Kris recently got together with the CEO of Redfin, Glenn Kelman, for a chat. Redfin is the most recent of the “discount” brokers to hit the area. The backdrop of this meeting was the impending rollout of Redfin in SoCal this week. Glenn also made the rounds to visit Roger Showley, real estate writer for the San Diego Union Tribune, and Channel 10 to spread the gospel of yet another discount model. Most of Kris’ discussion with Glenn was recorded (by mutual agreement) and is presented on podcast at the Bloodhound. With so many fish to fry, Kris didn’t have time to get to what I find to be the meat of the issue, so I will chime in here. Given that the meeting took place last week and Glenn imposed an embargo on the broadcast until 7:00 AM this morning to coincide with the debut of their San Diego website enhancements, and given that I had the opportunity to hear the taped interview before going “live”, I have had some time to gather my thoughts.
First, I would say that Glenn sounds like a nice, intelligent, well spoken person. He was very forthright in admitting to existing and potential flaws of the model, acknowledging that it is still evolving and that there are still several “issues” that need to be resolved. While his motives for bringing this new discount model may not reach the standard of being “noble”, he does seem to sincerely believe that there is a better, more efficient and less costly way to buy real estate, of course within the context of a for-profit operation. He is not running a charity here and is the first to admit it. Note that I don’t mention “sell” real estate. Although Redfin claims to have the ability to do this, their model, at least at this point is heavily weighted on representing buyers.
I’m not sure whether the background derives from negative personal experiences Glenn has had with real estate agents in the past or whether he is just an opportunist. He says that there are too many substandard agents today. I agree. The current barrier for entry into the business of real estate sales is far too low. In less than a year, my 17-year-old daughter, Becky, can get a license. Believe me, she can pass the test now without breaking a sweat. Does that mean she has the life experiences and business experiences to properly represent buyers and/or sellers? Of course not. There are too many agents out there who have no business being in this business.
In a nutshell, the Redfin model primarily relies upon a buyer-side commission rebate, generally in the range of 1%-2% of the sales price. Glenn will station an “agent” in Del Mar. Yes, one agent for all of San Diego County.He says that he wants to provide a “high quality customer experience and consistent service”.
Generally, the Buyer would be responsible for finding their own home, determining an offer price and submitting this information on-line to the Redfin agent, who will then forward it to the Listing Agent. If you do not feel comfortable on your own or are unable to find your perfect home driving around, you have the option of having Redfin show you homes, first 3-hour tour free, then by paying Redfin $150.00 per home or $250.00 for a 3-hour ”Home Tour”. According to their website, they feel that charging for the home tours will be a small price for buyers to pay when compared to the rebate. Another way to see homes for sale, according to their website, is to call the listing agent and have them provide this service, even though they do not represent you. The website actually contains a “script” for buyers to use to get into homes. This may be one of the “hotspots” with local agents, since a buyer who is represented by Redfin will try to shift the buyer agent responsibility on the listing agent. Their website actually advises the buyer to say, “If you are unavailable to show the property, my broker is happy to call the seller to arrange a tour.” I suspect this tactic may result in some interesting responses from listing agents.
The licensed agent will work as a “Transaction Coordinator”, pushing paper. There will also be “Field Agent(s)” who would be responsible for doing things like attending the property inspection. It’s not clear if this is a licensed agent, since Glenn did not say. He did state his goal several times – “Winning a good house on good terms” and providing “good service from offer to close”. Very worthy, but nothing new here. We all try to do that, of course.
So, here are just a few of the many questions that come to mind with regard to the buyer’s agent responsibilites if you are using Redfin:
1. Has your agent actually been inside or seen the comparable sales in the neighborhood? Will he/she be able to advise you on the differences that may justify establishing a reasonable purchase price for the home you have selected, even though the agent has not seen the home?
2. Is the agent aware of the current sales price trends in the many “micro-markets” that make up San Diego and, particularly the micro-market where you are searching for a home?
3. Since Redfin boasts that their rebate to the buyer is partly due to their ”on-line” efficiencies, who actually negotiates the purchase price, escrow period, title company, escrow company, items included or excluded from the sale, rent-backs, etc.? How will the buyer know that the best possible purchase price and terms have been negotiated?
4. What if the sale is contingent upon the buyer first selling their home or the seller finding a suitable home? These can be delicate and complex issues. Who negotiates these and other related terms? Is it done exclusively on-line by the one agent Redfin has in San Diego County or is the buyer on their own (he/she is, afterall, getting a rebate)?
5. Will your agent assist you with evaluating and finding a reputable lender that they have experience working with and review the lender fees associated with the loan? Will the agent coordinate with the lender to ensure that underwriting is sufficiently completed by the time the buyer must waive contingencies (when their deposit becomes non-refundable) and manage an on-time close of escrow?
6. Who reviews the title report, escrow and homeowners association documents, etc. and who is responsible for resolving issues arising from them?
7. Who is responsible for determining which of the items identified in the property inspection are worthy of further inspection and/or inclusion in the the Request for Repairs? Who negotiates the Request for Repairs?
8. Does the agent attend the walk-through inspection just prior to closing escrow? What if, at this inspection, the seller has not completed or properly completed items agreed upon in the Request for Repairs? Who is responsible for resolving this? What if close of escrow cannot be delayed without incurring liability? Who is responsible?
9. Will the agent review all seller disclosures and advise/counsel the buyer regarding identified issues?
10. Who will conduct the agent visual inspection?
11. What happens if the buyer fails to preform in a timely manner and receives a Notice to Perform? Does the Redfin agent jump into action and negotiate with the seller’s agent in an attempt to save the deal (and the buyer’s deposit)?
Summary: These questions just begin to scratch the surface of issues an agent must deal with. To do our job correctly regardless of whether we are representing a buyer or a seller, it takes a considerable amount of focus and direct contact with our clients on an almost daily basis, especially when there are multiple escrows going simultaneously. Redfin, in order to keep their cost structure down and offer a rebate, must rely upon the internet and the buyer doing much of the work, necessarily and dramatically reducing the kind of direct contact we find to be necessary with most clients.
Opinion: The “hook”, of course is the buyer rebate that Redfin will advertise heavily. They probably hope that their buyers will overlook the reality that Redfin would end with 1% of the sales price for doing very little for their client’s, not to mention shifting liability to both their buyer and the listing agent. For a company with a business model that professes that commissions are too high and service from agent’s is too low they are, ironically, raping their own clients by receiving too much commission (for what they do) and providing less service. In trying to shift the traditional buyer’s agent responsibilities to their client’s and the listing agent, it seems to me that the value they bring to a buyer and a transaction is worth very little, maybe about 1/10 of the 1% they would receive. I’m not suggesting there aren’t clients out there who may find this appealing. I just think it will be a very small segment. Maybe Redfin should offer part of their rebate to the seller…
ABOUT THE AUTHOR Steve Berg is Broker/Owner of San Diego Castles Realty. He is an awesome agent and an all-around great guy. When he is not dazzling clients, he contributes the occasional article here. 
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Answers to questions 1-11, with regard to buyer’s agent responsibilities:
1. The whole premise of Redfin’s sophisticated mapping of realestate data is to allow the consumer to easily become more educated and sophisticated when making decisions on their most important investment. The buyer’s agent therefore, is held to a much higher standard when the buyer is more informed. No doubt, the buyer, as well as the buyer’s agent, are be better informed when visiting the actual property, so it is incumbent upon the selling agent to be responsible, ethical and professional enough–when representing their client (the seller)–to not ignore requests from Redfin buyer’s agents to view the property.
2. Why would Redfin buyer’s agents be any less informed about “micro-market” price trends than any other buyer/seller agents working in the area?
3. How does the buyer know that the best terms and prices have been negotiated with ANY buyer’s/seller’s agent? The problem has always been that buyers–and sellers–have traditionally relied too heavily on, and entrusted too much to, their agents. This leaves the buyers and sellers too far out of the loop, and allows unscrupulous agents to manipulate terms and prices. The way to reduce these pitfalls is to provide more information to the real estate consumer, and thus create the efficiencies that Redfin passes on through competitive pricing, or “rebates” as it is referred to.
4. Buyers represented by Redfin have the added benefit of having two professionals working on “delicate and complex” issues: the agent, and the “transaction coordinator.” Obviously, no complex real estate transaction would take place entirely online. To suggest so, is nothing more than a scare tactic.
5. Most traditional agents don’t do this anyway–so it is the consumer’s responsibility to ask these questions up front before hiring an agent. It is also good sense for the buyer/buyer’s agent to obtain at least three quotes from reputable lenders. Finding reputable lenders is not rocket science, it just takes some time and energy.
6. Again, these are questions that all buyers should ask of any agent before hiring.
7. If buyers, their buyer agents, and their home inspectors are not all sitting at the table working out these types of issues up front, then buyer beware! Again, buyers need to ask these questions up front, before hiring an agent.
8. Is the implication here that companies like Redfin do not perform these same activities? If so, then why not simply come out and make the charge? Again, these are issues that ALL agents are accountable for, Redfin included.
9. Again, is the implication that Redfin doesn’t do this? If so, where’s the charge?
10. Again, is the implication that Redfin doesn’t do this? If so, where’s the charge?
11. Why would this situation be different for ANY buyer’s agents?
In response to the summary:
In the real world, rarely does any traditional agent expend the amount of “focus and direct contact” as is being proclaimed here. In fact, one way that buyers have been able to compensate for the all too common lack of attention they recieve from their agents is by gaining access to the same kinds of information that their agents have. This access is what has made buyers more sophisticated, empowering them to make their agents more accountable, enabling them to make more informed decisions. When buyers are more educated, the agents who represent them are held to higher standards.
Redfin doesn’t “rely” upon the internet to keep their costs down, they simply “offer” the internet, and the information it can access, as a “valuable–and previously withheld–source of real estate information to buyers who have traditionally been less informed. When buyers are more informed–and believe it or not, they prefer to be–they have a much larger stake in their investment; plus they have a more open and more honest line of communication with their agent. Buyers who prefer to have less control over their purchase can simply defer the process to a traditional agent if they choose, and thus pay a larger commission. It’s a choice! And it’s great now that buyers actually have that choice; that companies like Redfin are offering that choice.
After all, isn’t this how the internet has been transforming businesses in almost every industry?
Of course, it’s easy to suggest—or claim—that the Redfin “rebate” doesn’t amount to the money that a buyer would otherwise save through negotiating a lower purchase price with their traditional agent; it’s just as easy to presume that traditional agents are keeping buyers—and sellers—in the dark, so that they (the agents) are able to–and often tempted to–negotiate the best deal for themselves rather than their clients.
The best advice for buyers:
Do your homework. Be informed. Ask questions. And remember: traditional agents make money off the sale, not necessarily the work that goes into the sale.
I love discount real estate brokers! They make us full time professionals look like a Real Estate God! Here’s my favorite article about discount real estate brokers: http://www.homefindinginfo.com/DiscountRealEstateBrokers.htm
When was the last time you knew someone who:
A. Needed surgery and shopped around for a surgeon who offered operations for 1/2 price? OR
B. Was an expert in his field and didn’t want to be paid according to the results he could offer his clients.
I’ll venture a guess that everyone would say…. Never, and Never.
You won’t find a Monet being sold at Wal-Mart, and you won’t find a poster of Pamela Anderson being auctioned off by Sotheby’s. Just in case you’re still lost…. Pamela Anderson = Discount Real Estate Broker.
Hi Steve,
Thanks for the kind words about me and the tough questions about Redfin, too.
Rob McGarty, director of real estate operations at Redfin, started to write a comment about this post and now, here in the middle of the night, we joined forces, so this is a joint response.
We agree that evaluating a home and its neighborhood is a very personal judgment that requires walking the streets and peering in every closet. We believe that consumers know what they like, and can make their own choices about where they want to live. Once a customer has found a house he or she likes, Redfin’s role is to provide the most objective data possible about prices in the neighborhood, so that a prospective buyer can make an informed choice. We also offer our advice about the price, based on the deals we’ve done. Once an office gets busy, each agent gets plenty of exposure to what’s happening in the market.
Where our agents excel is in negotiations. Our agents do not spend time marketing their services, prospecting for clients or hosting home tours. They focus all their energy on closing: negotiating all the terms, arranging the loan, coordinating the sale of another property, reviewing the inspector’s report and ensuring the appropriate repairs are made, driving the transaction through escrow. These are the areas that matter most to the consumer, and it is where we believe our technology and our business model give us a significant advantage over traditional brokerages.
Because we pay agents bonuses on customer satisfaction, not commissions, Redfin agents’ only incentive is to get the best price, not simply to close regardless of price. Where other agents may be tempted to begin looking for the next client once a deal is initially accepted, a Redfin agent has no such obligations except to see the deal through. Redfin and its agents cannot accept any gifts or fees from third parties so our advice can remain objective.
We comb through the seller disclosures, review the title report and escrow documents, and attend the walk-through and the visual inspection. Once a client engages with one of our agents, the agent and the client work together exclusively, with the client able to call the agent on his cell phone at any time for an emergency. Whenever a deal is in jeopardy, we leap into action at a moment’s notice.
If all this weren’t true, we wouldn’t have been able to close over 200 deals in our first year, with a 95+% satisfaction rate. Our savings come not from a reduction in service once an offer is in play, but from lower sales & marketing costs, and a model that waits for the customer to come to us when he or she has found a home he likes.
Hopefully this answers yours questions, e-mail me (glenn dot kelman at redfin dot com) or Rob (rob dot mcgarty at redfin dot com) if you have more.
Best,
Glenn & Rob
Glenn (and Rob), Thank you for stopping by to clarifiy the extent of your services, apparently at 2:00 am. It must have been a busy day for you. Glenn, thank you again for the opportunity to meet with you last week.
If Redfin can indeed deliver on all that you say, I applaud you. There is much skepticism, of course, and we will be anxiously watching your progress in San Diego. Best of luck.
Stuart, if you don’t think people price shop surgeons, google “medical tourism”.
Interesting information. I just heard of redfin today. One agent for all of San Diego County. From what I can see on the MLS neither their agent or the company has ever closed a sale through the San Diego MLS. That alone should qualify them for top customer service and a source of market knowledge.
They appear to be a force to be reckoned with!!! Just like ipayone turned out to be.
Nice blog!
Gene – Thanks!
Regarding “the” agent, I think he has done 20 sales over five to six years, or an average of fewer than five transactions per year since he was first licensed in 2001. I could be wrong. Would be interested to know where your info came from.
Actually you appear to be right. He looks like he’s on the MLS roster under 2 ID’s. I searched the ID under Redfin which yielded zip.
This should be interesting to watch. ipayone spent, I would guess, several hundred thousand dollars (or more) in promotion and fell flat on their a$$. Redfin, as far as I can tell, has spent 0.
For redfin to announce their roll out in San Diego with a single, relatively inexperienced agent looks like an attempt to please and or encourage their investors.
Think about it… a single agent in every major city in the country and you appear to be “Nationwide”. Which or course you are… kinda. That means… More investors!!!
I think I’m going nationwide. Cheers!
Well Kris,
I’ll chime in here one more time. (at least for now) After thinking about the above post and “2 ID’s” I went back to the MLS roster and checked.
Sure enough, “the” agent does in fact have 2!
One ID lists him as an agent with a national franchise, full service, full price company I’ll call “Big Blue”, and the other ID lists him as an agent with the new San Diego discount roll out I’ll now call “little red”.
I wonder if either Broker knows “the” agent is working both sides of the fence???
My statement above about a “relatively inexperienced agent” looks to be pretty accurate as I don’t think any truly experienced Broker would try to pull off such a thing in our “information age”.
Hmmm… I’d guess a “Big Blue” branch manager is preparing for or already has had a meeting with ‘the” agent.
I’d love to hear a response from the folks at “little red”, but I’m sure that’s asking too much.
Cheers!
Gene,
The San Diego agent explained in a post at Bloodhound that he was a member of a different MLS while a Big Blue agent (North County), while his listing with Redfin is with Sandicor. Still, agreed that the dual listing is strange. One would think that the former Board membership would have gone away by now.
I don’t think he is a double agent. I called his Big Blue office asking for him and was summarily referred to the voice mail of “Pete” (not our Redfin agent’s name).
I’ll throw in my two cents.
I can picture a practical application of the Redfin strategy. The buyer does the work to find the house, and submits an offer. The Redfin agent, who’s role is to be the master negotiator, helps to find enough common ground to produce an accepted offer.
The buyer hires an inspector, and gets the report – whoa, the house has concerns. The inspectors are very thorough, and are worried about CYA, so they over-report, and let’s face it, you can find problems in any house.
The buyer, who is already feeling some buyer remorse, tells the Redfin agent to instruct the sellers to fix everything on the list. The sellers, and sellers’ agent, are already miffed at having to show the house themselves but having to pay the same commission, take one look at the lengthy list of requested repairs and say no way, take a hike.
In that moment, it takes a veteran agent to put that deal back together. An agent who has 20-30 deals under their belt is under-qualified to pull it off, and the deal dies.
The buyer will have to start over searching for another house, hopefully finds one, and pay another inspection fee – and risks the same scenario happening all over again.
There is rarely any recognition of the difficulty of reconciling the repairs request in a tough market – buyers, sellers, and most agents take it too lightly, and deals blow up regularly as a result.
Get good help.
The repairs request can be a delicate negotiation.
Just so you know, we hook up the buyer with a list of recommended inspectors, or work with one that the buyer prefers. Then of course we go over the list of repairs proposed by the inspector to talk about what’s reasonable to repair and what isn’t. Usually, a buyer who wants the house is reasonable and the list is manageable; when it turns out there’s a fundamental problem with the house, a Redfin agent may advise you to walk from the deal because sometimes that’s the best course of action.
Having done over 30 deals, Erik is plenty experienced to be able to handle an inspector’s report. You guys should just meet so you can size him up for yourself.
Glenn: Thanks for the clarification regarding the inspection process. It does point out an example of one of the many fundamental differences in your business model. While your agent reviews the list of deficiencies identified in the inspection report, the “traditional” agent was actually there, on site to witness first hand, the identified issues. So, when Erik is in the office reviewing the report comment on “cracked floor tiles” or “water stain noted on garage ceiling” or one of the thousands of potential other similar type comments, how will he know what to recommend? Is further investigation warranted? Are the cracked tiles or the ceiling stains a non-issue? Who will identify, arrange for and meet the vendor(s) who may further investigate these issues? Wouldn’t you want Erik to be there to personally observe the deficiency and hear what the consultant has to say in order to better advise your client?
Kris and I have reviewed many inspection reports. Most are pretty sterile. In almost every case, had we not been there personally to witness and better understand the details and magnitude of the identified issues we would be at a terrible disadvantage in trying to properly advise our clients. Leaving it to the client to decide without the benefit of an experienced agents input who was actually on site during the inspection, in my opinion, creates a significant amount of liability, both to the client and the agent.
What is our/your fiduciary responsibilities to our/your clients?
I understand what you are trying to accomplish. You have explained it well. As I stated previously, that there is probably a small segment of buyers out there who may find your model appealing. I think we will just have to agree to disagree on the rest.
“there is probably a small segment of buyers out there who may find your model appealing.”
I’m willing to bet money on that statement. That’s based on nearly 25 years in real estate and working for both a national franchise and a discount company… trust me, just because you offer them cheap, don’t mean they’ll come running. I think if “little red” were honest they’d admit the crowds ain’t breaking down the doors. (200 deals in the first year??? Hell, I know of many single agents who do more than that) As Nordstrom and many others have shown, people will pay a premium for what they consider to be premium. And that includes selling and buying a home.
Cheers!
http://voiceofsandiego.org/articles/2007/02/17/housing/939picket021207.txt
It’s a couple that was basically taken advantage of by their Remax buying agent. If only they had used redfin or buysiderealty instead, they probably would have saved themselves about $150,000 AND gotten that commission kickback. I had a similar experience during my last real estate purchase where I basically had to go fix all the mistakes that my agent made. Why do you think real estate agents have a reputation that is quickly moving to the same level of litigation lawyers. The point here is that a large number of buying agents are spending all their time looking for people and not servicing the customers that they have. I’m not saying they are all bad eggs, but, if you don’t know someone you can trust, you might as well do the legwork yourself and get the kickback. That way you can make sure you aren’t being screwed.
Sven: I generally agree with you. Well, almost (since I’m not sure how one saves $150,000 using Redfin or anyone else). The key for anyone contemplating a purchase or sale is not just to select an agent, but to select the correct agent. Real estate is no different that most other fields. There are a few really good practitioners, many more average ones and too many poor ones. Selection of an agent is the most important decision you can make in the process. While many buyers and sellers spend a significant portion of their time researching the internet regarding their home purchase and sale to try to empower themselves, few spend a fraction of that time evaluating agents. Unfortunately, with the huge increase in new licensee’s in the past few years (it’s sooo easy), there are many agents out there with very little (or no) experience.
Just last week, two of the escrows we closed were transactions which Kris and I were the SOS (Save Our Sale) agents. The agents hired by these clients were: 1.) An agent recommended by the client’s boss, who had never done a deal in this community, and 2.) A brother who was a mortgage broker and who offered to rebate the entire commission. In both of these cases, the homes sat on the market (a declining market) for six months before we were called. Now both of these client’s were very nice, intelligent couples. They now know there is a difference and they greatly appreciate the importance of agent selection. It can not only be the difference between night and day, but between success and failure.
Your suggestion, “…you might as well do the legwork yourself and get the kickback”, is, in my opinion, a defeatist attitude and one that will likely cost you. Buying or selling a home is a huge deal. Do it right. Take the time to interview and select the correct agent to represent your interests.
And One More Thing…
Sorry, Sven, I just had a few more thoughts. Your frustration, and that of many other buyers and sellers (and the better agents) is a function of the fact that the barrier for entry into the real estate business is still too low (IMHO). I’m not certain how to resolve this except to say that free enterprise will ultimately determine the agents who are successful. Those will be the ones who take the best care of their clients. For example, we believe that too many agents (and their broker’s) rate their success by the number of transactions they complete. Yes, this is one important method to measure success. But Kris and I measure our success by the number of satisfied clients. While this may sound old fashioned, we sincerely care about the results; not just that we closed an escrow, or 50 escrows for that matter. There are excellent and successful agents all around San Diego who have many years of proven experience with any number of brokerages; Maxine and Marty Gellens in La Jolla, Neuman and Neuman downtown, Patty Mckelvey in South Bay to name a few. Why would anyone who is thinking of buying or selling in those areas not interview one of these top agents is bewildering.
We just got a listing in Mira Mesa last week. Another Save Our Sale deal where they were on the market for eight months (with a friend as their agent) , unsuccessfully. The sellers, a wonderful young couple, finally decided to take responsibility, did their research and selected who they believed are the most qualified agents to get their home sold. They put us (and I can only assume the other agents) through a grueling interview process. They didn’t want to hear any BS. They want service and they want results and they want it now. This is the kind of challenge we thrive on. Not a chance for a comission, but a chance to dazzle the client. The commission will arrive, but only if we do our job well. It may sound like a subtle difference to you and others, but to us it’s huge and we sincerely believe in this philosophy.
Kudos to Glen and Redfin! We welcome him and his business model. Glen, if your model was not going to have an impact, then you would not hear all of these folks sounding off. They are terrified of your model, which will succeed over time and with adjustments and fine tuning. As a prospective buyer, I can begin to tell you how sick and disgusted I am with San Diego reltors who will cheat, steal, and lie to make a buck. Mind you, there are still many respectable agents who truly provide a service and earn their commissions, however they are few and far between!
You realtors underestimate the buying the public and how informed and sophiticated we have become and will continue to become. Be very scared of Redfin!
BD – I’m not certain how many transactions you have been involved in but it sounds a bit strange (and sad, if true) that you know of so many realtors who are so bad. At least you acknowledge that there are respectable agents, as well. Knowiing that, I question why you would use any other than the respectable ones.
I appreciate your warning that we (Realtors) should be very scared of Redfin. However, I believe that since we are really targeting different segments of the market than Redfin, I would suggest that Redfin needs to be more concerned of their direct competition from the many other discount, rebate and “menu of services” models that have existed here for much longer.
“They are terrified of your model”
Hate to break it to you BD, but we’re not. Steve is really right on here, their direct competition is other discounters.
Oh, and I can’t begin to tell you how sick I am of people generalizing about Realtors, attorneys or any other profession. That statement blew any bit of credibility you may have had.
Cheers!
I think redfin is actually helping reators like Chris and Steve, because they will kill the bad agents in the business and improve good agent’s chance to find business among seller and buyers.
Thank you Gene and AC. I think Redfin should be more concerned with BuySide Realty, the other buyer rebate model and a direct competitor. Their very small segment of the market just got smaller.
OK folks…
I’ve actually used Redfin. Twice. In the last couple of months. I did the legwork. It was OK with me. I had the inspections done. I took responsibility. I hired my own lawyer to represent me for the transaction. I used the Redfin guy as my representative in negotiations and in dealing with my lawyer. I saved ~$25K. I will never buy without representation, but I will never be represented by a full-service agent again unless they can change their pricing model, which might have been OK with $100K homes, but with $1M homes, borders on extortion. There is NOTHING you do as a full service agent that I cannot do myself, or pay a nominal amount to have done, including full legal representation for a transaction – which realtors (TM) do not provide.
Exe – That’s great that it worked out for you! Not everyone is going to need or want the same level of protection, counsel and representation, which is why there has been and will continue to be a market (albeit small) for these limited service models. The key was that you at least knew enough to seek legal counsel – Very good move.
I like the little “TM” after the “Realtor”. Very observant and detail oriented. Are you sure you aren’t an agent?
I just wanted to add a comment as a future buyer that may know more than the average joe (from reading sites like this), but certainly not as much as everyone else on here.
I’m yet to buy a home in this over-priced market, and I can respect the case for the service Real Estate Agents provide. However, with no offense to any Agents here, I agree with the comment that realtors have a similar stigma as lawyers. Certianly it’s not true across the board, but IMHO the impression is they are only out to maximize their commission, which means a higher selling price.
You can thank people like David Lereah for lying to the public that the worst of the deflating bubble is over, month after month. It’s just propaganda, to prolong the success of thousands of agents and brokers who have allowed people to buy homes they can’t afford.
Maybe those are the agents you refer to above that should not be in Real Estate, but nonetheless that is a the perception of many people like me.
If there are any good Agents in Burbank/Glendale though let me know.
LA Renter – Speaking on behalf of Kris and myself, we are generally in agreement with you. There are posts and comments all over this and other Blogs bemoaning the fact that the barrier to entry in real estate is far too low and that there are too many poor agents chasing too few deals. And, yes, NAR, to all of our detriment (IMHO), spins the market in a manner that hurts all of our credibility. In my recent post, “The Difference” I speak to the issue of client’s who spend so much of their research time on websites featuring homes/prices but relatively little or no time trying to evaluate and select agents to interview. Almost every day we see new listings in the MLS with agents we have never heard of. Top agents can be found, primarily on the internet or through referrals of friends who have had a good experience.
And, to make matters more complicated, just because an agent has done many deals doesn’t necessarily make them the right one for you. We know seasoned agents that we would never recommend to anyone (were we not in the biz). So you need to try to “qualify” them. Pick the top three or four who are working the Burbank/Glendale area and meet with them. Interview them and try to determine who you perceive will REALLY look out for your best interests. Kris and I work for each client, not just for that particular transaction, but with the intention of providing the kind of service and results that will cause each and every client to want to use us for any subsequent transaction and/or refer us to their friends.
I wish we knew an agent in your area, but we don’t. Hopefully, through your homework or by someone reading this and offering their recommendation, you will identify a great agent. We sincerely wish you the best of luck!!
“It’s just propaganda, to prolong the success of thousands of agents and brokers who have allowed people to buy homes they can’t afford.”
Wow, I feel so POWERFUL! To have “allowed” people to buy what they can’t afford.
Hmmm, I think I’ll “allow” the war to end. Yea… that’s it! That’s the ticket! What else can I “allow”???
Actually LA Renter, try telling a home buyer in a frenzied buyers market that he or she is paying too much and they will probably tell you that you’re crazy and then go find someone else to represent them. Been there, done that!
Cheers!
One of the biggest problems in this country today (and the world for that matter) is people not taking responsibility for their actions and/or decisions. The first two things I taught my children was to always be honest and that they must always take responsibility for their actions. It’s that simple.
Gene is correct. An agents job is to advise their clients, hopefully with the benefit of their knowledge and their experiences. Ultimately, the decision to buy or sell rests with the client. Any client who claims they were “forced” or, as LA Renter suggests, “allowed” to buy or sell, is simply not taking responsibility for their decision.
Exe-
How do you know you saved $25K?
This is the root of your misunderstanding. You are not buying a commodity with a fixed price.
In other words… Unless there were multiple offers on the two homes you bought and someone else was working with a traditional agent AND they also offered the exact same amount that you offered, but would have paid their agent $25K more…
Then you have no idea what any other agent could have negotiated on your behalf.
The fact is you paid a transaction coordinator (someone who usually makes anywhere from $250 – $350 per transaction) much more then what they deserved for pushing your paperwork.
So, how much did you really save???