuracy, link to Zillow’s Zestimates.
A few folks have noted Zillow’s troubles with its site today, but going down under traffic doesn’t seem to us like the worst problem in the world to have. The site will go up & stay up.
What matters most is whether people get value from the site, and I believe they will.
Today our site was buried in traffic too, with new offers again coming in from customers buying homes online. It’s a great day to be in online real estate for both Redfin & Zillow.
