Archive for the ‘Real Estate Controversy’ Category
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.
April 1, 2007
Redfin launched the real estate consumer’s bill of rights today, which Inman News is blasting out to its hundreds of thousands of real estate subscribers some time this morning. The premise of the bill is that consumers should have all the information the agent does about a house they’re trying to buy or sell, and about how the whole process works. Nearly a dozen Redfinners worked on it, from real estate operations, engineering and marketing.
Now we’re trying to recruit other brokers and real estate bigshots to support this idea. Already, we have our first, Kevin Boer, of 3 Oceans Real Estate, and we hope plenty will follow. So consumers can get in on the act, we’ve also started a petition that we plan to send to the National Association of Realtors and to all the local MLSs to which we belong; we hope you’ll sign it.
Maybe this can become a movement. Maybe real estate really can get better. The last time I circulated a petition, it was to get my beautiful but cruel high school French teacher fired, which involved premature exposure, humiliation, a year of intricate recriminations, and a very poor participation grade. Read the rights, and let us know if you think this stands a better chance.
1. Choose the services you pay for: Laws in more than a dozen states forbid brokers from refunding commissions to you, or require brokers to provide services you may not want to pay for. These laws protect the industry, not the consumer.
2. Know how your agent makes his money: In real estate, the seller pays both his own agent and the buyer’s agent a percentage of the sale; the agent earns more when his client pays more. If a house seems difficult to sell, the seller may even offer buyers’ agents an especially high percentage. Buyers’ agents should be required to explain to their clients how they are paid.
3. Know when you are committed to an agent: Often just showing a property entitles an agent to the commission for representing you, regardless of whether you intended to work with someone else or even preferred to represent yourself. The relationship between an agent and a consumer should always be explicit, so that both parties know when they’re committed to one another.
4. Know what services your agent will provide: Much of the work of a buyer’s agent begins after the buyer has agreed to buy a house. This work includes coordinating inspections, repairs, mortgages, title reviews and escrow services. But agents today are paid only to bring a buyer to a transaction. Once that happens, it is virtually impossible to fire your agent. In most cases, this is appropriate, as the agent who puts a deal together deserves the commission. But in becoming committed to an agent, you should know what services the agent will provide as part of that commitment and what recourse you have if the agent doesn’t perform those services. An open agreement between you and the agent protects the agent from being unfairly dismissed, and ensures you get the service you expect through closing.
5. Have an agent that represents only your interests: Most states allow an agent to represent the buyer and seller in one transaction, and get both sides of a commission. As a result, some sellers’ agents are on the prowl for unrepresented buyers to bring to the seller. It’s a solicitation neither side can easily refuse because the seller wants the buyer and the buyer wants the house. But an agent can’t fairly represent the interests of two parties to the same transaction. An agent should represent only one party, and take commissions for only one party.
6. Know the commission refund you can get before you buy a house: Depending on the service provided by the buyer’s agent, some sellers vary the commission offered to buyers’ agents. This flexibility is good in theory, but in practice it’s often used to thwart commission refunds: buyers expecting a refund of $10,000 or more from their agent discover on making an offer that the amount has been radically reduced in favor of the seller’s agent. Buyers should know in advance what circumstances let the seller’s agent keep more of a commission for himself. It’s fine to change the price but not at the cash register.
7. See all the houses for sale: Many of the multiple listing services set up to share listings between brokerages forbid participating websites from displaying for-sale-by-owner houses alongside broker-listed houses. As a result, home buyers usually don’t see all the houses for sale, and home sellers have to hire brokers just to get their house on mainstream sites. MLSs should not require exclusive display of listings.
8. Have an open discussion about a house for sale: On the web, you can openly discuss almost any product for sale except a house. That’s because sellers’ agents “own the listing,” controlling where and how it’s posted for their benefit. The rules of some MLSs discourage real estate websites from publishing independent reviews and preclude owners from distributing MLS marketing materials outside MLS-sanctioned websites. Once a house is for sale, everyone in the market should be able to discuss it.
9. See all the information available about a house for sale: Many MLSs make it difficult for buyers to see recent past sales data, how long a house has been for sale, or whether its price has been reduced. Once a house is for sale, you should be able to see all the information available about it on your own, without becoming anyone’s client. The only exception to this rule is information whose publication jeopardizes the seller’s safety, such as when the presence of children precludes a showing.
10. Be sure your agent will show your house to everyone: Some sellers’ agents selectively refuse to show houses to a buyer represented by an alternative brokerage, which hurts the seller and the buyer. If, as part of his service, a seller’s agent doesn’t show houses to all buyers, the seller should know it, and the buyer should be able to contact the seller directly. When agents don’t facilitate showing a house, they should at least stand aside and let buyers see the house on their own.
OK, now you can go hogwild with the comments…
March 1, 2007
Thanks to McKinsey-trained Kevin Boer, one of several brokers who reviewed Redfin’s NWMLS data, Redfin has discovered that we screwed up the accounting for one transaction in our analysis of Redfin’s negotiating advantage.
Except for this transaction, Kevin seems to have corroborated our analysis.
We originally reported that our King County buyers got a final price of 99.329% below list, whereas King County customers of other brokerages paid 100.233% above list. This is factually correct. But one transaction should have been adjusted to account for a commission refund applied to the purchase price, so as to isolate the negotiating capabilities of Redfin and its customers. Making this adjustment leads to an average final price 99.340% below list.
With this adjustment, the negotiating advantage we claimed to be .904% is .893%. This reduces Redfin’s negotiating advantage by $54, from 4,474 to $4,420. This advantage is still financially meaningful and statistically significant, but we are nonetheless unhappy with ourselves for the error.
The source of the error was obscure: one, and only one, of our 170 King County customers offered to allow the seller to keep Redfin’s 2% commission refund if the seller would lower the price an additional 2% (on top of the 2% commission savings factored into the price, the house in question still sold for nearly 2% below listing price). The MLS # for the transaction was 26136978.
The NWMLS thus recorded the final price as being nearly 4% below listing price, but roughly half of this advantage came because the seller essentially received Redfin’s commission refund. Had we realized this when performing the initial analysis we would absolutely have added the commission refund on top of the final price.
And we would have identified this transaction earlier but for an error in our customer database indicating that the customer had qualified for a 2% commission refund. Before publishing our analysis, we double-checked this customer database against our financial records, but this only confirmed the amount of the commission refund, not that it was or was not offered to the seller to reduce the final price.
When Kevin inquired about the possibility that a commission refund was applied to the purchase price, we were about to e-mail him that this had not happened. Before we did, we decided to review the official HUD-1 forms for King County deals with exceptionally low prices as compared to list, and then, when we found a problem, for every deal included in the study. While I was wining and dining a college recruit in Berkeley, Rob and Cynthia were in the office Wednesday night pulling every file from last year.
We spent Thursday double-checking and re-calculating the data based on an error in one transaction, e-mailing Kevin later that day to explain the error.
Once we recognized the problem, we could have actually accounted for it in one of two ways, either by lowering our negotiating advantage or lowering our average commission refund. Lowering the commission refund amount would have allowed us to avoid making an adjustment to NWMLS data, which was appealing to us because the NWMLS data is a matter of public record for other brokers and agents.
We decided against this. Since the buyer got an extra 2% reduction in price only by using Redfin’s commission refund in the negotiation, we decided to reflect the change in a lower negotiating advantage. We also thought that lowering the negotiating advantage was the most conservative approach, since the negotiating advantage has been most hotly disputed.
Over the course of the morning, we will update our website, issue a corrected press release, and contact journalists and bloggers to whom we had sent the numbers that included this error.
In other news, the NWMLS report cited by various bloggers as contradicting Redfin’s data turned out to be wrong by a large margin. The NWMLS adjusted the ratio of the median final price vs. the median list price from 81.61% to 99.52%. When the NWMLS realized that a further adjustment upwards seemed to be in order, it re-published the report a second time with the table in question entirely removed.
Thanks again to Kevin Boer for finding Redfin’s error. After a week of intense scrutiny, the basic conclusion that Redfin’s King County customers got a price significantly better than customers of other brokerages still stands, but we are exhausted from having to re-analyze an already exhausting analysis, and apologetic to everyone we let down by making this mistake.
February 27, 2007
Publishing MLS data that shows that Redfin got a better deal for buyers than agents at other brokerages sparked a riot yesterday: here, here, here, here, here, here, here, here, here, here and here. We also showed up in Freakonomics (holy cow!).
There has been a healthy discussion about how to interpret the data: whether Redfin agents negotiate better, for example, or its customers tend to seek better deals. We think both factors contribute to our success, and we love the debate.
But attacks on the main finding, that Redfin customers tend to pay less for properties above and beyond the commission refund, have been flat-out wrong:
The date range was arbitrary (see comment #5): the date range we chose was from February 6, 2006 to February 5, 2007; exactly one year from the launch of our home-buying service. If the date range had been January 1, 2006 to December 31, 2006, as critics suggested it should have been, our negotiating advantage would still have been .769%. It seemed less fair, not more fair, to include January 2006 data when Redfin Direct was not available in January 2006, but the overall result still favors Redfin.
Redfin sales increased as the market softened, skewing its advantage (see comment #6): if we analyzed only the last 90 days of the time period studied, the Redfin negotiating advantage would have been 1.10%, as opposed to the .904% we calculated for a full year. Redfin’s negotiating advantage over other brokerages actually increased, not decreased, with deal volume.
The data are not statistically significant: based on a p-value calculated from the MLS data set, the likelihood that Redfin’s advantage is entirely due to a small sample rather than a legitimate difference is less than 3%.
An NWMLS report contradicts the NWMLS data Redfin cites: an NWMLS report states the median final price of King County homes sold in 2006 was 81% of the median listing price of King County homes listed in 2006. No one believes that a typical home sells for 19% below its list price; to verify this, Redfin retrieved from the MLS every record of a house or condominium sale that closed in 2006; of the 37,185 transactions, only 49 (.13%) closed at a discount of 19% or more. If that report were correct, a discount of this size would have been 385 times more prevalent than it actually was. We have called and written the NWMLS, which is verifying its own report; we will notify you when the source data or the methodology becomes available. If this report proves us wrong, we will say so.
The data are impossible to replicate: we published a methodology for replicating the data that several complete NWMLS neophytes were able to follow. Nonetheless, we are now offering to share the data, with addresses and other private information removed, until the NWMLS objects. We already have sent the data to folks from Rain City Guide, Three Oceans Real Estate, Bloodhound Blog and 360 Digest, all of which have been strongly critical of Redfin in the past; if there is an error, one of these bloggers will find it.
Having challenged us, we would ask at this point that our critics report their findings, whether there is an error or not.
February 20, 2007
Earlier this week, the Sellsius real estate blog published a picture of me as James Dean in Rebel Without a Cause, suggesting that Redfin’s criticism of the real estate industry is merely a marketing ploy.
The most recent case in point was my remark in the LA Times comparing the real estate industry to Big Oil or Big Tobacco, which I later regretted. In Sellsius’s reading, it was a calculated effort to reap a marketing benefit. But really it was a sincere comment, which probably did Redfin marketing more harm than good.
We’ll get to what was sincere about it. First, let’s explain our regret: we don’t think marketing anger works. Anyone who watched the SuperBowl could see that it has a new vogue. E-Trade, for example, encouraged its customers to give stockbrokers the finger:
In our business, this adolescent approach is especially short-sighted and destructive: Redfin will probably end up doing deals with everybody we’ve ticked off.
Our reputation was on my mind when I heard on the radio last week about a retired U.S. congressman voicing regret for having held open a vote so he could strong-arm support for a bill. The bill passed, but years later he said he felt that he had lost that night the good-will of his colleagues across the aisle.
We’d like to avoid the same mistake with our real estate colleagues, to the extent that being a consumer advocate allows. We won’t apologize for our disagreements, or pretend we don’t compete with other brokerages. We want to convince the world we’re better than other brokerages, if not that the others are worse.
But we still aim to be respectful. This is why, as a sound-bite, our Big Oil comparison made me cringe. I could cite the context, but I knew when I said it that newspapers only have space for a brief quote. I hadn’t intended to sound cavalier and disrespectful. I was, and I apologize.
But however much we regret the tone, we stand by the substance. The sodium pentothal truth is that brokerages recruit more agents than the market can bear, without sufficient regard for professional development or codes of conduct; brokerages pay agents to close deals first, not serve customers.
If all of us in real estate don’t initiate reform, we’ll end up like the drug companies — which shifted their focus from research & development to sales & marketing, flooding doctors’ offices with Viagra-toting sales people while asking consumers to foot the extra costs. Today, an industry that cures cancer is reviled. The pendulum of consumer emotion, once it swings toward distrust, never stops in the middle.
Since real estate is an asset in which people invest enormous emotion — emotion that brokerages have taken to the bank with treacly ads showing families smiling in front of yard-signs and crying over houses — our reputation can suffer the same vicissitudes.
Redfin, as an alternative to traditional brokerages, may benefit from such a swing. But we don’t need it and we didn’t start it. In a survey of 23 professions, real estate brokers now rank last in prestige. Bloggers’ fixation on attributing this resentment to Redfin’s “marketing machine” (two people, if you don’t include the person running Sweet Digs) seems to us like a form of denial.
Many will claim that we are trying to have it both ways, competing while cooperating on deals, criticizing brokerages while calling for civility, championing consumer rights while profiting as a brokerage. But these aren’t contradictions. We compete, we collaborate. We can serve the consumer first and try to make money, too. We can respectfully disagree with the industry.
I just wish there was a way to say all this in a civil, thoughtful way, without its being pared down to a sound-bite or a marketing stunt. It’s a fine line. We do our best to walk it.
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.
December 20, 2006
Ardell DellaLoggia posted a very thoughtful argument today about Redfin’s obligation as a real estate broker (can a post be very thoughtful if it’s titled “Is Redfin a ’slut’?” Apparently, yes). In it she argues that e-commerce companies exploit traditional providers’ service ethic, comparing Redfin to an Amazon that benefits when someone browses at Borders, then buys on Amazon.
Of course Redfin offers free home tours, and provides every service from offer to close. Traditional agents are often pleasantly surprised at how easy it is to work with a Redfin agent on closing a deal. But Kevin Boer points out in a comment on Ardell’s post that if we really wanted to hold up our end of the bargain, we would stop giving customers the option to ask listing agents for tours, too.
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We’ve thought about taking his advice, but we think he goes too far. This isn’t to say we disagree with Ardell’s analogy. I’ve always felt uncomfortable about Zappos (e-commerce for shoes), which sells a product that almost requires personal service. Since every brand is sized differently, don’t you have to try on a pair of shoes before you know what fits? For that matter, don’t you have to see a house before buying it?
But there is one important difference between the shoe salesman and the listing agent showing a property. When you order on Zappos, the shoe salesman makes nothing. When you buy through Redfin, the listing agent still earns his share of the commission.
What we are really arguing about then is whether the listing agent deserves both commissions for showing the property. Redfin believes that the function of a buyer’s agent providing a home tour is to advise his client on the advantages and disadvantages of the home; our customers prefer their own counsel about what they like or don’t like about a house. They only want property access, and objective Internet data.
Giving qualified buyers access to a property seems to us to be one of the basic functions of someone selling a house. We could argue that point, I suppose, but it really doesn’t matter what we think: if the listing agent doesn’t believe his commission entails showing the property, he should say so to the seller.
In those situations, we could then arrange what we believe is the most natural connection, for the seller and buyer to walk through the house together, leaving it to the real estate brokers to handle the areas where we really earn our commissions, negotiations and legalities. Maybe this scenario sounds naive to you, but not to us (the couple who previously owned my house showed it to me even though they had a traditional listing agent; their tour was *fantastic*.)
But why end on a high note? The comments section of Ardell’s post is a dog’s breakfast of creative legal strategies for denying Redfin customers their commission refunds, which has never happened in our history.
The first strategy is the most easily dispensed with: procuring cause. As Ardell herself notes, it is well established law that the buyer’s preference rules the day, so any listing against on our commission will be arbitrated by the customer and her amply documented intentions. It’s an open and shut case.
Then there’s variable office commissions, in which different commissions are paid depending on whether the listing agent shows the property. This seems to us like a potentially fair solution to the problem of listing agents feeling they should be paid more to show their own properties. But we think this requires all parties to be able to clearly account for the circumstances under which commissions are split differently.
In the rare cases when we’ve encountered such variable commissions, they’ve been unenforceable because the seller was not informed that his agent was taking a larger share of the commission for showing the property. Every time, we got the full commission refund for our customer (if we hadn’t, we’d have probably given it to them anyway). So where we come out is for transparency; pay either brokerage whatever you like, just be straight up about it and tell the buyer & seller what they’re paying for.
And hey wait a minute, since we started offering free home tours, why are we even having this discussion? It’s late at night in the dorm room, and none of these issues seem that relevant. Ardell goaded us into it, again!
One clarification to a question Ardell asked in her post: we do not ask buyers to sign buyer’s agency agreements with us when going on a home tour. We do ask buyers to sign these agreements when submitting an offer, but not to obligate the buyer to work with us — we will never enforce such an agreement on an unwilling buyer — but only so it is clear we are the buyer’s agent, so we can get the buyer her commission refund. If not for that, we agree 100% that these agreements are lame.
August 10, 2006
The aftermath of Redfin’s congressional testimony was initially rather ho-hum.
My parents and their elderly dog fell asleep watching out for us on C-Span (in the middle of the day, actually). Chairman Bob Ney left a kind, careful message on my answering machine just a few days before announcing his retirement from Congress. A high school guidance counselor who’d read the testimony wrote me an oddly encouraging note.
But then C-Span must have decided to air the hearing after all (we’ll post it here as soon as we can find it). The way we figured it out was through feedback submitted via our site. Embarrassing personal critiques were forwarded by engineers who monitor the alias for bugs, though I think they know I’m already on the alias anyway.
One person wrote a note called Maxine Waters vs. Kelman that consisted almost entirely of:
“Next time, be prepared: http://www.opensecrets.org/politicians/contrib.asp?CID=N00006690&cycle=2006”
Which I liked. But my favorites are always the ones nearly incoherent with rage, like this one from a Sarasota broker:
From: Bruce Y
Sent: Thursday, August 10, 2006 4:38 AM
To: feedback
Subject: Kelmen in Concress
Glenn Kelman,
Saw your weak, whiney testimony in congress.
You have never been a RE broker, you are a computer geek. (Checked you out).
You arrogant little twit.
Get off you dead ass, stop your whining and let a real job.
Say “Hi” to your mommy for me.
Bruce Y
What are the chances that Bruce didn’t say something very similar 20 years ago, right before stuffing an 80-pound 9th-grader into a girl’s locker?
His tone reminded me of an essay written by the New York Times’ conservative columnist David Brooks, who observed that all political divisions spring from primal high-school-age differences between handsome jocks with the “emotional depth of a cocker spaniel” (future conservatives) and sensitive, misunderstood nerds who “have as much personal courage as a French chipmunk in retreat” (future liberals).
Maybe the real division is between “computer geeks” and real estate agents, though we have plenty of both here, and we all seem to get along fine.
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.
