[photopress:wedding_1.png,full,alignright] You are cordially invited to a two week Moratorium on “Sticking it to the Man”. I know Greg and others have been having a lot of fun poking at Redfin, but I would like to announce that Glenn Kelman of Redfin is getting married this weekend.
Glenn and I discussed not discussing anything we discussed at our little tete-a-tete. But I would be remiss if I did not publicly congratulate him on his upcoming nuptials. Let’s give him the gift of being able to focus on his Once in a Lifetime Event, by applying the old adage, “If you don’t have something NICE to say, don’t say anything at all”.
I remember the first time I heard about Redfin. I was at a listing appointment and a young couple thinking about selling their condo in Issaquah said, “Did you see this really cool site?” They pulled up Redfin on their computer and showed me how they could “fly around” looking at property. They LOVED it. You can hardly run into a buyer, especially younger ones, here in the Seattle area who have not heard about Redfin. That is a fabulous accomplishment and it is time to give credit where credit is due.
So if you have something really NICE to say about Redfin, say it here! If you don’t have something nice to say, then let’s keep it zipped for a couple of weeks, and cut the guy some slack, so he can enjoy his pre and post wedding time.
Congratulations Glenn!
Ardell, I think you’re very sweet, but unless Redfin is going to start earning its commissions, even if only for this two week honeymoon, I’m not going to let up on anything. I wish Glenn Kelman every happiness in his marriage, but it has nothing to do with anything.
It’s nice to see you step up to the plate as the
international…inter… real estate blogsphere mediator! 🙂I’m happy to play along and wish Glenn all the best in his upcoming wedding!
Greg,
Boo, hiss…They do EARN their commission. It’s less than yours 🙂
Whether you like what Glenn’s doing with Redfin or not, it’s hard not to respect someone who’s willing to try something different and challenge the norm.
Congrats Glenn. All the best with your wedding.
> They do EARN their commission. It’s less than yours
They take the same commission as everyone else. They disburse it as they choose. The problem is that they don’t earn that commission by any standard that would apply to any other buyer’s brokerage.
Wow… That was a long moratorium… 😉
Well if we can’t put a lid on it…we can at least defend their position. Greg, with all DUE respect, which at the moment is nil, clearly Redfin agents are not the only agents who have ever written up a property to tie it up, and then go see it at the home inspection.
Hell, I’ve done it myself! I’ve even had both sides of a transaction where I never saw the property, the seller never saw the property, the buyer never saw the property and none of us had a key! LOL
Ardell,
That last situation clearly deserves a blog post…
Dustin
Throw some lettuce on my tomato and I will…I have too many in a row.
> Greg, with all DUE respect, which at the moment is nil
I think we have minds in order that we might use them as we deem best. I don’t denigrate you for disagreeing with me.
> clearly Redfin agents are not the only agents who have ever written up a property to tie it up, and then go see it at the home inspection
Do you think that this is my objection to Redfin? I deliberately linked to the major posts I’ve written on the subject.
In summary: Redfin’s cost-savings come about not from technology but in two ways, both unethical: It shifts the burden of showing real estate to the listing agent, even though the pupose of the cooperative commission is to compensate the buyer’s agent’s efforts. And it defaults all but entirely on its responsibility to represent the interests of its clients. The Redfin.com “business model” is simply an elaborate reification of laziness — rationalized by blame-shifting — a complete default on every duty incumbent on a real estate practitioner.
The “nil” is on your refusal to be nice for a lousy two weeks, not your position.
As to your position, the cost savings DOES in fact come from technology. Your agent brain just refuses to recognize that fact. I am pretty sure there are no “lazy” people at Redfin. Clearly I was not “lazy” the times that I did not show a property that I have written up. I’ll bet there isn’t an agent in this business who hasn’t at one time or another written up something they haven’t seen. How about “value is in the land” type transactions. Who needs to go see a house that is going to be torn down?
If the buyer retains an out during the inspection period, and the inspection is three hours long, there is plenty of time to SEE the property during the inspection. In very hot markets it is not uncommon for an agent to say “lets write it up and then go see it”.
This is not about seeing the property for the benefit of the buyer client, as Redfin DOES see it at the inspection. This is about not liking the business model from an agent perspective.
The same agents who don’t want someone counting their “hours on the job” when they sell a house in 10 hours, are the same ones wanting to “count the duties on the job” of the other guy, they deem to be “lazy”. There are more lazy agents who show property and then just stand around waiting to get paid…too lazy to give advices…too lazy to check on the lender…too lazy to keep up with little snafus…too lazy to negotiate the inspections and so they just fax the inspection issues back and forth with no comment.
If you want to point at “lazy”, don’t be pointing at Redfin working night and day around the clock people, point in many and varied other directions to “lazy” in all aspects of representing a client well.
> The “nil
ardell,
we support consumer choice. but, we also advocate full disclosure of information so consumers can make an “educated” choice. we regret that you interpret our post as “sticking it to the man” or poking fun. we are trying to provide a thoughtful review of redfin from the buyers perspective.
btw, because of our blog post, glenn may extend the guarantee and will change the legal boilerplate language regarding affiliates for the benefit of consumers.
please visit our post and read glenn kelman’s comment:
http://blog.sellsiusrealestate.com/?p=1926#comments
-rdb.sellsius°
p.s. congratulations glenn!
Greg,
What’s really happening is that the buyer is taking control of his Agent and Agent Fee, as you support, but not necessarily doing it on your terms. Once Pandora’s Box is opened, many things will come forth for all of us to deal with and work on and work out.
I suggest we give Redfin the same kind handling that we do new agents we come across every day. We don’t beat new agents over the head with the things they need to get better at doing. So why not treat a new Company with the same helping hand, instead of whacking them upside the head at every turn?
> What’s really happening is that the buyer is taking control of his Agent and Agent Fee, as you support, but not necessarily doing it on your terms.
I see it as a complete default of their fiduciary duties. This is not buyer empowement, it’s buyers paying for representation but not gettting it. “They’re bad, but we’re even worse — for less!” As soon as buyers learn that they have the right and power to negotitate compensation for representation, Redfin will be history.
> I suggest we give Redfin the same kind handling that we do new agents
They have $8 million in funding. They’re not new agents. Moreover, since they are defulting on agency and procuring cause, these defects need to be corrected now. The problem won’t get better by being ignored.
Ardell was there a job offer at the lunch meeting :)?
Greg,
Who says they have “fiduciary duties”? Not all states are equal in that regard. Oklahoma outlawed agency entirely, didn’t they? No one size fits all on that count. Russ says WA doesn’t have “fiduciary” level of care. How about Transaction Broker status? We can call them Transaction Brokers if that makes you happy.
Trust me Greg, I see the buyers, they feel more empowered simply because Redfin EXISTS! It’s a start in the right direction. Even if Redfin fails, they would have accomplished great things in the minds and hearts of many buyers. Even buyers who do not use Redfin better understand their position in the marketplace because Redfin exists.
You keep saying they have $8 million in funding and yet go back to their performance AND procedures from BEFORE the time they had that funding. Not fair. Buyers DO have the option at a set fee to SEE property, and I believe that option came about since they have been funded to the degree you suggest.
You want to hold them to the same standard from day one as you do after they received funding…not fair. You want to blame them for things they didn’t do on day one, that they now do. If a buyer elects NOT to see the house with Redfin and pay that fee…isn’t that the buyer’s right?
Allen,
I admit I do look like Redfin’s PR person today. But, it’s just because of my upbringing, and feeling that a man deserves a break around the time he gets married, because he may never get another break again! LOL
I have had the opportunity to meet Glenn twice- at the TechCrunch party in Seattle at at the Inman Connect in SF – I think he was a great guy and a very engaging speaker on his panel.
Like Greg said- business is business. I like all the Redfin guys I’ve met and, speaking of business, I like their technology a lot. Some parts of their model I don’t care for and I can understand why agents in the marketplace would not like their model.
But I’ll tell you what I really like about Redfin…
Look around and you’ll see disussions all over the blogosphere about Redfin and their business model and the real estate business and commissions and value and what Realtors do and don’t do- and it’s all open dialogue that does two things.
It gets us all excited about our business so we feel passionate about it and it gets us all creative about how to do things better.
My business model has a similar option to allow people make offers online and during our first 40 days we received four online offers and sold three homes through online offers. Two were people who had found the homes by going through open houses- and one was a neighbor who already knew they liked the home. And we don’t post listing agent info for the buyers to contact, because we do not want to encourage buyers to contact the listing agents to see the homes, rather we want to help facilitate those rare occasions where the buyer already knows about the home they want to buy and just needs help negotiating and coordinating the escrow process.
The whole make-an-offer-online segment is a niche market and might always be that way- but for some people it’s a great value proposition and there’s nothing wrong, or unethical, about that.
The open discussions that takes place on these comment boards- and the ability to do so- is one of the greatest things to happen to our business in decades because it allows us to become better for the consumer. Even if we don’t agree with each other…
Here, here, Greg Tracy! Very well said.
A two-week moratorium on Redfin bashing? NO FAIR! In San Diego, where we are newbies on this topic and Redfin is becoming the target practice of the week, we can’t possibly be a party to the cease fire. Besides, I just introduced my “first in a multi-series, public service” post on the topic (http://sandiegohomeblog.com/2006/09/10/redfin-101-and-the-debut-of-the-podcast/) and can’t backpeddle now. Being a reasonable person, however, I wish the Redfin chief well on his nuptuals. I guess you’re a better person than I, Ardell.
Greg, on your “Redfin is lazy” rant (see Comment 9 of 19), bravo!
Adell, thank you and everyone else for the kind words. But please feel free to discuss Redfin all you like; the debate about the company, our level of customer service, and our business model is healthy.
I have, however, always discouraged conflating Redfin with my own personality, not because the personal criticism is necessarily unwarranted or likely to arrive at an otherwise cloudless moment, but only because there are so many other people who are responsible for making Redfin what it is: our founder, David Eraker; our customers, our employees, our investors, our colleagues in the profession who have worked with us on real estate transactions.
I am still working out how to be myself without having that hurt the company, without having that take credit away from all the others to whom credit is due. Or blame, depending on how you see it…
“I see it as a complete default of their fiduciary duties. This is not buyer empowement, it’s buyers paying for representation but not gettting it.”
Try explaining this to a buyer who will be receiving several grand in rebates. I think this aforementioned reasoning may fall on deaf ears. Money talks.
“They (Redfin) take the same commission as everyone else. They disburse it as they choose. The problem is that they don’t earn that commission by any standard that would apply to any other buyer’s brokerage.”
Since the buyer brings the money to the table and, as some argue, are in need of more respect, could the above statement be said for a listing agent—even moreso in a hot market when a house sells in milliseconds? Again, try explaining the fiduciary angle to a consumer who will be receiving a rebate (sellers too).
Consumers understand the size of their wallet, when it’s full of money and when it’s a little thin of Benjamins. Fiduciary duty and what that means to a consumer is probably not on their radar as much as “do I get good service, how much is it going to cost or how much money am I getting back.”
Too simplified? Maybe. But, sitting across from buyers and sellers every day gives a unique perspective on what those folks feel and say. I can’t imagine what consumers would think when they are signing paperwork at our office and gaze up on our wall of client satisfaction “report cards”, and notice a comment by a Redfin customer who states ….”and we saved $11,250.00!” or some other sum. Talk about awkward. PS. our escrow office has yet to close a Redfin transaction.
> Fiduciary duty and what that means to a consumer is probably not on their radar
It will be when they discover they have bought a house their supposed buyer’s agent could have and should have advised them not to buy. An attorney will explain everything to the complete satisfaction of a jury — even if not to you.
“It will be when they discover they have bought a house their supposed buyer’s agent could have and should have advised them not to buy…..”
Explain how often that occurs (maybe more complaints are surfacing now-a-days)? As I think this through, explain how many times this may occur with a buyer who has a buyer agency agreement in writing with an agent. I thought that the only meaningful decision makers in whether a home should be bought is solely that of the consumer, regardless of buyer agency in force or not. It’s the buyers signature on the Purchase & Sale Agreement. Certainly, a buyer being represented in a purchase would take the advice of their agent in consideration, but caveat emptor.
Maybe Russ Cofano has more experience in understanding Greg’s suggestion here, but from my experience, I know of only one case, ever, in working with an agent’s client where the client was advised not to buy a home. The agent’s client was a SELLER who sold a home and was advised to wait out buying in the current market climate. I only found this out during casual conversation because I asked the seller where they were headed after the sale.
Perhaps buyers are being advised not to buy a home more frequently than I think or know of.
> explain how many times this may occur with a buyer who has a buyer agency agreement in writing with an agent
Agency is not created by a buyer broker agreement. Practically speaking, agency is created when the client believes it has been created. This is an excellent reason why listing agents should not show homes to buyers ostensibly represented by other brokers — because it creates the possibility of an undisclosed dual agency.
> caveat emptor
Very funny. Y’all don’t have newspapers?
> Perhaps buyers are being advised not to buy a home more frequently than I think or know of.
That really isn’t the issue. The issue is, when the buyers decides they should not have purchased the home, what is their attorney going to latch onto? Can Redfin.com show a pattern and policy of consistent, vigilant representation — or just the opposite? Redfin.com does everything it can to avoid knowing about its buyers, their needs and circumstances and the homes they purchase. They do not — and by virtue of their praxis they cannot — faithfully represent the interest of their buyers.
Here’s how this works, and you would know nothing about it unless it happened to you: If all efforts at persuasion fail, I prepare a letter that says, “Against the advice of the undersigned Buyer’s Broker, the undersigned buyers elect to proceed with their planned purchase of 123 Mulberry Street despite the prevalence of past and possibly on-going dry-wood termite damage in the framing members of that property.” Sign and date please. They won’t sign and they will cancel the purchase contract, and that’s how it’s done by responsible Realtors.
What would be the consequences of my having failed to prepare that letter? I would buy a termite infested house and my E&O underwriter would pay a lawyer to go feed on someone else — and raise my premiums or possibly drop me altogether. Welcome to the real estate business. I’ll bet there are risk reduction classes for Escrow Officers. Might be worth looking into.
But: If there is not a cadre of ambulance chasers prowling around every Redfin.com client — looking for that $8 million payday — it’s because they don’t understand ambulance chasing. I know nothing about Washington, but attorneys in California and Arizona are constantly trolling for grievances.
If you want to know more about the unethical nature of Redifn.com’s business model, I have written a lot on the subject.
I say well done to Glen. Being from the UK i dont understand how American realtors getting away with charging 6% commission. i just think its ridicoulous. here in the UK comission is on average 2% and now the business is becoming more cut troat some agent actually charge 0.9%
I have briefly looked at redifin and i think its good the guy is coming up with cost cutting measures and in my exprience it doesnt necesarily mean shoddy job. I do read a lot of Americal realtors blog and i still do not understand why you charge that much. I think its time you also look at how you work. i dont think it is the most efficient and best way, so my hats off to Redfin for trying something new
Thanks for welcoming me to the real estate business, E & O insurance, litigation, risk reduction classes,ethical issues etc…. lol.
Work in an escrow office for a month and you’ll experience real estate in a whole new light and see business ethical issues tested frequently. And, you’ll see how great some people do business too! It is quite the experience. Please do not remind me of risk premiums. Our $8K premium is due soon! Escrow office operational premiums are high because the risk is exponentially higher than that of other real estate practitioners. Mostly because escrow deals w/lots of money and prepare legal documents.
The issue at hand is is not “what if scenario’s”, but what is. Disputes arise all the time in real estate, but , from my experience, continual talk of “jury,” “what a judge is going to rule,” etc.. seems like a lot of wasted chatter talk. The vast majority of disputes are worked out or mutally settled. If a dispute ever made it to a courtroom regarding an agency problem with Redfin, I would bet a nice cold brew, that it would have not only ramifications for the parties (goes without saying) but would probably rock the real estate establishment of agency, at least in Washington—and it would get the attention of DOJ because it may have significant anti-trust implications regarding open competition, not just between real estate brokers but because of it’s impact on consumers.
The idea of unethical business models is largely established by what an individual deems as unethical–based upon a person’s belief system of moral principals and virtues. So, perhaps the Northwest Multiple Listing Service will come out with a white paper on “the following examples are unethical business models.”
Back to the issue: Redfin may be considered an unethical business model by some, but I don’t think that their satisfied customers who are being credited thousands of dollars would consider it unethical, particularly since they are bringing the money to the table in the first place. In addition, if an individual is using logic, then perhaps buyers who are bringing the money to the table would consider a listing agent unethical who credits their seller commission money (for whatever reason)at closing. It’s a difficult question to work through.
Redfin agent or not, agents in general credit commission money to their customers very frequently. In fact, we hear from agents from time to time in managing their deals placed in our office how frustrated they are with the other agent who “is not doing their job” or they are perceiving that they “are doing the other agents’ job.” Where’s the outcry? Yet, the agents still get paid full fare or close to it.
..”Agency is not created by a buyer broker agreement. Practically speaking, agency is created when the client believes it has been created.”
I’m unaware of the agency law in Arizona. I didn’t know that an agency relationship can be created because one party “thinks” it has been created and therefore it magically blossoms. Seems to me, if this is the case, the agent either had no discussion or a weak discussion regarding representation with the consumer.
Placing myself into the consumers shoes in a highly mobile society, I think their frustrations with how real estate functions is understandable. Agency in one state being different than another, traditions different, standards different,…it just seems like an uphill battle for the consumers who are the fuel for the real estate engine.
> Redfin agent or not, agents in general credit commission money to their customers very frequently.
Tim, with every possible consideration: You have no idea which practices of Redfin.com I am decrying as being unethical. This discussion has absolutely nothing to do with crediting back commissions. If you want to understand this, again I refer you to to the posts I’ve made on the subject. If you want to beat up on straw men, you can, but you don’t need my help for that.
PS: Implied agency. Ostensible agency. Undisclosed dual agency.
I propose a 2 week moratorium on flamebait.
(that was a joke directed at no one in particular)
Greg,
We don’t have those things here as all agents are agents of the buyer except the listing AGENT, not company, without the need for a contract. Washington is quite different from AZ in that regard and Guess What??!! Redfin doens’t exist in AZ…so you are spreading misinformation if you base Redfin critiques on AZ law.
What am I missing here? I see fiduciary loyalty, reasonable care, acquisition of knowledge and disclosure thereof — even a statutory duty to seek and show properties. Redfin.com would seem to be in the wrong on all these grounds. Possibly they’ve written them out of their Buyer-Broker Agreement in Washington State — but then it should be obvious to the buyer that it’s no bargain. Plus which, Redfin.com also practices in California, where there is a lot less wiggle room.
> spreading misinformation
Incorrect.
Greg, I thank you for giving me every possible consideration. After nearly 15 yrs of marriage, my wife would rather forego considerations and get to the point by thumping me upside the head. As I reference back to my physiology background perhaps my Calcium Ions are a bit out of whack causing my Synapses & neurotransmitter receptor sites to malfunction.
All humor aside, I think I have a good fundamental grasp of agency in Washington State. Obviously I am not an expert on the level of say a Russ Cofano who evidently played a central part in drafting the agency roadmap among other things. Since you believe I have no idea which unethical practices you decry (leads me to believe you sense Redfin has many unethical practices), please reaffirm those that are unethical. Studying ethics in business is a passion of mine and appears as important to you as well.
I genuinely don’t understand the fascination with calling out Redfin.com for unethical business practices where the foundation of an argument against their model is based on agency/representation problems, not visiting houses with their clients, etc. As I mentioned in my prior comment before I went to work today, I don’t understand why the hugely absent outcry by full service, full fare agents who are frustrated at other agents (not Redfin.com agents) in their own sale transaction because of their lack of fiduciary duty or having to pull the weight of the other agent. To me, it sounds like a double standard. Experienced agents probably all have personal examples of running into this problem. Why don’t the brokers get together and set minimum standards for their own brethren? Why not dock the compensation of the other agent for being a “secret agent,” or one that is not pulling their weight? I raise this issue because for the most part, agents are not involved in transactions on the scale of escrow & title companies–therefore, many allied professionals are unaware of the frequency of this problem. Yet, Redfin.com is the focus? I just find this issue raises a lot more questions than answers and is highly ironic in many respects. And that’s the motivation for my contrarion viewpoint.
Greg,
The biggest hole in your argument is that there isn’t an agent in this business for any period of time who hasn’t been happy to have his listing sell after an Open House. If you were doing an Open House and a buyer happened through and said I’m going to go call my agent because I really like this, you would be thrilled! Especially if you knew the agent and he “honored” you last time your buyer wandered into his Open House.
This whole honoring of people we like and freaking out at people we don’t like has been going on since the beginning of time, long before buyer agency ever existed.
“Oh, your agent is Pete? Great, have Pete give me a call”. Oh, your agent is Redfin…???” Not the same answer. Why is that Greg???
Tim,
It all goes back to this. Is the BA fee for “bringing the buyer to the table”? Or is the BA fee for “representing the buyer”.
During subagency the fee in the mls was the same old 3% for “Bringing the Buyer TO the Seller to be SOLD TO”. When Buyer Agency first started NO ONE BOTHERED TO REDEFINE the purpose of those monies, to being to pay for the buyer’s representation. That’s why you see bonuses being offered. If you are bringing the buyer to the seller for YOUR purpose, then a higher fee is GREAT! If you are represnting the buyer and recommending the best house for the buyer, then the seller cannot have the means to determine or modify the BA fee (BA is Buyer Agent)
So the law says buyers HAVE representation like a Fairy Godmother with a magic wand, BUT the good old boys theory of bring me the buyer then shut up and go away, IS STILL THE LAW OF THE LAND.
So when you say “dock”, when you even suggest that the SELLER’s AGENT can DOCK the BUYER”S AGENT, you are saying that the seller and seller’s agent have something to do with the buyer and buyer’s agent, which goes back to subagency mentality.
Redfin has single handedly brought an issue to the forefront that has been swept under the rug for 15 years, and needs to be addressed once and for all. If the buyer is actually reperesented and it is not simply “lip service” to call someone a “Buyer’s Agent”, then the Seller’s agent cannot determine that the Buyer’s Agent “isn’t doing their job right”. Only the BUYER can determine that. Clearly the SELLER would have a different idea of how the agent should “handle” the buyer who is buying HIS house.
You have the wolf walking around in sheep’s clothing. At least when all agents worked for the seller it made sense. Now the guy walking around trying to bring a buyer to the table is “calling himself” a buyer’s agent but the rules for that same money are the same as when he was a wolf…how odd is that.
Ardell states : “If the buyer is actually represented and it is not simply “lip service
So what do you do Tim, if a State Law says the licensees have to give 3% worth of duties and the buyer only wants 1% worth of duties? Who wins?
What if a buyer is “representing himself” and wants no representation, or minimal duties. Why does the State get to dictate the level of service a buyer wants to pay for?
Sounds like it’s a pickle!
Where in the “H-E-Double Hockey Sticks” does state law say that a licensee must give “3% worth of duties” to a buyer?
I haven’t heard H-E Double Hockey Sticks since grade school! Cute.
Fact of the matter is you have two forces on level of service standards and two forces on what the fee is paid for. You have what existed before there was Buyer Agency, and you have what has happened since Buyer Agency.
That you want to think that a $500 fee and a lockbox in the MAIL! holds someone to the same standard as a Windereme agent, is beyond belief.
The government sets one standard to “protect” the people and some of those people want lower fees and not as much protection, thank you very much. If the mls imposes minimum standards, then they squeeze out business models and the publics right to options.
The Agency laws of this state must be modified to allow for Transaction Brokerage to allow the new business models to thrive within these laws, for the public to have a right to choose any level they want.
Forget Redfin, Russ, let’s talk about MLS4U for a minute. Do you really think that a locbox in the mail and an online upload can be held to the standard some government determines all buyers and sellers MUST PURCHASE?
Or do you expect all options at all prices to have the same liability standards by Law? You can’t have it both ways. You want the legal standard to be high, but you also support services at any and all levels and prices. That’s a catch 22 for the new business models.
First, I asked a simple question that you again failed to answer. You are very good at that.
Second, I think that state law really provides something more in line with the 1% (or less) value and that good agents add service on top of that to support higher fees.
Before you respond Ardell, I would suggest you take a quick look at the Washington Agency Law and then consider what you do for a buyer that is nowhere to be seen in that law.
Russ
First: Thank you
Second: If you read all of the statements regarding Redfin around the Country, including their now office in CA and Greg’s comments, they are being judged by “fiduciary” standards. The State pamphlet should describe what EXISTS in the marketplace, as it is it is meaningless to the average consumer. 7 or 8 pages that are handed to people by people who represent them by and large and the 7 or 8 pages do not describe the varying levels of services of a buyer’s agent or seller’s agent that exist in our marketplace.
What licensees do or don’t do can’t be seen in that law at ALL. The test of that is the consumer’s understanding of what they read vs. what they get or don’t get AND what they EXPECT and WANT or NOT. There does not appear to be any correlation whatsoever. Are you saying that the law was written so that someone could open a lockbox, take out a key and say “Do you want this one”?
*Warning – Very Long (and Quite Possibly Boring) Post*
“Are you saying that the law was written so that someone could open a lockbox, take out a key and say “Do you want this one
Russ,
That was SO not boring to me, so much so that I cut and paste it into a Word Document for future reference. Thank you for that wonderful explanation.
But that brings up my same old, same old, “When in Rome” problem. Isn’t a person held to the highest standard “of which they are capable”? This is where I run into “difficulty” moving from state to state. I don’t know where I get the idea that I am held to a standard of care, equal to my ability, and cannot simply shift to “When in Rome do as the Romans do”. But I do know this creates a problem for me personally, and has since 1996.
If I am “capable” of better, isn’t it then “dishonest” for me to “hold back”. The most important issue being advising with regard to price. Most buyers want the Buyer Agent’s advices with regard to price and I certainly always advise with regard to price when a buyer is making an offer, because I can. Wouldn’t it be dishonest for me to pretend I don’t know things?
Even more importantly, this is where most “Redfin converts” draw that line. If the agent isn’t going to give an opinion regarding price, and whether or not I should buy this one vs. that one, then why NOT use Redfin. So my clients don’t consider Redfin equal to me, but they do consider Redfin equal to agents who refuse to offer opinions between one house and another with regard to price and other issues that affect them. In other words, those who perform in accordance with the “minimum” standards of the law.
This also points out one of the problems with written Buyer Agency Agreements. The NUMBER ONE reason a buyer leaves an agent, is due to this issue. They are fine looking at houses with an agent, until they ask questions about a given house and the agent says “I don’t talk about price or compare the homes one to another”. That is when the buyer says, “Hey, I don’t want to go to the next phase with this guy” and if they have a contract, or are subject to Procuring Cause problems, the buyer gets caught in that trap.
Do the buyer agency agreements you helped draft make it clear whether or not the agent will offer advices at that point, with regard to price and comparisons of the choices available? Is that one of the “services and metres”?
Ardell,
Knowing things and agreeing to perform them for a client are quite different. I know a lot about real estate business and legal matters. I have a current client who is buying a building. They asked me for some help reviewing the PSA. I gave them my advice and we made some changes. I also told them that they would be well-advised to have me review the title commitment. They don’t want to pay me for that so I am not doing it. I know a lot about title issues and might very well find something that could help them. However, I am not going to do it for free. Their choice, their risk.
To your example, if you agree to provide a BPO to your client, you must do so to the best of your ability but at least using ‘reasonable skill and care’. However, there is no law that legally compels you to provide the BPO, including the fact that you know a lot about home pricing.
With respect to your question about buyer agency agreements, the ones that I have drafted have allowed the individual agent to insert the tasks that they feel are valuable. Some go further than others.
Russ
Russ,
-To deal honestly and in good faith; (licensees cannot lie or cheat)
An agent cannot lie to their own client, but is it ever appropriate or necessary to lie ‘in the best interest of their client’?
Sometimes you run into that whole “Sin of Ommission” thing. I clearly instructed an agent regarding how to structure an offer for her buyer client, before there was another offer on the table. Her client either didn’t listen to her, or she “omitted” something and her client didn’t get the house.
Once there is another offer I have to clam up, so I try to get as much info out to the agents planning to write, before any offers materialize. This is more of an agent to agent issue, but clearly affects consumers.
Bob
Nope! At least not in Washington and presumably most other states. If you are a Realtor (capital “R”), you also will run afoul of the Code of Ethics.
Russ
Russ, Doug laid out an example in class that went something like this: Joe and Ed are neighbors but Joe doesn’t like Ed so much. Joe puts his house up for sale, but absolutely does not want to sell it to Ed. Ed hires Andy the agent and instructs him to present an offer but not disclose who he his. Joe asks if the undisclosed buyer is Ed his neighbor.
What is Andy to do?
If he tells the truth he is hurting his client. If he says I can’t disclose, Joe knows the Ed is the buyer and Andy is hurting his client. If Andy says no Ed is not the client then he is acting in his clients best interest.
If my memory serves me we left this class on legal matters under the impression we are not to lie unless it hurts our clients.
On another level how can I truthfully tell a potential buyer that reason my clients are selling is because they have to move immediatley? Are you saying that the Realtor code makes me tell the truth and nothing but?
Bob
Congratulations Glenn! I am spreading the word in the SF Bay Area and all I hear is WOW! Thanks for giving us this choice. I know people are upset at you because you are threatening their jobs. Revolutionaries and innovators faced that all the times; it is not easy to go against the status quote and monoplies. The National Realtor Association will file frivolous lawsuits, lobby politicians to shut you off… realtors who lost their deal may even break your car windows… but remember, we are with you, keep up the good work.
30 years from now when your boy buy his first home, you can tell him: “Son, people used to pay 6% commission, daddy changed all that.”
Watch this video: http://www.youtube.com/watch?v=JngiUdAZ0KU
Greg and Marlow, care to create a YouTube video to make your point? Ask the National Realtor Association to make one if you don’t want to get infamous. Kids on YouTube will chew you up alive. My generation are left out of the dream of owning a house partly because of realtors and realtors turned flippers.
Glenn, my posts are my wedding gift to you. Go Bear! Keep changing the world and make it better. One day, Redfin will be the Travelocity, esurance, eHealthInsurance, carsdirect, eTrade, eBay…
———————–
# Simon Says:
September 12th, 2006 at 4:18 pm
Twenty years ago, plane ticket can only be purchased through travel agents, I doubt any one on this blog does that today. The internet is a disruptive force that eliminates middleman and empowers ordinary consumers. I am actually surprise that Redfin is the only company out there doing this. Travelocity, Esurance, Ebay have been around for over 10 years now. Maybe the fact that the National Assn of Realtor is the 3rd largest donor of the last presidential election (above the Assn of Trial Lawyers) has something to do with it:
http://www.opensecrets.org/orgs/index.asp
Realtors benefit the most from the housing boom. The commission they charge are basically a tax to the American people. We talk about oil companies price gauging, but we never talk about Realtors price gauging. A $200k house requires as much effort to sell as a $1M house, yet for no reason, realtors’ profit grew from 12k to 60k, sometimes for representing the very same house. What do realtors do that RedFin can’t? I don’t need you to open the door, I go to open houses. I don’t need you to help me negotiate, because I get to know the market before I bid and I know you want to close the deal. I don’t need you to refer an inspector, I go to http://www.ashi.org/ to find one who is truely independent. There may be some super paranoid people or internet illiterate people who prefer to use a realtor, but at least give buyers like myself an alternative so I can save up some money for the new carpets. I personally know couple realtors who own 8+ properties and flip them like hamburgers, with the money you and I feed them. I sometimes question if the realtors are the one who jack up the housing price.
Enough said, I think realtors are a friction in the market. Crudos to Redfin for empowering consumers and starting this revolution.
Simon,
“Realtors benefit the most from the housing boom”
That’s a pretty hefty statement, care to quantify it? If you could peek at the financial statements of the lending institutions, buiding industry members, municipal tax rolls, home improvement companies, title/escrow companies not to mention the millions of tradespersons involved etc you may wish to rephrase.
If you want to dogg RE agents that’s fine, but it may a little less than accurate to blame them for you not being able to afford a home. The NAR is a powerful enity but I’m not sure it rises to the Evil Empire status just yet. But I agree that the Jedi’s will bring this behemoth to it’s knees and then you can rail against the evil developers, or banks, or……….
Is there a special place in your Hell for flippers? Is it hotter for REagents than say a cabbie with the cajones and foresight to borrow up to his neck with 105% loans and hope the party doesn’t end?
What about the architects of the cheap money policy which ultimately was the engine for the latest RE boom. Where is your anger at them? And what of all those investors that fled the equities market only to provide more demand than supply into RE?
Your statement about giving you an alternative is redundant. The marketplace is proof of that. Prior to the onset of the ‘revolution’ buyers and sellers have been getting together on their own since the beginning but it might have taken effort and hard work to find properties.
. The youtube video is great and does answer your question about what an agent can do that Redfin doesn’t.
Anyone that can look into tomorrow knows the industry is changing, but it’s still fun, and intellectually lazy, to rant and use it a convenient whipping boy.
Bob
Simon, I don’t really want to take the bait, but there are definitely other companies offering reduced commissions and other “exotic” fee structures like flat fee listings and sales (no percentage of the sale price at all!).
Simon,
I always laugh when someone compares purchasing an airline ticket to be the same as purchasing a property. As soon as they make that comparison they lose all credibility in this conversation. How can you compare a seat on an airplane with a home that you will raise your family in and pour 20 to 40 percent of your monthly income into for the next 30 years? There is no investment in a ticket only an expense. When was the last time you purchased a car and sold it 5 years later for more then you paid for it.(give me a break)
Not everyone needs an agent people have been selling their homes for years without agents. I have 20 years in the real estate industry and wouldn’t dream about purchasing a property without an agent involved. That being said I wouldn’t use any agent I would use an agent that had in depth market and area knowledge of the asset I’m purchasing. I know when I purchase I get excited about the property and lose focus on the property as an investment. The agents I use continue to bring me back to reality they help me walk away when I get out of control and lose focus on the investment. Its similar to bidding for items on ebay I find it amazing how much people pay for stuff + shipping cost when they could order it new from any online retailer for less and usually no shipping charges. It’s because of the frenzy of the bidding. I watched a dell 1u server sell yesterday for more then what you can buy it new. (crazy)
Real Estate is not a commodity there are no two pieces of property the same.
Excellent comment, Allen!
This is the crux of the issue. “The agents I use continue to bring me back to reality, they help me walk away when I get out of control and lose focus on the investment.”
I would add, the reverse is true as well. Sometimes someone loves a property, but they fine tune their pencils and spreadsheets to the point where they never make the correct offer. Using the wrong comps, being too hard on the price and never achieving their objective.
The REAL issue involves lots of the comments to many of our articles combined.
1) Russ is correct. While the Seattle area has one of the BEST agency laws in that every buyer is “represented” at first contact, for the most part, agents DO NOT have the responsibility to do what Allen wants from an agent…the yay or nay factor. Very few agents say NO, Don’t buy that one. Or, You can buy that one, but it is about $15,000 overpriced.
2) When buyers are stuck on their own. When buyers look at houses with an agent who clams up as soon as the buyer wants to make an offer. When the buyer feels they are not receiving the type of advices that Allen craves, and they need NOW!, at the point of offer…
They THINK about using Redfin. Whether they do or not, they THINK about using Redfin.
If the agent is not going to offer advices, then why not take 2% of the commission instead of using an agent.
I have heard this time and again from real people on the street, here, where Redfin is available. What the rest of the Country says about Redfin is not based as much in reality, as what we see here in our marketplace.
So, yes, my clients have considered Redfin before meeting me, and while working with another agent. I offer them a “third choice”, and they choose IT over Redfin.
For several years many, real estate companies have trained their agents to clam up on many things in a “risk reduction” effort. Don’t go to the home inspection, or go sit and do some work while the inspection is going on, don’t listen, don’t talk, don’t have any opinions. Hand the buyer the comps and clam up. Don’t offer advices that may come back to bite you in the ass. Show houses, close the sale, but clam up on giving advice.
I think the time has come for the traditional agent to step up to the plate being served by Redfin. BE BETTER than that!
Galen,
Your response to Simon is apples and oranges. Redfin is primarily, at this point in time, for buying property. At least Simon’s comments are about that portion of their business model.
Your response is about the listing side…apples and oranges.
One of the greatest boons to the industry, brought about by Redfin, is dispelling the “myth” that commissions are 6%. There really is no such thing even when the commission IS 6%. 6% equals 3%/3% and involves to separate agents and not one, by and large.
Redfin’s model of 1% to us, and 2% to buyer, helps dispell the myth that there is, in fact a 6%. IF the fee signed by the seller is 6%, then 3% of that is for the listing side and 3% of that is financed by the buyer to provide for their “separate and equal representation”.
Redfin deserves credit for making that issue more transparent.
I guess you guys use Merrill Lynch advisors and pay them 5% fees too. I don’t, I use Ameritrade because I don’t think the advisors are any better. I welcome anything that lowers transaction fee and take your salary into my pocket 😉
Competition is good, may it be David vs Goliath in the case of Skype vs. AT&T, or two giants duke it out like what’s happening with Comcast and AT&T. I don’t care, I am paying $12.99 for DSL and I just negotiated 2% rebate with the listing agent.
Simon,
Stocks again are commodities one share is the same as any other share.
You stated you just negotiated a 2% rebate with the listing agent. Exactly what do you mean by that? You purchased a house through the listing agent? You listed your house and the listing agent is going to give you 2% back? Also why would you want a rebate vs a straight discount?
Each used cars are different, but I don’t see people hire agent any pay them hefty commissions. Same or not is up to me to decide, at least give me the choice. Bottomline, Redfin brings competition, transparency, it’s a good thing. You don’t like it, that’s your problem, please don’t gang up on it and trash it.
Simon,
Hear, hear! You are quite right. Every industry needs a shot in the arm now and then, so they don’t get too complacent.
The reason the real estate industry needs it more than most, is because they have been a “self governed” force for about 100 years. That is a very long time, way too long, and they haven’t reacted appropriately for 16 years.
Time for outside forces to be at work. It is exciting new territory!
Ardell, I can’t think of any right now, but aren’t there fixed fee buy-side brokers too? Hourly agents who will do either side of the transaction? A la carte agents who will take you to a set number of houses for a fee? We had someone who was replying to our posts on RCG who had a deal like this last fall, but I can’t remember who (or where).
Galen,
I think you are referring to Bill of the Real Estate Cafe in Boston. The change Redfin is inducing, that I am referring to and praising, is not about the amount of money paid or saved. It’s about the powers that be, rethinking and revamping the entire structure of buyers in the real estate transaction. It’s just a tiny lightbulb going on right now, but it holds great promise.
When agents criticize the “ethics” of Redfin, they are talking about agent to agent “ethics”, not agent to buyer “ethics.
Up to 1989, all rules were about sellers. All agents were paid by sellers. All agents represented the seller. TO THIS DAY, all fees paid are shown on the sellers statement and NOT shown to the buyer at all, on their closing statement. So “transparency” being the buzz word of the day is not simply “negotiating” fees. It is the buyer actually being involved in the fee in any way shape or form.
That is why a buyer never, ever knows if he is “sold” to the highest bidder. The fee the buyer agent pays to the third party is either not shown at all, or shown ONLY to the SELLER, and not to the buyer.
From 1989 to present, instead of bringing the buyer into the picture, agents have sold “the idea” that buyers have representation. But not much else has changed. Agents want buyer agency agreements signed to disempower the buyer, not to empower the buyer.
The seller’s agent is still the one deemed to be paying the buyer’s agent. That is why Russ’ suggestion that the seller’s agent “dock” the buyer’s agent in a Redfin deal, is both ludicrous and credible. It is credible if the seller retains control of the buyer and the buyer’s representation. It is ludicrous if the buyer has separate rights.
All over the country, agents are discussing (internally) the idea that the buyer can choose an agent, AFTER having seen the property. They are not even talking about the fee structure, because that is beyond reason to them, so far…
Galen,
Technically, Redfin cannot promise to give the buyer anything. If Redfin takes only 1%, then the seller gets the change. The seller offers 3%, the buyer’s agent (Redfin) takes 1%, the 2% goes back to the seller. That we are reconfiguring the credits and not asking the seller’s permission to do so, is very, very new. Some escrows will not do it that way. They want the agent to give the many “back” to the seller and then have the seller sign an addendum to give the money from the seller to the buyer.
Sounds like a bunch of semantics, but it suggests the buyer has no power with regard to their agent and their fees paid. This change is dramatic and new and not being seen even now in many places. Redfin is pretty much single handedly responsible for the industry talking about this issue, which should have come up back in 1989, but didn’t.
Glenn and Anti-Glenns, I started a thread on “What Redfin Should Do” at Sellsius’ OpenMike http://blog.sellsiusrealestate.com/?p=2020
Ardell, I think it’s great that the industry is talking about the issue whatever the cause.
Absolutely Galen! I don’t think you can put your finger on any one thing, as I don’t think the industry would care as much about it all, if the DOJ weren’t breathing down their neck at the same time.
The industry generally functions as if the Buyer’s Agent is working for the seller’s agent, so you hear comments like “Why should we pay him if he doesn’t show the house!” Meaning why should the seller’s agent pay the buyer’s agent.
That’s why Simon’s perspective is so interesting. If agents are getting in the way of buyers and sellers coming together instead of facilitating the process, then it’s time for a shake up. During a strong seller’s market there is no hope…but maybe we can make some progress now, that we haven’t been able to do for a very long time.
It’s Redfin, it’s the time, it’s the place, it’s the DOJ, it’s the market…and transparency WILL help to sort it all out.
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“The seller offers 3%, the buyer’s agent (Redfin) takes 1%, the 2% goes back to the seller.”
This might be the case in othe states but I think it might be incorrect in WA with the NWMLS. The commission is a contract between the seller and the listing broker. As a NWMLS member the listing broker agrees to cooperate with a buyer’s agent and share the comission. The cooperating commisison is an agreement between the listing broker and the NWMLS. the buyer is not a party to any of the agreements concerning a commission.
RedFin doesn’t have to ask the seller for permission to give part of their commission to the buyer. The seller is a not a party to the agreeement to cooperate and share the commission between the listing agent and the NWMLS. A buyer’s agent giving a credit to the buyer is nothing new. Buyer’s agents have paid for or reimbursed the buyer for home warranties, appraisals, etc. What is new is the size of the credits.
Cheers,
Michael P. Lindekugel
Financial Analyst
RE/MAX Commercial
Team Reba – RE/MAX Metro Realty, Inc
Michael,
The laws and rules that cause the monies to go back to the seller and/or require seller approval to be applied against the purchase price, are Federal and/or national lending standards. Remember, the lender has full control of all monies up to the day of closing. The lender tells the buyer how much downpayment will be required. The lender determines how much money the buyer can receive from the seller or third parties.
For instance, you can’t charge a 20% commission and then hand the buyer that 20% of sale price in cash after the closing. Why not? Because it is lender fraud, and so this issue does not vary from State to State. I’m sure you agree with this, so the only queston is where between buying a home warranty and 20%, is the cut off the lender will allow as a buyer credit. It varies from borrower to borrower.
There are only two ways to credit buyers, one is to show it on the HUD 1 and the other is to adjust the purchase price. If the lender does not allow the full amount of the credit then the seller gets the money unless the seller agrees to reduce the sale price accordingly. As Lynlee of Legacy Escrow pointed out, this must be done early in the transaction or the buyer loses the credit to the seller. The agent can likely get it back, but the buyer can’t get it if the lender disapproves the total amount of credits. If the lender says you can’t give it to the buyer ON the sheet, then to give it to the buyer OFF the sheet is lender fraud.
I notice you are in the Commercial Division. Maybe a lot of this involves RESPA and 1-4 unit family housing, and not commercial sales where RESPA does not apply.
Ardell,
I agree with you. Your comment was in the context of the Feds, RESPA, and escrow following the law. I missed that.
A neighbor tried to sell their house unrepresented for $539 sqft while the average in a quarter mile radius was $352. the property has challenges. It shares with the house next door an uphill walkway to the front door. it has no offstreet parking. It is hard to find. No interested buyers.
After a month, the owner brought in RedFin and listed at $527 sqft. After three weeks the price dropped to $500 sqft. After six weeks the price dropped to $477 sqft. After two months the property was taken off the market.
In a conference call with a RedFin executive and the public, a caller mentioned this property and asked how RedFin handles telling their client the house is over priced in this case by 30-40%. The RedFin executive replied he knew the house and the owner was a personal friend. Wow, is it company policy to setup your friends for failure?
You get what you pay for?
Michael,
It is not a “get what you pay for” issue, it is about being honest with yourself about your home’s weaknesses and its ability to compete in the marketplace. I was planning to write an article on who can FSBO and who should not FSBO…hmmm…maybe in theTuesday Blogathon.
The outcome would have been the same if you listed it for your friend at the price your friend wanted to “try”.
“If”……I run my real estate practice differntly. If a prospect and I do not agree on the pricing strategy, then we do not do business together. It is a waste of the prospect’s time and my time.
Cheers,
Michael P. Lindekugel
Financial Analyst
RE/MAX Commercial
Team Reba – RE/MAX Metro Realty, Inc
Michael,
Sometimes people just believe their house is worth more than it is and have to try. It’s their right. That doesn’t mean you should waste your time, but once in a blue moon, someone achieves what we might think is impossible.
Yes, I agree it is the owner’s right to try. Trying within reasonable bounds is one thing. Setting up the client outside the bounds of probable success is another. The RedFin listing neighbor is good example. It wasn’t over valued 5-10%. It was over valued 30-40%. The seller ignored counseling from RedFin or RedFin did not provide counseling. the RedFin agent decided
I will gladly pass on the engagement I that I think statistically unrealistic.
Cheers,
Michael P. Lindekugel
Financial Analyst
RE/MAX Commercial
Team Reba – RE/MAX Metro Realty, Inc
There is no risk unless they HAVE TO sell it. They apparently did not have to sell it as they took it off market. Where’s the risk?
Where is the risk? There is risk in every business transaction. The seller has the risk of carrying costs of the unsold asset. The seller has the oppurtunity cost that the funds could be invested elsewhere.
the seller must be financially secure. the seller bought and moved into anther house before they put this one on the market. The house is not rented.
The agent has risk as described earlier. Time value of money. The agent risks working without compensation to cover time and out of pockets costs. The agent has the oppurtunity cost of spending time and out of pocket costs on projects with higher expected returns.
Michael,
From what I can see, the issue is simply the asking price of the house. It is not Redfin’s fault that the owner didn’t price it properly. As you said, the owner priced it as a FSBO even higher, before Redfin was involved.
I can find other listings of full service companies with the same scenario. Why single out Redfin on this one? If the seller can afford to rent it, that may be the best case scenario for that house, all things considered. That’s the owner’s decision, not Redfin’s.
Still looks like you just want to throw eggs at Redfin. They are not the only company with an expired or cancelled listing. If it’s the one I think it is, the owner pulled it after 68 days on market instead of reducing the price. How is that Redfin’s fault?
FSBO. the seller got what they paid for. no counsel.
disount broker. the seller got what they paid for. inadequate or non existence counsel.
RedFin just happen to be the listing broker. the listing broker could have been a brand new inexperienced full service agent or another discount broker.
As if this could never happen to an experienced, full service agent? Right. We both know better. Truth is, the house may have to sell for the value of the lot, or no more than $50,000 over the value of the lot, given its size, curb appeal and other negative attributes.
The fact that it didn’t sell where the owner thought it should, has more to do with the house itself, than Redfin. What the market will bear, needs to be tested. The owner’s tested the market. Ball’s in their court.
Maybe an experienced agent wouldn’t have taken it at less than $375,000. But maybe the owner would have always thought they could have gotten $50,000 more than that, if they didn’t try the higher price first.
Stop beating the drum that only an experienced, full service broker will do…or at least point to the percentage of successes vs. failures.
Singling out one failure, just makes you look bad.
You are making some great points, Ardell.
I am an experienced, traditional/full-service agent. As I’ve mentioned in other blogs, I don’t think that the animosity should be between traditional and non-traditional (e.g. “discount,” fee-for-service, etc) agents. Agents, like everyone else, are not all the same. I have dealt with plenty of unprofessional traditional agents, and plenty of poor non-traditional agents. The difference is that with most traditional agents that I have worked with, they promise full-service that is never delivered.
I believe that we as agents are advisors and representatives of our clients. We do our best to educate them and to empower their decisions. But in the end, decisions such as pricing are entirely theirs. If we as professionals do our best to urge our clients to price at $350,000, for example, and they are adamant on $375,000, that doesn’t mean we didn’t do our jobs.
I like Redfin’s business model and the fact that they are trying to focus on the consumers. However, I have had difficulty working with some of their agents in the past. There was a recent NYT article that made it seem like traditional agents were stone-walling Redfin agents. That may be true, but the Redfin agents that I have encounterd don’t deserve sympathy, as they never returned calls (really, never), posted incomplete listings, etc. Out and about, I have met people that told me that their Redfin agent recommended that one way to view homes prior to writing an offer was to call up a traditional agent and have them play chauffeur for a day or two. I have also had an honest, young couple working with a Redfin agent that was upfront about needing me to show them my listing prior to making an offer.
I won’t judge an entire company based on heresay and experiences with just a few of their agents, but I really think that they should make it an even greater point to hire only GOOD agents vs. agents with at least 25 deals under their belt. I’m sure we all know plenty of agents that do lots of deals that really should not be in this biz.
Quite excellent, Art. Well done.
Thanks Ardell! I’m trying to not shoot myself in the foot, as one day, Redfin might overtake and buy out the brokerage I’m affilated with!
Really thoughtful post, Art. You should have associated it with your own site, so we could go there to read more. BTW, did you intentionally wait till 9/25 because you were honoring the 2-week moratorium? … Yikes, I was just about to post and saw your more recent comment. Joke, right?
I have to start the Blogathon now, but I wouldn’t worry too much about shooting yourself in the foot. Your comments were well thought out, honest and without undue bias. It was a pleasure to read.
Hey Cathleen, funny you should mention my own site, as a friend and I are preparing to start one up next week. I’ll post the url and would welcome your visits.
It was purely coincidental that I posted 2 weeks after the moratorium. I came upon it as I was doing more research on Redfin and what their agents are paid. My friend was asking me about Redfin and the general health of our local market. He said that he heard (probably from me, via other agents) that Redfin was growing very quickly and hiring a lot of agents, and he was wondering what type of agents worked there. I wasn’t sure, but I remember someone telling me that the average agent there is paid much less than $30,000 a year as salary, and a relatively small bonus for each transaction.
I have no idea if that’s true, but if so, the general economic idea of a brain drain would probably apply. The best people in any industry will usually be drawn towards the position or company that compensates them the best. There is a small percentage of such people who do NOT follow this trend, but I would argue that they usually do it for reasons related to personal interests or altruism (e.g. a very talented individual that chooses to become the director of a non-profit vs. a bank). As such, it would seem reasonable that really experienced agents who have great skills and loads of contacts would be able to do enough business to bring in over $100,000/year, several times more than what Redfin’s experienced agents are purported to pay. Based on personal experiences, I would be so bold as to claim that many of the agents at that company are not there for altruistic reasons, which means they’re there because. . .
Any additional insight is appreciated. Ardell, I’m going to be up for at least another hour, so I’ll probably be able to help you get closer to your blogathon goals while accomplishing more research at the same time!
I think the best people in our industry are indeed drawn toward the organizations that compensate best… and that would be their own organizations! No one who is good enough to earn a good living in real estate is ever going to be an employee and let someone else profit from the fruits of his labor! So, whether the agent-employees at Redfin are there for altruistic reasons doesn’t say nearly as much about who they are as the fact that they’re there at all! If they were the best and the brightest in the industry, why aren’t they flying their own flags?
I’m all for alternative business models. Even the cheesy ones bring new ideas to the forum. I see Redfin filling the needs of the buyer that Help-u-sell fills for sellers. Cheap, but not such great service. That’s okay. But what’s not okay is for the sloppy, lazy Redfin agent to whine that the full-service listing agent isn’t doing the buyer’s agent’s job for him.
Very interesting. I agree with you whole-heartedly on your point about lazy agents that whine incessantly. I will say, though, that of the dozens of deals I’ve done this year, easily 85-90% of them were with sub-par agents. These are people that work for supposedly full-service, traditional brokerages. The worst offenders included agents that didn’t know the NWMLS switched from the forms 35 A and B to a 35R, that there is a new form 17, and that the 22A does NOT give the buyer the right to walk away from the deal after x days (30 standard) if his lender writes a letter saying he didn’t get the loan. Do agents bother reading any of the forms anymore?
I’m curious about two things that maybe you can answer. What is the compensation package for Redfin agents and do they get “stock” options? It’s important to my biz to understand what motivates my competition and what makes them tick, and none of my competition has as much hype as this brokerage does.
I’m of the thinking that the lazy discount companies will only thrive in a hot and active market. I think that for the past several years, agents have gotten biz handed to them and many are out of touch with the true skills it takes to put a deal together. When the market cools off a bit and listings in the metro areas sit for a bit longer while buyers can afford to wait because of a stagnation in the interest rates, real estate will once move towards being a skill-driven industry. The shake-down will hopefully remove some of the dead weight in the industry and we’ll be able to demonstrate why we earn and deserve what we’re paid. I believe that any happy & satisfied sellers will agree that the commission they paid for the smooth and successful sale of their home is worth it.