It’s been a while since I beat this dying horse but recent comments were far too difficult to ignore for long …
And yet compared to other brokerages, Redfin’s business may thrive in the coming storm. After all, we’re at the beginning of one of the greatest buyer’s markets in U.S. real estate history, and Redfin is predominantly a service for home buyers.
As inventory piles up in every market, the voodoo promised by traditional agents offering private previews of their buddies’ listings doesn’t matter much to buyers anymore; consumers know that finding a home to buy has gotten easier, even as buyer’s agent commissions have increased.
The voodoo is in the minds’ eye in this case. The vast majority of agents use similar tools to those used by Redfin agents, assuming they look at the inventory at all. The tools offered to buyers by many aren’t substantially different than what Redfin offers.
All Redfin offers is a rebate. Talk all you want about wanting to change the industry and provide something truly of value, but you can’t do that when you offer less service than the rest of the industry. People aren’t nearly that gullible, Glenn. Unless they’ve got a pocket full of venture capital, that is.
I’ve offered the chance for Glenn to explain what makes a Redfin agent so much different than everyone else. Crickets chirped but no response was forthcoming. Why? Because giving buyers “the opportunity” to search for their own homes isn’t a value-added proposition. They’re already doing it. The value isn’t in the technology but in the value added after the point.
Over the longer haul too, the market hasn’t changed the fundamental dynamics driving our business: a generation of home-buyers that grew up with the Internet want data, not a sales pitch, and they feel most comfortable with a real estate agent who gets paid more when they are happy with the service they received, not when they buy a more-expensive house.
Unless the sales pitch has changed Redfin isn’t being paid on some magical happiness wage scale. They’re getting paid the co-brokerage fee offered by the selling agent and passing a portion back to the buyer. So if Redfin’s getting paid by the same co-broke as anyone else, wouldn’t that mean Redfin gets paid more for a more expensive home?
Rebate and flat-rate models always have been a niche, though good markets and bad. There’s nothing to indicate that will be any different this time around.
[tags]redfin, real estate marketing, real estate technology[/tags]