Archive for the ‘Real Estate Controversy’ Category
May 27, 2008
In September 2005, just as Redfin was raising its first round of funding, the Department of Justice sued the National Association of Realtors for developing a policy that allowed its members to share listing information with some brokers but not others.
The policy was suspended while the lawsuit lumbered through federal court. And in the interim, Redfin was able to cite the lawsuit in convincing investors that we could compete straight up, broker to broker, without losing access to all the listing data controlled by other brokers.
And it’s still why Redfin, alone among the major new websites, has had all the broker-listed homes for sale: we’ve been able to become members of the Multiple Listing Services (MLSs) that Realtors use to share data, and have made our peace with its other rules.
But plenty of folks wondered what would happen to Redfin when the NAR suit settled. We wondered too. Well, today the suit settled. When I first read the NAR press release, I suddenly remembered what Billy told his platoon of mercenaries at the beginning of “Predator”: “We’re all gonna die.”
The National Association of Realtors proclaimed a stunning victory, first because it didn’t have to admit to any wrongdoing, though this is a standard feature of many settlement agreements; and second because the NAR also said that it didn’t h
ave to pay any money, though this is hardly what the Department of Justice was after.
Greg Swann at Bloodhound, quoting Hamlet Macbeth, rightly said so what.
But the proposed settlement agreement did result in a major change, the permanent repeal of the Internet Listings Display policy that would have allowed brokers to selectively withhold listing data.
So for the consumer (and for Redfin too), the settlement is good news: an MLS can’t discriminate against Redfin or any other broker because of our business model or our technology. Any information that can be whispered by a real estate agent to his client — such as how long a home has been on the market, or how its price has changed over time — can be distributed by Redfin through its site. Hooray!
But the NAR wasn’t about to set the data free willy-nilly, especially when its member Realtors are accountable to home-sellers who want to see their homes marketed, not discussed or criticized. For one thing, the DoJ protections only apply if we ask site visitors to register, which turns off about 90% of the people who visit a real estate site (how would Google have grown if it required registration to search?).
Beyond that the NAR claims that “the new policy protects sellers from having false or other unwanted information about their listings appear” on sites like ours. We wondered what that meant. According to the exhibits in the settlement agreement, a seller can opt out of:
“1. allow[ing] third-parties to write comments or reviews about particular listings or displays a hyperlink to such comments or reviews in immediate conjunction with particular istings, or
2. display[ing] an automated estimate of the market value of the listing (or hyperlink to such estimate) in immediate conjunction with the listing.”
The automated estimate mentioned in the exhibits is exactly what we’ve integrated from Zillow, eppraisal and Cyberhomes. And the online discussions are something we’ve tried to host before, too. We suspect that some brokers will include such prohibitions in their standard listing agreements, so that many sellers will opt out.
Ultimately, we think that ducking a conversation like this is just sticking our heads in the sand. We can understand why the NAR took the position it did, but in the final analysis it marginalizes Realtors, and limits our ability to connect buyers and sellers.
People will talk about homes online, and they’d rather do it on brokers’ sites, where all the listings are available. But if they can’t talk here, they’ll go somewhere else.
So all in all, we were glad to see that the settlement protected all brokers’ access to data. We just want to make sure we can still do something meaningful with the data, too.
Bonus link: The NYT gets snarky about Paris Hilton, AGAIN…
April 22, 2008
For no real reason, a San Diego Sweet Digs blogger attacked real estate broker Kris Berg today. The contract blogger, a usually kind person who deeply regrets the post, no longer works for Redfin because she violated the first rule of our culture, which is that everyone is respected. The charter of Sweet Digs is to write about local real estate, and to leave the shooting-yourself-in-the-foot-stuff to me.
The post makes me physically ill, not only because it seemed mean-spirited but because we know Kris Berg to be a wonderful person, a total pro and a darn good blogger. Worst of all, it deepens a brainless, destructive division between Redfin and our peers that has caused me great — this is the right word — anguish. We have already commented directly on the post, and Kris has already been gracious enough to accept our apology. So the rest of this post is an apology to everyone else in real estate, many of whom have reacted to more than just what we said about Kris last night. And because this is so hard to write, it’s also a list of small but important things we can’t apologize for too.
We all know that Redfin’s business model is different than yours: we try to get customers via our search site, we pay our agents salaries and customer-satisfaction bonuses, we want to put the escrow process online to avoid talking so much to our customers, and we refund part of our commission. This makes us freaks perhaps, or even fools if you like, but not an enemy.
Just because our model is different doesn’t mean that we think it’s universally better than the commission-based model. You have no idea how many times a day, every day, all night, we worry that we can’t make it work, usually right before we’re filled with euphoria at our prospects. We long ago imagined the party you’ll throw on our grave if we fail. But the reason we can’t give up on Redfin is that it’s what we would want for ourselves. Clearly, most consumers still prefer the traditional model. But some consumers have chosen our model too.
So that’s what we can’t apologize for: for who we are, for tinkering to make our model better (especially around tours, where it has been broken), for believing we can make it work. But we are sorry for our tone — I am sorry for my tone. What is most important to us is that Redfin’s (often ineffective) calls for reform stop ticking you off. Like you — and unlike the Zillows and Trulias whom you love (and whom we sometimes find ourselves admiring too) — we are real estate agents. We have a vested interest in making real estate better. We share our data via the MLS. We play by its rules. And we work together buying and selling homes.
The change we want is change everybody wants: that consumers can choose the services they pay for without fearing retribution, that they can access property information on their own. That’s it.
I don’t know how we’ve screwed things up so badly that our complaints about vandalized yard-signs or blocked offers have ticked you off. We should all denounce the one-in-a-zillion nut jobs who pull these stunts, because they make us all look bad, and it only takes one or two to terrify an entire market (#1 reason Redfin.com visitors don’t buy through us, 2 years straight: “fear of discrimination”).
It took us a while to realize how stupid it is for us to talk to the press about these incidents — nobody is ever punished, in even the slightest way, even when caught red-handed, and nobody else in real estate is outraged — but we’ll try harder to work out future incidents in private.
And, today’s blog post aside, there is reason to believe we can patch things up with everyone else. Last week, I finally told Greg Swann — he was so nice and gracious — that I was sorry for picking fights with him. Last month, an MLS decided to liberalize its data-sharing rules. Yesterday, a broker phoned to point out — privately, kindly — a possible error in one of our marketing claims (which we will correct if it’s wrong). And Kris Berg took my call today when 9 out of 10 people would have hung up in my face. Every week or so, I get a thank-you note from an agent about a deal we worked on together. How wonderful, how unnecessary and necessary, is that?
So maybe there’s hope that we can work things out. This isn’t a promise to be boring. But at least we can be civil. We weren’t today. We are sorry for the post about Kris Berg. We wanted to say to everyone else in real estate talking about this post that we hope there can be peace between us.
February 27, 2008
Stephen Dubner and Steven Levitt renew their argument that real estate brokers aren’t worth 6%, citing a study (PDF) conducted by Stanford economist B. Douglas Bernheim and one of his graduate students, Jonathan Meer, which shows that using a broker has no effect on a home’s average selling price.
We are an (online) broker ourselves, but have argued that consumers should be able to choose the real estate services for which they pay, so I’m not sure we have a dog in this fight. In the past, we have welcomed studies showing that buyers and sellers can get along without a broker, and argued that a client working with an online broker negotiates a better price. But in this case I was surprised that the Freakonomics team didn’t evaluate the Stanford economists’ methodology.
The Stanford study only evaluated 800 homes sold on the Stanford campus, “the ownership of which is limited to Stanford faculty and a limited number of senior staff.” In such an environment, marketing is much easier because of the small number of potential buyers, trust is high because of the buyers’ affiliations with one another, and supply is extremely limited: many academics would kill, or even teach an extra freshman survey course, to live on the Stanford campus.
Moreover, there is no broker-operated MLS on the Stanford campus, and likely no other broker representing the buyer, so there is no rationale for buyers’ brokers to steer clients away from properties not paying a commission. It seems like a leap to draw conclusions from this data set for the typical consumer, who is probably selling a home in a larger market, with more competition, to strangers largely represented by brokers.
In real estate and in life, college is a smaller, more perfect vision of how the rest of the world could be. We thought it was interesting that the previous academic study on brokers’ effectiveness focused on Madison, Wisconsin, because this is also a small college community where alternative approaches to real estate have reached critical mass. Maybe these communities point the way to a post-brokerage world waiting for all us, where both sides abandon their brokers, where we can access information for ourselves online, where we can come to terms more easily and economically.
For now though, we should at least take such findings with a grain of salt, because the Stanford campus isn’t the Hobbesian jungle of, say, the Orange County real estate market. We revere the Freakonomics team, who inspired us to offer real estate e-commerce in the first place, but it seems a bit too credulous to present these findings without acknowledging that Stanford, far more even than Madison, is a different world.
Bonus link: a consumer reviews the best real estate search sites… photo credit: To Mr. “Leaning Right” on Flickr.
Also, the NYT obituary on William F. Buckley is unusually good:
“No other act can project simultaneous hints that he is in the act of playing Commodore of the Yacht Club, Joseph Goebbels, Robert Mitchum, Maverick, Savonarola, the nice prep school kid next door, and the snows of yesteryear,” Norman Mailer said in an interview with Harpers in 1967… For Murray Kempton, one of his many friends on the left, the Buckley press conference style called up “an Edwardian resident commissioner reading aloud the 39 articles of the Anglican establishment to a conscript of assembled Zulus.” A friend of mine was, as a teenager, once fundraising door-to-door in Buckley’s Stamford neighborhood, and William F. Buckley invited him in and held forth at length on obscure topics…
January 22, 2008
What do you make of this: The New York Times reports today that a San Diego couple, the Ummels, is suing their real estate agent for allegedly failing to protect them from overpaying for a $1.2 million Carlsbad home in August 2005.
The lead plaintiff is a 60-year-old university fundraiser who describes herself as “114 pounds of absolute perseverance.” She spent the past year picketing the agent’s office. With shoot-from-the-hip media-savvy, her former agent says “the lady’s a nut job.”
And of course, the suit is just the kind that drives conservatives nuts, too. Why can’t people take responsibility for their decisions?
But wait. The only problem with blaming the buyers for overpaying is that the rationale for traditional buyer agents’ fees has been to protect buyers from overpaying. As the Times observes, the Ummels’ lawsuit is new in part because the buyer agent is fairly new, too — in the last downturn, agents represented only sellers and so buyers had only themselves to blame.
This time around, no one expects a buyer agent to have a crystal ball. The suit isn’t charging that Ms. Ummel’s agent should have foreseen a future downturn, only that he failed to guide his clients on current market conditions. Two nearly identical houses in the same, nearly new development sold at almost the exact same time for $105,000 and $175,000 less.
And even then, no one expects a real estate agent to be an appraiser either: the plaintiffs’ beef is that the agent withheld an independent appraisal they had requested, which would have notified them before their own closing of at least one of the nearby sales. Since the Ummels had already scotched two deals, it seems reasonable to think that the appraisal would have scotched a third.
Now we could argue endlessly that price comparisons are odoriferous and no two homes are the same, even in Southern California, but that misses the point. For the purposes of this discussion let’s just take a flying leap and assume that the Ummels overpaid, so we can focus on the interesting, difficult question of whether an agent can ever be liable for his clients’ overpaying.
Once a buyer’s agent begins making representations about price, it seems possible for him to make negligent representations about price. This doesn’t mean an agent can’t make representations about price, and can’t be wrong when he does. He just can’t be negligently wrong, by withholding material information that a reasonable person would want to see. If the Ummels’ agent did that, he should pay for it.
Of course, since we have no idea from our seat in the peanut gallery what really happened between Ms. Ummel and her agent, the whole debate is academic. The only undeniable fact is that the lawsuit that Ms. Ummel is pursuing, at greater cost than she is likely to recoup, must be like all other forms of revenge, a hopeless attempt to regain what she lost: her sense of trust and self-reliance.
In this respect, the case just illustrates the perils to both parties when a client outsources her brain to a real estate agent, or a stock-broker, or anyone else trying to sell something. It is why we dislike the paternalistic mindset occasionally used to justify brokerage fees, in which talk of “hand holding” is not seen as condescending, fears about “the single biggest purchase in your life” are stoked, and agent attempts to be persuasive during tense, personal moments are seen as heroic.
That’s messed up. It seems like most clients would prefer a partnership, carefully constructed to avoid conflicts of interest, in which agents provide information, professional judgment and support so as to empower the client to make a few big decisions: Is this the house you want? Does it have anything wrong with it that you didn’t notice? Could you get it (or one like it) for less money?
It is still possible — though we think less likely — that the Ummels could have taken this approach and still paid as much as they did for their house, but somehow I doubt Ms. Ummel would have wasted a year of her life afterwards feeling, rightly or wrongly, like a sucker.
(And no, we don’t think the behavior the Ummels attributed to their agent is at all typical, and we aren’t trying to make any claims against the industry beyond arguing for a different approach to customer service.)
December 17, 2007
Thanks to everyone for their kind words about Redfin’s appearance on “Today,” which broadcast on Friday our data-driven guidance on how to sell a home more quickly, for a higher price. We showed up in the local papers and the blogs. Another food-fight broke out with the real estate bloggers. But mostly people have asked what it was like to be on the show. Here is our starstruck eyewitness account…
The segment was scheduled to run at 7:40, and the producer asked me to arrive by 6:50. Outside the Today studio it was festive: there was a gigantic Christmas tree, and traces of snow still on the ground, and a crowd of tourists, and a security guard manning a velvet rope. It was windy and cold. Inside there was another security guard, and — what a thrill! — another velvet rope.
The green room was just around the corner. The carpets were comfortable and worn. I was alone with two production assistants who were surfing the web on an ancient computer and watching the show; the food was plentiful: doughnut holes, egg sandwiches, cookies, bagels, granola bars, a plastic bowl of cut fruit. The place was crammed full of newspapers and televisions, all tuned to NBC. “Mind if we see what else is on?” I asked. They shook their heads.
A contingent of cooks showed up with a truck-sized slab of beef that they were going to prepare on the air. Since it was so early, I asked the PAs if they ate the food from the cooking segments and they said, “Oh yeah.”
The mood was unruffled. Brian Boitano was in the building, and somebody said, “It’s Brian Boitano.” Julia Roberts appeared just after Redfin, but her segment was taped the day before. Unlike “60 Minutes,” which was as highly charged and carefully wrought behind the scenes as it was on camera, “Today” is sunny, relaxed and fast-paced. It is after all on for four hours a day, almost every day. All the make-up people and production assistants are very encouraging, almost like amusement park attendants.
Heading up the stairs to the make-up room, I walked through a door and literally ran into Matt Lauer. “Hi guys!” he said. “Do I really need make-up?” I asked and the make-up people nodded with religious conviction. I asked them about their favorite stars to work on and they told me “the stars bring their own make-up people.”
The producer called to say I would do great. I think I sounded nervous, which made him sound very nervous. We ended up reassuring one another. I wanted to ask if I could use the word “kick-ass” on the air, for reasons I can no longer remember, but then told him “forget it,” and he said “what?” and I said, “no, forget it,” and then he said “Just don’t get nervous.”
At that very moment I was thinking of a Post headline I saw on my last visit here, when the Mets choked in a pennant-race (”PAGING DR. HEIMLICH”), and the one from the day before, when Mike Huckabee had to apologize to Mitt Romney (”I HUCKED UP.”) A PA escorted me onto the set five minutes before the segment started. I shook hands briefly with Meredith Viera, and with 90 seconds to go, I was wired for sound.
While I sat in the bar-stool, Meredith Vieira’s executive producer kept making jokes in her earpiece that caused her to say “You’re terrible.” And “stop.” She turned to me and said “He’s just being mean,” though of course I had no idea what the executive producer was saying. She sized me up and then said, “Can I preview the out?”– the segue to the next segment which the anchors memorize in case at any moment they have to end the current segment.
I tried to remember the advice I got the day before from a friend of a friend, waiting on the outdoor platform for a train in an ice-storm, clutching a cell phone with a frozen, agonized claw (”How much time do you have?” he asked. “12 hours.” “Oh my God. And what’s all that noise in the background?” “It’s me, freezing to death.” “Ok, the first thing to remember is to sound happy — you don’t sound too happy right now, ha ha!”). Here was the advice we got from him, and an Omaha pediatrician with TV experience, both of whom were enormously helpful:
- Enthusiasm, passion, conviction: The most important qualities
- Always answer three questions: So what? Who cares? What’s in it for me (that is, the viewer)?
- Assume the viewer is channel surfing and didn’t hear the question.
- Look at the interviewer; let the camera-people worry about the angle in which to shoot your face.
- It isn’t uncommon for the questions to change the night before the show.
- Don’t lean back in the chair; scoot forward, as this naturally tends to improve your posture.
- Tuck arms close to sides, as this also tends to improve posture, but don’t have your arms too close to your sides.
- Talk with your hands if that’s how you’re comfortable.
- Avoid correcting the anchor; validate the questions.
- If you want to circle back to an answer, you can say, “Like we were talking about earlier…”
- The interviewer usually chooses you because he or she is most interested in your area; assume she is interested in what you have to say.
- It’s probably best to avoid wearing white or patterns of a finer weave than a centimeter. Wearing a blazer gives depth (”I left my blazer at home.” “OK then, wearing a blazer makes you look stuck up. Ha ha!”)
On the set, Vieira was very relaxed and amazingly good at scrolling ahead through the teleprompter script just before the segment started and then never really looking at it again. She was also friendly, which calmed me down. Then she kicked off the segment by saying that I was here to explain how everything a Realtor tells you may be wrong. I knew that somewhere at that very moment, a blood-thirsty mob of real estate agents was forming.
The rest of the interview, I was w
orried about what they would think. But then before I knew it we were done. The producer showed up and said we did great, not entirely convincingly. Swinging by the control room — eerily dark but for the light of forty television monitors — I saw on one monitor that Vieira was already doing aerobics with her next guest.
I met a children’s book author from Palm Beach when I went to pick up my laptop from the green room, and someone in the crowd outside cheered when I came outside. I checked my phone and saw nine text messages from Redfin’s well-wishers. And I felt very grateful to Today’s producers, and lucky to have such a wonderful team, and to work at such a great company.
My mom called to say I was “very informative. But why can’t you sit up straight?”
June 7, 2007
Last February, when the rain wouldn’t stop and we were bored out of our minds, Redfin released a year of sales records indicating that our buyers on average got a better deal than customers of other brokerages, on top of the commission savings.
Mose Andre, Redfin’s compulsive stats man, has only recently recovered. Hundreds of bloggers, commenters, e-mailers and callers raged against the idea that Redfin customers got a better deal, or that our agents had any part in our customers’ success. But the data held up.
In childish, tearful rants, I defended our agents. Our CTO, Michael Young, poked his head into my office to ask, “Who cares why our customers win, if they win?” And then shrugged (he has a two year-old). Mose nearly had a nervous breakdown calculating and re-calculating the numbers, then slept for two days straight.
But ever the kinky masochist, last week Mose called me out in the hallway to ask why we hadn’t tallied up the Redfin Advantage for our listing customers.
“Too hard,” I said, turning around. “We could intentionally set a low price than claim a big mark-up. What’s the right number to compare ourselves against?”
“The assessed value,” Mose said. “The Zestimate.”
“People would question those numbers, too,” I said.
“It doesn’t even matter if the baseline number is wrong,” Mose said. “As long as it’s consistently wrong for everybody.” He was now surrounded by his math nerds, and I was all alone.
“Try explaining that in a blog post,” I said.
“Just because it’s hard to explain doesn’t mean it isn’t worth doing,” Mose said.
I started to back away. Mose smiled and said he would come back from vacation with a new way to figure out how our listing customers really did.
Well, it turns out that somebody beat him to it (hopefully Mose will realize he should never go on vacation again). A Northwestern economics professor bet his colleague that a traditional listing agent increases the price of a home, and then spent the next three years analyzing Madison, Wisconsin data from 1998 - 2004 to prove his point. Today, that professor is taking his colleague to lunch, because he was wrong. The traditional agent often doesn’t get a higher price, and consumers know what their home is worth better than anyone in traditional real estate has admitted.
According to a review of the study published in this morning’s New York Times, people in Madison, Wisconsin “who sold their homes through real estate agents typically did not get a higher sale price than people who sold their homes themselves.” In fact, the study found, the agent-sold homes actually sold for slightly less (the difference though was within the study’s margin of error).
The study pointed out one bright side for the traditional industry, reporting that Realtor-listed properties sold more quickly (105 days vs 125 days), but we’re not sure this is such a simple advantage. According to another study by Freakonomics professor Steven Levitt, when Realtors list their own properties, the properties are on the market longer because the Realtor is holding out for a better price. Perhaps Madison home-owners took the same approach.
The Northwestern study worked because Madison is a kind real estate of Neverland, where more than 10% of all the homes for sale are available on a single For-Sale-By-Owner — FSBO — site, FSBOMadison.com, which still allowed owners to offer the buyer’s agent a commission. So the data set of FSBO sales in Madison was large enough that the professors could correct for all sorts of skewing factors, like lot size, neighborhood and time of year — and compare it to Realtor-listed sales.
Everywhere else in America, FSBO marketshare has declined (14% to 12% from 2002 to 2006, scattered across many sites) at the same rate as traditional brokerages (74% to 70%), with alternative brokerages like Redfin taking up the slack. One reason for the decline is that through services like Redfin Direct and many others, consumers can now list their home in the MLS without paying their listing agent a traditional commission.
Which brings us to the final twist: we feel kind of weird promoting a FSBO study. It drives us crazy when traditional agents claim we’re a FSBO type of service. Redfin agents work with clients to price and promote their homes, to negotiate a deal and to handle all the paperwork associated with the sale. So it cheered us to see one of the study’s authors, Aviv Nevo, acknowledge that you do of course want to pay a listing agent for the work he does, so long as you don’t give him a piece of the action based instead on the value of your house. Which is how we’ve paid Redfin agents all along.
May 28, 2007
About a week after Redfin showed up on 60 Minutes, Century 21 started running an ad challenging the idea that you could buy a home online.
“Some people think they can do it all on the computer,” the actor says.
Find a home, sell a home. Except the computer can’t do what I do at Century 21.
Understand your needs.
The subtleties of the market, the neighborhood… the schools… the process!
To watch your eyes when you walk into a home and know right away that you’re in love with it.
No computer can do that.
I like the music, and the shy way she never quite stands in the center of the screen, or how she scrunches down as she talks about understanding your needs, even while the background darkens. The ad seems to be a self-conscious departure from the sinister tone of Century 21’s earlier efforts, which like most real estate marketing, oscillate between corn-pone dreams of home-ownership and scaring you to death.
But, since we still are one of the only online brokerages, it feels like a blunder for Century 21 to take us so seriously. Watching it, I was overcome with the elation of a high-school nerd after the prom queen noticed him enough for a put-down.
And the ad falls into the same old trap, arguing that customers need help picking out a home. Most don’t.
According to the market research we conducted before launching Redfin Direct, people value a broker for putting together a winning deal over helping them pick out a place, by a margin of about four to one. Buyers’ big anxiety is that their agent, because he’s paid by the seller, isn’t completely on their side. Negotiations, contingencies, legalities are of course where Redfin’s salaried agents focus all their efforts. The ad doesn’t really speak to any of that; it acts as if online brokerages don’t even have any agents.
Our CTO, Michael Young, disagrees. He thinks the ad is bad news for Redfin. In an e-mail, he worries that traditional brokerages “have a lot of money to spend… there’s a consistent FUD [Fear, Uncertainty, Doubt] attack against us that we’re just a bunch of low-touch clerks that we don’t combat well in our current marketing.”
Redfin spent peanuts on marketing last year vs. the traditional industry’s $12 billion. Mike suggested all sorts of guerilla tactics for getting the word out that we offer better service from offer to close than a traditional agent. Somebody suggested providing complete real-time access to customer survey results. My favorite was cinema verite of Redfin customers and agents working together. Our founder, David Eraker, once proposed picketing traditional real estate brokerages. (”What would we put on our signs?” I said.)
And so we’ve started to think about how we should change up our marketing, and could use a few suggestions. We’ve already got some raw material: Redfin customers have shown up on TV in Seattle, San Francisco, San Diego and nationwide. We’ve got heaps of agent and customer photos and testimonials buried somewhere in our site. We’ve also written an exhaustive overview of the home-buying process, more than I thought anyone would ever read, except we know from all the questions we get in web seminars that occasionally they do. It has been downloaded about 25,000 times in a few weeks.
If you know someone handy with home-movies, or you have an idea about what we should do to spread the word, let us know.
Bonus link, in honor of Memorial Day.
May 24, 2007
A random follow-up thought to the 60 Minutes controversy: one thing we’ve always wondered about is how traditional real estate brokers can insist on calling Redfin a discounter while strenuously maintaining there is no standard commission? The six percent commission is supposedly an emotionally void concept, but anyone who offers to charge less is reviled like a deformed little frog. How can we (so eagerly) categorize any broker as a discounter if there is no standard price to discount from?
For all of brokerages’ blandishments for consumers to consider factors other than price, are we ourselves able to think about any of the ways a brokerage can be different (technology, customer satisfaction metrics, negotiating approach, agent compensation, satisfaction guarantees, business model) if it also happens to price its services differently? We hope so.
I know it’s just semantics, but I’ve been thinking about it a lot lately… and feeling a little bad about having posted so infrequently.
May 18, 2007
Rainer Maria Rilke once wrote that we have in love to learn only this: letting go. Everything else comes naturally. In starting Sweet Digs, a blog that provided independent, eyewitness reviews of houses for sale, we had forgotten this advice.
(Bahn Lee, Sweet Digs mastermind)
After almost a year of negotiations came to a head with the Northwest Multiple Listing Service (NWMLS), Redfin announced yesterday morning that it would no longer publish in-person reviews on our blog. NWMLS rules forbid Redfin from advertising another broker’s listing, and the NWMLS deemed our reviews (particularly the harsh ones) as an advertisement. The NWMLS fined Redfin and has explained that our compliance with the rules is a prerequisite for continuing to access its database of listings. It is Redfin’s first major setback with an MLS, and everyone here is a little blue about it.
For all the well-reasoned jeremiads against this decision, few seem to have noticed just how good the reviews themselves were. Thanks are in order to our writers and editors: Amy Johnson, Anna Hibble, Anna McClain, Bahn Lee, Brenda Keener, Cynthia Pang, Jessi Princiotto, Kris Newby, Laura Reiter, Marie Hagman, Marilyn Krichko, Marina Andriola, Polly Meyer, Sue Herz, Susan Brady and Tracey Taylor. We chose you out of hundreds of applicants because you write so well, on a topic you care so much about.
And you were often very funny, comparing houses to $1,200 jeans, wondering about satanic addresses, or surveying garages that changed the world. You could be brutally candid, but most of all you wrote with heart, for the abandoned houses you walked through and the quirky neighborhoods in which they were found. As the great William Shawn once said in a farewell to the magazine he ran for most of his life: “the operative word is, I think, love.” You gave Sweet Digs more love than we could have hoped or asked for — certainly more than we paid for — and it showed.
Lest you think we are too idealistic, we should also add that from a crass commercial perspective, you were wildly successful: you published a staggering 1,481 posts with 561 comments. Starting with a few hundred readers at the beginning of 2007, you roped in 3,959 e-mail subscribers and nearly the same number of RSS addicts; 42% indicated in a survey that Sweet Digs increased the likelihood they would buy a home from Redfin.We will try to cook up an alternative format, in which we sort through the detritus of past sales, but it won’t be the same as reviewing live listings on the open market.
The Seattle and Bay Area real estate markets have now lost a voice that on the whole was not only good for everyday people, but for the real estate industry itself. Consumers want candor about homes they can buy, and if as brokers we refuse to provide it, we will lose the authoritative, trusted position we’ve cherished for decades. As MLS rules force our sites to act as listing brochures, other websites will develop a monopoly on the truth, and we will pay those websites for traffic we should have had in the first place. We are not only giving away our brain and our heart, but our wallets too.
The MLSs don’t seem to realize that outdated rules against commingling MLS listings with data from other sources will preclude any brokerage site from accepting the basic premise of the Web 2.0 paradigm for building sites: mashing up data from many different sources to give consumers a comprehensive portrait of a market. These rules are dooming us to obsolescence. (By the same logic that ended Sweet Digs, we have been told we may have to stop publishing Zestimates alongside listings.)
It should thus come as no surprise that the commingling of listing data with other perspectives seems to be the next major front in the Department of Justice’s dispute with the National Association of Realtors. The question at the center of almost every skirmish in the modernization of real estate is who controls the information.
Who killed Sweet Digs? Everyone, including many of the brokers in Seattle, has pointed to the NWMLS, a mostly faceless, seemingly bureaucratic institution that struggled to respond to press inquiries about the decision. But the inconvenient truth is that the NWMLS is broker-owned, and that the people who run it are reasonable people who are simply trying to keep their owners happy. The big brokers in Seattle killed Sweet Digs. If you are working with one of these firms, be sure your broker hears what you think of the decision. And even if you’re not, you can sign our petition to the NAR, which demands free speech rights around listings.
The whole situation of brokers blaming the MLS reminds us a little of Pablo Picasso’s response when Spanish soldiers saw his painting of the bombing of Guernica, and demanded to know: “Who did this?” Picasso immediately replied, “You did.”
May 14, 2007
Redfin and the traditional real estate industry duked it out on 60 Minutes last night.
The segment aired second, after Mitt Romney took a stand against polygamy, but was the most popular video until losing out to a wayward penguin who swam 3,000 miles to Peru (Sasha Aickin just sent an e-mail around saying “we beat the penguin,” so I guess we’re back on top).
Here in Redfin Seattle, we watched the show in a conference room with a mixture of apprehension and desire; people brought their families and we all made fajitas. Seattle PI reporter John Cook showed up and began taking video with his digital camera.
Then the segment got rolling. Our favorite moments:
–> Rob McGarty wearing a blazer for the first time in his life, Kelly Engel stealing every scene, Fadi Hafzalla rolling up his sleeves and getting down to business.
–> The strange Borat-like moment when the traditional realtor was asked if she had refunded any commissions last year (”absolutely… NOT”).
–> The traditional agent’s explanation of why real estate agents charged nearly four times per transaction what they once did: increased postage costs…
–> The terrifying loss of perspective as the camera panned back on the National Association of Realtors’ sign as if it were a Star Wars spaceship.
–> B-roll of me complaining about our $4,000 copy machine, which is just so typical, cheap and mean-spirited (I HATE that thing).
Everyone in the conference room got quiet when the CEO of a company that had once embraced a business model similar to Redfin’s told Lesley Stahl he’d lost $33 million. Then we all cheered up when someone said we don’t have to worry about that because no one will give us $33 million.
And then the phones started ringing off the hook, and all of us — developers, executives, testers — scampered back to our battle-stations to answer them.
The website groaned under the load; first from 4:40 to 5:00 p.m., after the piece aired on the East Coast, and then again from 7:35 to 7:50 after the piece aired on the West Coast. Before our routers tapped out, we had served 40 times the volume of content that we normally do. We put up an emergency home page with search disabled. But without the Google Analytics tags on our standard home page, we could not see to see: we have no idea how many people saw that page.
It was fun working the front-lines. Many folks wanted to know if we could sell their property in Aruba, Italy, Mexico and Canada (Redfin’s dedicated agents immediately volunteered to handle Aruba, Italy and Mexico). One disgruntled 60 Minutes viewer called Donald DeSantis and told him he hoped he “died a slow, excruciating death” with one delicate body-part somehow wrapped around his neck.
A man with an ecumenical-sounding “SpiritJohn” e-mail address asked if I wouldn’t mind some constructive criticism; sure, I replied. Then he called me a “sissy” who “has been defrauding the American public for decades” (I started at Redfin just over a year ago; I wasn’t able to drive two decades ago). A third called and asked for Kelly Engel, then told her off. A very nice real estate agent e-mailed me offering herself as a corporate hair-stylist. A far-right radio show host asked me to name the “government bureaucrats” who blocked real estate reform.
Robert Scoble and Greg Swann reported a huge disturbance in the force, as hundreds of “60 Minutes” viewers descended on their site in search of Redfin (Robert’s blog about Redfin is the 7th Google search result for a Redfin search; we weren’t able to find Greg’s in the result set). A blog post that challenged Redfin’s facts began by noting I was a Harvard MBA (I never went to Harvard, I do not have an MBA). Another real estate blog argued for higher commissions (”6% is squat”) and lusted after Lesley Stahl (”what I wouldn’t do to have that blond hang out with me for one day as I go prospecting”).
For all the consumer enthusiasm, thousands of real estate agents and brokers have mobilized against CBS. The President of the NAR sent an e-mail to all 1.4 million members describing herself as “disappointed and dismayed” and encouraging agents to give CBS a piece of their minds. The real estate paper Inman News describes an industry in uproar. CBS News posted the text of the piece, alongside 46 pages (and counting) of comments.
Now it remains for us to sort through all the e-mail, call everyone back, and pick up where we left off building our little business. Thanks to everyone for all your kind wishes. If you have further thoughts on the segment, please just leave a comment below.
