Redfin wants you to feel special!
Want to feel special? Just submit the online form. Our agents are standing by.
The announcement came Monday and, as always, I had to let the pot stew for a bit. We all know that the beef gets more tender the longer you cook it.
Redfin, those freakishly hip fellows who promised to stand traditional real estate on its head, just got a little more, well, traditional. Recognizing that those darn buyers refuse to be entirely clinical when spending hundreds of thousands of dollars, they just refuse to let go of that silly emotional baggage, Redfin is now at least open to the idea of doing a little more… for a little more, of course. Dang, this business of selling homes is more complicated than we thought!
Redfin is now offering a premium home-buying service, which lets our clients tour homes to their heart’s content. The name of the service is Redfin Select.
Why not? The USDA has been using this tiered method of grading the quality of their meat for years. Select, alas, is inferior to Choice and Prime, but it beats the socks off Cutter and Canner.
About the tours:
- Redfin tours are up to two hours each. You can see as many as five or six homes, depending on your route.
- Tours are available seven days a week, from 9 a.m. to 6 p.m. We’ll get you on a tour within 48 hours of your request, often sooner.
- Redfin offers rush-hour tours, 40-minutes each, Monday through Thursday 6 p.m. to 8 p.m., for when you need to see one or two homes quickly.
- You can schedule up to two tours per week.
photo credit: John Edwards 2008Â
This offering for the more special clients (special as in a serious drain on the old resources) will sadly only be available in the Seattle market initially.
…we’re only taking 20 clients at first, so we can be sure to have enough tours to go around for everybody, even on short notice.
And until we can rent a bigger bus.
I could have a field day with this one, but I suspect our five readers care very little about the wacky goings-on at the Redfin think tank. Let me just say that if the buyer of one of our recent listings had used this system for the home that sold in one day with multiple offers, he would be back on the cattle car next week (but only during the hours of 9 a.m. and 6 p.m. and with 48 hour’s notice and not more than twice, assuming he was able to “get the forms” from his field agent in time).
I do find it amusing that it took a mere 2 years and over $20 million of venture capital for the self-proclaimed champions of buyers’ rights to figure out that people want to see houses before they purchase. What’s next? A program where a buyer can request a field agent who, if not exactly familiar with the neighborhoods in which they are interested, can at least find it with a compass and a note pinned to their collar? Now, that would be special!
April 10th, 2008 at 9:10 am
Damn! I just finished memorizing their last set of rule changes. This is getting complicated.
April 10th, 2008 at 9:38 am
Many agents in our market now are offering variable sales office commissions stating (for example) “3% Sales Office commission, 1% if Sales Agent not present at all showings”, so this is the necessary next step for Redfin if they want to try to get the full Sales Office commission.
April 10th, 2008 at 9:42 am
[…] Redfin wants you to feel special!, by Kris Berg. […]
April 10th, 2008 at 10:13 am
Ah hah! So that explains it. Since our Board doesn’t allow variable commissions (except in the case of dual agency), I guess the Redfin bus won’t be traveling through our San Diego neighborhood any time soon. Thanks, Marlow.
April 10th, 2008 at 10:31 am
Ayn Rand would have referred to the Redfin business model as “the sanction of the victim.” Redfin can only take advantage of the system with the complicity of the listing agents involved.
April 10th, 2008 at 3:24 pm
Once upon a time, not that very long ago, the average realtor was a highly skilled person. It was not an easy business to get into, and it took some work to get established. Successful realtors really had to know their stuff. Then came the “housing boom”, and it didn’t take much skill at all to sell a house. Lots of people became realtors, and the average quality came down a great deal. These new realtors didn’t know much more than what David Lereah told them was true. Alot of people got bad advice, and they have lost faith that a realtor is worth the money they get paid. Realtors were perceived as very expensive “sales people” rather than true “agents”.
Into this gap steps the internet. Since many people aren’t aware that its actually possible to get expert advice, they think they can do everything themselves. Now, if you have a “newbie agent”, then it may actually be a better idea to use that internet than an agent. The “newbie agents” may very well do more harm than good. On the other hand, if you get the right agent, they will undoubtably be worth more than the cost. The problem for the public is finding that right agent.
Pressure that is felt by standard agents from the internet is the result of allowing the quality of agents (and NAR press releases) to get so low. In a normal environment expensive expert advice should beat the pants off of cheap internet advice. My two cents.
April 10th, 2008 at 7:06 pm
Thot everyone would like to know that I will now show homes for $500/each
April 10th, 2008 at 9:39 pm
Ha! Redfin Canner! That’s good eatin’.
April 10th, 2008 at 10:41 pm
Here is another way to make clients and competitors, for that matter, feel special!
http://tinyurl.com/2tcnbl
April 11th, 2008 at 1:31 am
I actually used Redfin recently with that offer I put on the house. I thought they were pretty great. My only complaint with them is the $250 per showing policy. When you are serious about buying a house, you don’t want to be thinking “Should I go see another property I might hate… I mean it’ll cost me $250 to see it”. This new policy (although not active in San Diego) is a good step. They have agents that just shows properties all the time, and they have agents that specifically deal with the transaction. The one I was dealing with closed 35 transactions himself just last month, was very knowledgeable, and, most importantly, wasn’t pressuring me to buy.
You have to keep in mind that I’ve only bought and sold one piece of property before this. Last time, I had the worst experience with both realtors on the buying and selling side with both transactions. I had keys lost 3 times when selling the place. I had realtors stealing from the tenants that I had living in my condo, and showing up with no notice. When I was purchasing, I had the biggest idiot ever. Every question was answered with “I dont know”. Pretty much I ended up having to search the internet for everything I needed to know about the transaction. I have to admit, it’s very likely that I was just unlucky and ended up being exposed to those realtors that give realtors a bad name, but it gave me a very sour opinion of the profession at the time. I was rather unhappy that they got paid 3% each both times on the transaction.
Overall, I thought Redfin was pretty good. Maybe it’s just that I’ve never worked with a really good realtor to see the difference. I’ll admit that I haven’t seen Redfin through the whole transaction yet, but, so far, they are pretty solid in my opinion. Perhaps if this transaction doesn’t go through, I’ll try a conventional real estate agent and compare the differences.
April 11th, 2008 at 10:08 am
“The one I was dealing with closed 35 transactions himself just last month…”
Sven - One of the most important things a buyer and seller can do when evaluating/selecting agents to represent them is verify the information provided by the prospective agent. Assuming you are planning to buy in San Diego County (based upon your recent and past posts), according to SANDICOR, Redfin has not even come close to closing 35 transactions since their existence began here more than a year ago, much less 35 in a month.
“Maybe it’s just that I’ve never worked with a really good realtor to see the difference.”
BINGO!
April 11th, 2008 at 11:16 am
>Well this is probably going to come as a colossal shock to anyone who knows me, but I just recently placed an offer on a house… So I go loan shopping… Turns out, I may not be able to get financing on this place.
Sven, You say you thought Redfin was “pretty good.” From your previous comment (on a different post), you think pretty good is letting you go through the entire home search and offer process without knowing you can get financing? Yikes! That doesn’t sound at all good.
>… but I think I’m going to end up having to back out of this one.
I assume we are talking about the same “one.” While you may give them a high customer satisfaction ranking, my customers are typically most satisfied when they can actually close on their home of choice.
April 11th, 2008 at 1:22 pm
Well that’s not on their end. If they were a mortgage broker, I could complain about that. I had a pre-approval, but I started looking at the fine print on it. It looks like I might be able to get it after all. I dunno, I’ll have to see what comes down the pipe from that.
I’m not arguing that real estate agents should all be replaced with Redfin or Iggy’s like services. It’s more that maybe these discount agents do work pretty well for some customers. I remember when the online stock trading first came out. A lot of stock brokerage houses had a lot of hate for these discount brokers that were doing transactions for 1/5 of the price. Saying, “Yeah, but you dont have someone to talk to” with the rebuttal being “Yeah but I never really got the time of day from my broker anyway”. Yada yada, it’s the same song you hear between traditional agents and these new discount agents.
The end result years later in stock trading is that both entities exist pretty well in harmony. There are still many full service brokerage houses doing extremely well, and there are still many discount online brokerage houses doing extremely well too. The more sophisticated users prefer the price difference, and the less sophisticated users want someone to talk to and keep an eye on everything.
I predict the same will be true for services like Redfin.
April 11th, 2008 at 1:26 pm
I’m inclined to agree with Sven.
Remember travel agents? They still exist, for people who want someone to take care of all the details. Realtors will always exist for the same reason.
April 11th, 2008 at 2:55 pm
Kris & Steve,
Nice job with your opinion on a difficult topic to chime in on. Many people like to make comparisons between home buying and other industries, but in reality, very few, if any other industries carry the combination of emotional and financial significance that is associated with buying a home. When a limited service company distances itself from both the financial and emotional aspect of the home buying process, they become a paper pusher, which is indeed sad.
April 11th, 2008 at 3:12 pm
Steve Belt,
I’m coming to the conclusion that every real estate agent should get a bumper sticker that says “Everything and everyone is different. I swear we are so different! There is nothing like this or me or what I do anywhere else.”
Not to brag, my track record of predictions has been pretty spot on. On my blog I told people to buy puts on Countrywide when it was at $40 a share. (your investment would have gone up 500% in less than year if you had) I predicted the real estate crash back in 2004 (not exactly a crystal ball there, I think it was obvious, then again, I heard a lot of insiders saying it was impossible). I even predicted the start of a redfin-like service back around the turn of the millennium when I was having all these real estate agent woes.
So how about a friendly wager. A case of Stella Artois (Belgium beer) that this will come true. Online discount brokerage volume for purchasing (not selling) in southern California will increase by over 100% in a year and at least 1 more competitor to Redfin will form servicing the southern California area as well. Studies will show that when buying property, the price difference between a discount brokerage purchase and a full service broker will be also be statistically insignificant (5% or less). (I think that last one has already been proven true, sellers drive prices not buyers)
April 11th, 2008 at 4:49 pm
Sven - I get your point. You have been pretty consistent throughout and I appreciate your thought process. The main point Kris was making in her post is that the Redfin model was/is so flawed that they have to keep changing it. Are they morphing toward a larger rebate and more limited service for the consumer? No, just the opposite. They are evolving into a higher cost model that provides exactly what their customer base is demanding - More service. The question is how far will they need to go to survive?
“Studies will show that when buying property, the price difference between a discount brokerage purchase and a full broker will also be statistically insignificant (5% or less).”
The average cost of the home we sell is over $700,000. 5% is $35,000. To me, that is not statistically insignificant. Just because you may decide to use a discount broker doesn’t mean you should be penalized by paying up to 5% more. There is a market price for that home you want and it’s not $35,000 higher or $35,000 lower just because of who your agent is and what their commission structure is. You shouldn’t feel like you should pay one penny more because you may be getting a commission rebate. BTW, for the record (again), my commission is negotiable.
April 11th, 2008 at 7:53 pm
I thought I should post because the Anti-spam word was “wine” and I am drinking wine. Kris: I love the Ramona home listing (as you know that is where we are looking). Maybe I can sell more of my geology hazard maps! BTW, I did my taxes today and owe 6K so I better buy something soon….. My “science” offers are getting me nowhere but I rather stay in my apartment in La Jolla than the house
kc
April 11th, 2008 at 7:54 pm
I thought I should post because the Anti-spam word was “wine” and I am drinking wine. Kris: I love the Ramona home listing (as you know that is where we are looking). Maybe I can sell more of my geology hazard maps! BTW, I did my taxes today and owe 6K so I better buy something soon….. My “science” offers are getting me nowhere but I rather stay in my apartment in La Jolla than the houses I see under 425K (which is what 130K family income buys you these days with 5% down).
kc
April 13th, 2008 at 6:56 am
For anyone who doesn’t know, KC’s “science” thing is creating very cool natural hazard maps. KC - am sorry it hasn’t taken off yet; I think you have a really cool product. There are worse things than being relegated to an apartment in La Jolla, though!
April 22nd, 2008 at 6:22 am
[…] we truly don’t support. Barbie is one of those looking. Not only is she looking, but she is stewing, biting, overindulging and making herself […]
April 22nd, 2008 at 9:33 am
[…] target is Kris Berg, an agent in San Diego. Kris wrote a post about Redfin’s shift to providing more buyer side service, and apparently Ms. Hian felt compelled to […]
April 22nd, 2008 at 9:33 am
[…] target is Kris Berg, an agent in San Diego. Kris wrote a post about Redfin’s shift to providing more buyer side service, and apparently Ms. Hian felt compelled to […]
April 22nd, 2008 at 9:36 am
Sven sounds like a neutral person–thanks for the comments. Kris and Steve deserve thanks for bringing up the issue but I keep thinking they have a strong incentive to self serve.
The recent Oceanside case where the lady sued because her agent did not inform her of lower comps in the neighborhood was astounding to me. The jury felt the buyer willingly paid the price and the agent was not responsible for providing comps.
I strongly disagree: the agent is licensed to collect a huge sum for sometimes very little work (especially if no comps are examined). I call that agent a highly paid expert and the buyer can rely on the agent to protect her interests. But this agent let the buyer pay top price in a falling market without informing the buyer of the very relevant facts.
I know very good agents and very bad agents. The good ones are worth every penny–the bad ones should be sued to bankruptcy–but that never happens. My recent experience as buyer and seller gave me a look at the many pages I must sign to use agents–absolving them of any responsibility. Nice work if you can get it.
Any paradigm changing business has to make adjustments. I applaud Redfin for adjusting to the internet age and for making changes as they see fit. That’s not a sign of weakness but of strength.
I feel manipulated by most encounters with realtors: the advertisements and websites withhold info, trying to force me to contact them for facts to make my own decisions.
I say bring on the new tools of communication: give me more Craigs List, more Redfin and Zillow. Few agents will look out for my interests as I will, so give me the info to do that–and I’ll pay for it. The current commission system promotes an inefficient market and needs reform.
April 22nd, 2008 at 11:09 am
Sven — You said — Online discount brokerage volume for purchasing (not selling) in southern California will increase by over 100% in a year and at least 1 more competitor to Redfin will form servicing the southern California area as well.
I’ve been hearing variations on the whole discount brokerage theme since Nixon was in office. Still waiting.
Increase by over a 100%? Wow — in Redfin’s case that’s what, 50-75 sales in San Diego alone?! 3 Million people and in the time they’ve been here the Berg’s have out sold the entire Redfin operation. Of course that’s unfair the the Bergs. They close more transactions every year than Redfin has in their entire San Diego history.
At least for Redfin, a 100% increase will be just a little harder than improving on nothing.
April 22nd, 2008 at 12:21 pm
Alan Dr-
Y
our right on. From a consumer standpoint, the more informed I am the better. I don’t go to Best Buy and rely solely on their staff or expect a car salesmen to get me the best possible deal. I don’t mean to insult R.E. agents, but his bottom line is the only person who is going to have my best interest in mind is me. At least that’s how an educated consumer should go into the process thinking.
April 22nd, 2008 at 12:40 pm
I am new to the San Diego market, and I am considering using Redfin for the basic reason that I have yet to locate a realtor who I can justify paying $30,000. I have now “fired” two traditional realtors for the simple reason that they were incompetent. The first was a blonde lady that was recommended to my wife, who basically fit all the traditional blonde stereotypes. Whenever I asked her a question she simply answered “I don’t know” or made something up that was completely wrong. Her highest education was a HS diploma, so I guess it shouldn’t be surprising. The second was a realtor a neighbor used. But, it turned out, our neighbor made all the decisions and used this guy just to write up the contract. I got rid of him because the information he kept e-mailing us on comps was often incomplete, e.g., he was only sending the high comps and leaving out any comp he felt was below market value. He also had a tendency to send us e-mails announcing a new listing, when in reality the house had been sitting on the market for a year but some dishonest realtor chose to relist the house to fool naive buyers. His response to me when I pointed these errors was basically oops or he tried to blame the MLS database. If I am going to pay someone this kind of cash, I expect them to doublecheck everything and ensure what they send me is correct, complete, and they can offer some insight into the data beyond what is blatantly obvious. Third, I recently sold a house and that realtor proved to not be very good at all (but was a relative and my wife wouldn’t let me fire them). So, after dealing with three straight realtors who weren’t worth the price, what am I left to do? Being new to the area, I don’t think I get a truly honest response when asking people about their realtors, but instead get the polite response (the people I know who I would trust have been in the same home for years, so they can’t recommend anyone).
Will redfin offer less services? Yes, they will. But, I just can’t see a traditional realtor offering $20,000 more in services. I also wouldn’t trust any realtor to negotiate anything. A buyer’s agent’s incentive is to get you to spend more money and thus increase their commission. So, I will likely give redfin a try.
April 22nd, 2008 at 12:46 pm
Alan DR and Real Estate Raj-
Your points are well taken. Due diligence in every business venture is a critical component. So why do you not do this when selecting an agent? If you think that the agents bottom line (all agents) is all they care about, then maybe you are good candidates for Redfin. You will then be taking responsibility for your actions with no one else to blame.
April 22nd, 2008 at 2:16 pm
5 readers?
April 22nd, 2008 at 3:51 pm
I haven’t been keeping up on this thread. I feel the urge to do some typing so here goes:
My past experiences with real estate agents was very similiar to Chester’s, and it’s probably the reason that companies like Redfin are doing so well. They are new to San Diego, and it’ll take a little time for them to achieve the success they have experienced in Seattle and San Fransisco.
I guess the point is that real estate agents always get mad at Redfin because “They don’t offer the same level of service.” and the consumer’s reaction is “What service?”. I had such a bad experience from real estate agents that I used to tell everyone “Don’t trust anyone that has to put their picture on their business card”.
Hell one glance at a handful of MLS listings, and I can point out incompetence everywhere. Listings that are in ALL CAPS, mispeld werds, blatantly wrong information, upside down pictures (or no pictures), pictures of a the beach 3 miles away, and useless hype (”better buy now before prices go up!”, I see this all the time). But damn, they have a nice picture that takes up half their business card.
The issue is that the real estate sales industry is ridiculously easy to get into, and it was way too good for way too long. If you are a real estate agent that really works hard on making sure your client has the best deal and no surprises going into a deal then it’s more likely that you are the exception. (citation needed, I know)
Let’s do a comparison. People working in the technical field are considered very well compensated due to limited supply and the overall difficulty of keeping up to date with their industry. I work was a technical consultant, and when I’m awarded a $30,000 contract, it easily takes me 400-500 hours of work to complete that contract. Now, I have over 10 years of professional experience, an education, and a lot of known information that I also bring to the table. Compare that to real estate where a million dollar house (very common in San Diego) can carry a $30,000 commission for each agent, and you don’t even need your degree in psychology. I’m sure some of the agents reading this forum have closed million dollar houses. Did you really work 400 hours? 200 hours? even 100 hours? on that one listing? (400 hours is 10 weeks of full time, 2.5 months, 9-5, five days a week of work) Do you really think you are worth that much more than me, and, if so, what do you bring to the table that really gives you that value?
(Note: You would be very hard pressed to fit 400 hours of work into a 45 day escrow period, working every day and weekends)
April 22nd, 2008 at 4:58 pm
Sorry for the extended absence from this discussion. I’ve been busy not earning my living (insert tongue in cheek). I’m too tired for complete sentences. I am definitely too pooped to get into the tired, infinite argument loop about why real estate is different than a salaried job. I will attempt some bullet points, though.
- I do not disagree with any of you that it is valuable and even encumbant on the buyer to do their own research and homework. Au contraire.
- I do not disagree with Alan that part of an agent’s duty to their buyer client is to research and education on market activity and comparable sales, and to advise on value. I DO disagree if you argue that the buyer has no responsibility or accountability in this area.
- To Frank, it just seems like more than five. They each usually leave more than one comment.
- To Sven, I totally get the perception by you, and many I’m afraid, that we are grossly underworked and overpaid. Of course, that is mostly a perception. I am guessing that you receive employee benefits, that you have job security and a steady income stream, probably some paid vacation, and I rather doubt you have to put money into the kitty each day until your assignment is completed. Further, if your boss changed his mind half-way through the project and decided to scrap your work, I suspect he would neither dock your pay nor keep your upfront entry fee. I know you have heard this all before, and that is why I will leave it at that. (P.S. That $30k number you are throwing around is so wrong on so many levels, I won’t even go there. If it was as simple and lucrative as you suggest, I would be living in Virgin Gorda right now).
- To Sven, again, you are sadly correct about your MLS observations. There are great agents, not-so-great agents, and really bad ones. Kind of like any profession, don’t you think?
-BUT, that is the great thing about this country. You have choices. You can choose among agents, you can choose among brokerages, or you can choose not to use one altogether. One size does not fit all. Between us and Redfin and the FSBO sign you can buy at Home Depot for $9.95, there’s something for everybody.
April 22nd, 2008 at 9:43 pm
After reading this entire thread, it occurs to me that I’d be more cheered by the traditional realtors who run this blog if they didn’t spend SO much time and energy defending being traditional realtors and attacking the alternatives. It seems to me if they focused their resources on serving their clients, both their clients and their profession would be better served.
Efforts to reform the real estate business, like Redfin, exist for a simple reason: people are often unhappy with and ill-served by the traditional business model. In many cases, it simply doesn’t work well and truly needs reform. So why not put all that effort into 1) acknowledging the problems, and 2) fixing them, rather than attempting to discredit the competition?
April 22nd, 2008 at 10:07 pm
As a Redfin blogger I appreciate all the discussion and speculation about the company. It seems to me that everyone is correct about the company, the market and the future. (That’s to say nothing is certain except change) It’s such a pleasure to find this discussion here, where Redfin is sometimes disparaged.
Nevertheless I enjoy Kris & Steve’s informed and entertaining voice (one of the few in San Diego). Write on and I’ll keep reading.
April 23rd, 2008 at 6:36 am
Thanks, Tom.
April 23rd, 2008 at 11:31 am
Kris,
I think I said my point wrong. I guess what I’m trying to say is that if you focus on a single transaction (which is a single customer’s perspective), real estate agents are grossly overpaid. If you add up all the hours you spend on a single transaction vs how much make from that single transaction, you are probably better compensated than the top brain surgeon’s in the world.
Then again, I doubt you are making $1 mil+ a year (or are you?). The simple sad fact of real estate is that it’s way too competitive because the per transaction profit is so high and the barrier of entry is so low. You have to spend so much time getting new customers and so little time servicing the existing ones. What if things shifted…
Let’s do a thought experiment here. Let’s say all real estate agents agreed to only put 1% commissions on both sides of every contract. I know your first thought would be “How could anyone survive with that”, but let’s examine this a little more. Imagine if you didn’t have to spend most of your time trying to get people to walk into your door and give you business. Imagine if you spent all your time dealing with the transactions themselves. If you had enough business that you could turn away all the obviously unmotivated buyers and only accept listings where the seller is being realistic.
Because the $12,000 paydays would be over, a lot of people would leave the profession and go back to whatever they did before someone said they should give real estate a shot. The diehards left would easily make up the reduced commission in total volume, and their time would be spent giving value to the individual customers rather than marketing themselves. Wouldn’t this truly be better for both parties? Your income would be very steady (because of the high transaction volume, and steady stream of customers) compared to what it is now, and people would have no good reason to gripe about how much a real estate agent makes on their home.
I’m not salaried. I work for myself. If I even hint that I’m available for work, I usually have two or three clients lined up ready to give me a project. My income fluctuates, and I get cancellations all the time. It’s just supply and demand, and few people want to go into my industry because it’s a hard industry to get up to speed on, and it’s a lot of late nights sitting in front of a computer working when you do. (that and you have to lie to all the girls you meet that you are a garbage man or something to get a date
April 25th, 2008 at 2:46 pm
[…] http://sandiegohomeblog.com/2008/04/10/redfin-wants-you-to-feel-special/by Kris Berg, a well respected Realtor out of San Diego… […]
April 29th, 2008 at 8:15 pm
[…] understand that this blog was a response to a blog by Kris Berg about Redfin regarding a new service they were introducing called “Redfin Select”where buyers could […]