Below is an article about the Discount Realtor Redfin’s CEO Glenn Kelman, who, having failed to achieve more than niche success in the real estate industry (despite a couple of years of gushing media adoration and favorable stories on shows such as 60 minutes), claims now that he’s being picked on.
Dude, you were thumping your chest and throwing down some big smack talk about us traditional Realtors not long ago, boasting of Redfin’s pending spread into all major cities in the U.S. What happened?
This reminds me of a “big talk” sports athlete popping off about how his team is going to devastate the opponent, then after failing to follow through on the boast, whines about the bad ref, or says the other team didn’t play fair.
Quit being a crybaby and go sell some houses. Oh, wait, your model only works in very hot markets where Realtors are deemed unnecessary. Oh, and there are no hot markets at present, at least not in the markets you’ve decided to conquer. Once the game gets tough, you can’t compete. Buyers and Sellers actually want experienced agents, not telemarketers.
Story and additional comments inline below…
Source: Forbes, (02/11/08)
Glenn Kelman, CEO of Redfin, the online discount real estate sales firm, claims he and his company have been badly treated by traditional real estate practitioners.
He complains that Redfin’s for-sale signs are often knocked down, stolen, or smashed.
So are mine. It happens all the time. I had 4 stolen over a two month period from one listing alone. Welcome to the business. Quit complaining and go buy some more signs, if you can afford them.
He also says that in Seattle a traditional practitioner posted Kelman’s address online and subsequently a sign in Kelman’s yard was destroyed. In a national forest near Yosemite National Park someone pasted fake Redfin bumper stickers on signs, trees, and rocks to make the company look like a shameless promoter and defiler of the environment, Kelman says.
Actually, you are indeed a shameless promoter. Taking advantage of clueless media people to push your “Realtors are Evil” line of hyperbole through every media outlet that responds to your requests to be interviewed, or your inflammatory press releases. Provocation invites backlash. It’s human nature. Don’t pick fights you can’t finish. Try being nice instead.
Since opening for business two years ago, Redfin has represented buyers in 1,300 transactions, totaling $600 million, refunding $10 million to those buyers. It has sold 300 houses for sellers it has represented and currently has about 100 listings.
Not very impressive. That’s about 67 deals per month. Let’s divide that productivity by the number of agents you have in your various market areas.
Ironically, the rebates are a result of that which you claim should not exist – a 3% buyer-side fee. More on that below.
Buyers represented by non-Redfin agents purchase most houses,
So, your business model won’t work without the help of the type of agents you claim should be displaced from the industry. Explain the whole idea to me again, I don’t get it. Current commissions are too high you say, but were it not for the “too high” commission, you’d have nothing to rebate a buyer. Traditional Realtors are overpaid and not necessary, yet without them, you wouldn’t be in business.
although Kelman says that traditional practitioners often refuse to present offers coming from buyers represented by Redfin because it means they’ll be supporting a practice they don’t believe in.
“Every week we have a selling agent tell one of our clients that their offer will go nowhere,” Kelman says.
If that’s true, file a complaint with the Board of Realtors of the agent committing the ethics violation. How many complaints have you filed, and how many have resulted in a finding of fact against the other agent?
Most of us are agent agnostic, and could care less whether the offer is coming from a Discount agent or a full service agent. We just want to sell our listings or find the right home for our buyers. The only thing we notice is that the Discount agents are normally less experienced so we have to help the deal along more than we would with an experienced agent on the other side.
Meanwhile, Redfin also has been facing accusations of its own. Northwest Multiple Listing Service fined Redfin $50,000 last year after Kelman’s company posted unflattering remarks about homes for sale in Seattle. Redfin promptly removed the postings.
Imagine that. You sent your agents to visit the open houses of other agents (the evil full commission ones), then your agents come back to the office and write nasty insulting blog articles about the listings they visited. Yes, that’s an ethics violation. Read the Realtor Code of Ethics and Standards of Practice. Remind me again why you don’t understand why the listing agent of one of those listings would be unenthusiastic about working with one of your agents?
Although Kelman says he’s confident the company can succeed, he questions whether he should have taken the job in the first place: “If I had known then what I know now about real estate, I’m not sure I would have gone through with it,” he says.
So, with tremendous grandiosity and bravado, you entered into a business of which you knew little about, announced the superiority of your business model, received applause and attention from the starry eyed media, and a big yawn from the consuming public.
Mr. Kelman, the real estate business has chewed up and spit out chest thumpers like you longer than you’ve been alive. You failed to grasp one important concept, which is, real estate is a highly cooperative and cordial business environment. Our most important asset as Realtors is the relationships and trust we build with others in the industry, along with the expertise we develop during the course of our real estate careers.
Your strategy of “hey, you Realtor’s all suck, now can you help me out here on this deal” was a fool’s errand. Your provocations and brash statements about the real estate industry and its practitioners ensured your demise, as you established yourself as an adversary of those you sought to work alongside instead of a friendly competitor.
Ultimately, it is the consumer who rejects your business model because it’s not a model that can succeed in a down real estate cycle. You’re a one trick pony. Anyone can sell a home in a hot market. When markets get rough, what depth of experience and expertise does Redfin offer buyers and sellers? None. You expect other listing agents to meet and show homes to your buyers. You have nothing in the way of experience to sell in a tough market. Your hype is wearing thin. You’ve provided nothing of value to the real estate industry, and you’ve endeared yourself to noone.
Welcome to the real world. Now stop being a crybaby.
Source: Forbes, (02/11/08)
This is a well written and amusing piece. I think you’re exactly right about misconceptions about the difference between a great realtor working on a client’s behalf, and one who isn’t prepared to co-operate ethically.
In England, I am used to paying 1.5% total commission for a sale, and I didn’t really understand why I might pay more in Texas. Since becoming a realtor, I have uncovered exactly how much work is involved in getting a listing sold for a good price in what is now a pretty competitive market.
I’m a buyer looking at a house that is listed by a discount realtor, sigh. I really wonder if a CMA was done, the listing price is way out of line for the neighborhood. In this market, you really need a realtor on both ends.
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As usual this was a well written, spot on post Steve. I never understood Redfin. They were basically telling realtors “You are evil. But now that we have a deal going on can you do all the work. And oh yeah I hate you because your evil” Considering all the hype and media exposure I can’t believe they only have 100 listings. The people that gave them venture capital have to be a little stressed at this point.
Hi Shireen: As a buyer you want your agent to run a CMA for you, and that determines what you will offer. Sometimes it’s hard to ignore the list price if it’s a lot higher, but you just write your offer with a letter and attache the CMA and see what happens.
Hi Gareth: One of my Buyers from the UK wrote up his take on the differences, which I posted on a blog a while back.
http://crosslandteam.com/blog/2007/04/27/buying-and-selling-real-estate-in-the-uk-vs-austin-tx/
Thanks Kimbrough for your comments.
I think Redfin is destined to remain a niche player in a few limited markets. I don’t know if the general public really understands that they are essentially a “by phone” buyer rep. So if a Redfin buyer wants to see a listing, they call the listing agent and ask for an appointment instead of having their own buyer agent walk them through the house.
This is not the best representation for the buyer, and it places listing agents in an awkward position of having to answer questions (or decline to answer questions) from a buyer represented (if we can call it that) by an absentee agent. How the heck can that agent make a proper recommendation for an offer price having never set foot in the home?
Personally, we don’t work directly with buyers on our listings and always suggest that they find an agent. There are just too many things that can get sideways in trying to run both sides of a deal. The exception would be a junker or rehab property being purchased by an experienced remodeled.
Steve
Steve
If one can’t sell on quality and service, they have to sell on price! At a recent Open House, I had a couple whose ‘Redfin agent’ couldn’t be found. So, they wanted me to spend the three hours discussing the house with them! I figure they should rebate the commission to the client, they certainly don’t earn it!
Great article – you hit the nail right on! Kelman should go get a job!