I represented the buyer in the sale of a home worth $450,000. Luxury home on the first tee of an exclusive golf course, right next to a million-dollar custom-home lot.
How much did we pay? $310,000.
Now the truth is, I had an ideally-situated buyer and we were working with an ideally-dys-situated seller. Fortune favors the well-prepared, but, in the end, we simply got lucky.
But if I wanted to, I could present that story in such a way that, by the time I finished warming your ears, you’d want to rename Wednesday after me. (Take that, Odin!)
And welcome to Redfinland. They’re determined to take a victory lap, and let ’em. As Kevin Boer said to me in email:
In all fairness to Redfin, if the numbers had come out the opposite, the re.net would have been all over it, showing it as “proof” that they suck.
Indeed. And as much as CEO Glenn Kelman resists the characterization of Redfin.com as a discount real estate brokerage, it remains that their marketing appeal is based on saving clients’ money. It’s hard to doubt that discount-seekers would be discount-finders.
But, as I discussed last night, Redfin’s results are not a slam-dunk validation of its agents skills, zeal, rigor, vigor or charm. The much more likely explanation for the results it reports is that its clients — unlike swimmingly-besotted house-lovers — are congenitally low-balling INTJs and INTPs who do not focus on anything that can’t be expressed numerically.
Tougher agents or tougher clients? There is a way to find out for sure. Last night I made this proposal to Kelman:
I’ll make you a deal. Send me PDF scans of the 170 files. I’ll make a server available for FTP, and y’all can redact for personal details. I can reconstruct a transaction from the file, so I can vet the quality of the work in full, not just as regards price. For example, I can see how complicated the deals are, and how much Redfin’s buyer’s agents are bringing to the transaction. I’ll report my findings in detail, and you can get your incredible PR machine to promote them far and wide. What could be more fair?
I truly do not believe you can deliver the service you promise and promote, and I do not believe that ordinary buyers can adequately evaluate the quality of work you are doing, but I am completely prepared to be proved wrong — and I am never shy about admitting it when I am.
I don’t think they’ll take me up on this, but they should. I’m a real estate broker. I’ve read a lot of files — and I can tell a hawk from a handsaw. More importantly, I am an information broker with a hard-won reputation for hard-headed integrity. I can do a whole lot more for Redfin than the Seattle Times, if its praises are worthy to be sung.
So there’s my gauntlet. Redfin shared its raw numbers with us, but the numbers by themselves don’t tell me anything. (For example, if many of Redfin’s houses were egregiously over-priced to begin with, its Sales Price to List Price ratio would look impressive even if its actual results were awful.) Seeing the files wouldn’t tell me everything, but it would tell me a whole lot more — of which I would conceal nothing.
Kevin Boer and Pat Kitano keep coming up with off-the-wall cost-saving ideas, and, in that spirit, I will give Redfin.com this much credit: Omitting the cowbird practices, omitting the rebel-without-a-clue MLS rules violations, omitting the unrelenting antagonisticism (now that’s a religion!), the idea of a hierarchically-managed real estate marketing practice is not awful. In a world of haute cuisine, the idea of a McDonald’s or a Taco Bell might be anathema, but that doesn’t mean it can’t work.
So send me the files, Glenn. I could end up being your most vocal champion…
Technorati Tags: blogging, disintermediation, real estate, real estate marketing
JeffX says:
Hey Greg,
Im sure Redfin’s #’s could be carved up to self-serve a predetermined opinion, i.e. Someone as astute as yourself could find shortcomings within the data and expose them as such.
Lets keep in mind that Redfin is serving a growing niche, as their stats show, 90% of their buyers were under the age of 45. ‘Time is on their side’ as they say. To label them as a discounter brands them as cheap..cheap service, cheap advice, etc. but this isn’t the case. Their model targets/appeals to the Gen Y crowd, one that has grown up knowing the internet as a normal way of life and more importantly how to use it to their advantage.
Redfin simply ‘makes more sense’ to this demographic, one that values information and ease of use over a relationship.
Im a big fan of your writings…they inspire and provoke a good bit of what I post…
Thx for ‘keeping it real’…
JeffX
February 27, 2007 — 8:50 pm
Brian Brady says:
Oh, Jeff! The honeymoon is over! Here we go.
“Their model targets/appeals to the Gen Y crowd, one that has grown up knowing the internet as a normal way of life and more importantly how to use it to their advantage.
Redfin simply ‘makes more sense’ to this demographic, one that values information and ease of use over a relationship”
I think it is noteworthy to document the life cycle of many of my former securities brokerage clients. When I was a twenty-something stock jock , they absolutely loved Schwab and Fidelity because they “did the research”, As online brokerage grew, they gravitated towards ScottTrade and TD Waterhouse.
Then they wanted the “hot new issues” from the full-service firms. And…they started making a little money so they were less worried about price to insure convenience, advice, and more importantly, PERFORMANCE. They gravitated towards the relationship as the stakes were raised.
Jeff, let’s assume your premise is correct (I think it is) Redfin appeals to the young, hip, tech-savvy crowd. What will happen to their crowd when they get schooled by a local market-savvy, professional Realtor? I think they’ll gravitate towards the relationship like so many of the upper-middle class, older Xers did in financial advisory.
I respect you, bro…you know that. Moreover, I respect your knowledge and acumen but I have to disagree with you on this.
February 27, 2007 — 9:22 pm
Kevin Boer says:
Brian, I think you’re right on.
I also believe, however, that Redfin’s business long-term business plan calls for “doing a Schwab” — ie building the relationship with the “lower-end” younger client, then moving upmarket with that client when his/her needs evolve.
Gen Y’ers with time on their hands and a hankering for spreadsheets may be really good at spotting deals, but as they get older, busier, and wealthier, they may well want that high-touch experience when they upgrade from their $500K Seattle condos to a $750K suburban home and eventually perhaps to a nice $2.5M spread. Redfin may well be there to take the ride with them.
The question is — will they get there before or after they run out of money?
February 27, 2007 — 9:34 pm
James Klobasa says:
I’ve got to agree with previous comments.
Gen-Y is alive and active in the market. I’m just glad that it’ll help all of us along the way!
February 27, 2007 — 10:38 pm
JeffX says:
Brian…
‘What will happen to their crowd when they get schooled by a local market-savvy, professional Realtor? I think they’ll gravitate towards the relationship like so many of the upper-middle class, older Xers did in financial advisory.’
The older Gen X’s didnt grow up with the net and only a % utilize it for what its worth today….As the Gen Y’s grow older, it makes sense to assume they will continue with their familiar ways…
I didnt differentiate between a Listing and Buyers Agent here (bad Jeff)…I do believe a savvy and seasoned listing agent will always have a place in the industry…its the Buyers Agent who will suffer (that disintermediation word) from the Redfin’s of the world…
Thx Brian…talk to you soon!
February 28, 2007 — 7:09 am
Kris Berg says:
Kevin, You win my prize for best point made. As we get older and busier, competing demands will dictate that we delegate responsibilty for items in our lives which, given an infinite amount of time, we could do but will chose not to.
The flip side is the true, time-on-his-hands Gen X or Gen Y. They can and will do the legwork, but they need the professional, negotiating and transactional assistance. It is the latter that concerns me most – I can not conceive of the current Redfin model delivering superior or even equal service despite all of their PR to the contrary. Doing a Schwab? Perhaps, but the danger here is that that the younger consumer may not know that the service or results they ultimately received were inferior and what the true cost of that Redfin ride they took really was.
February 28, 2007 — 11:49 am
Glenn Kelman says:
Hi Greg,
We’re already sent you our entire quantitative data set, which you have only ignored.
We’ve also sent you evidence that the NWMLS report you and others have cited was corrected in our favor by the NWMLS and then retracted by the NWMLS.
Finally, we’ve responded to your argument that the data is not statistically significant, with a mathematical analysis that you’ve ignored.
The premise of a mathematical analysis is to avoid the subjective judgments you would prefer to make; the premise of a statistically significant sample is to account for all the ways individual transactions can vary in the ways that you fear.
So now we could pretend that your subjective assessment is more valid than objective data. Since you have ignored the information you earlier requested, we have no reason to believe you would not continue asking for data until you found the result you were looking for. Moreover, we see no evidence of a single, testable hypothesis that you would declare proved or disproved.
Asking a small company to redact all the private information from a year’s files for your review entails days and days of work. As a lively Redfin critic, you’ve hardly established yourself as an objective arbiter, or outlined any objective criteria for assessing what constitutes a true negotiating advantage.
For our part, we have demonstrated an abundant willingness to engage with a skeptic interested in an objective, independent analysis of our data, but we do not see you as any such arbiter of Redfin’s capabilities.
We see you as a brilliant but opinionated person who isn’t necessarily interested in being boringly fair.
Since we are responding in the first place to traditional brokers’ unfounded claims that they negotiate better than we do, at some point the burden of proof has to shift onto our detractors.
You seem to feel we owe you the world, and that you owe us nothing at all. Do you honestly feel you’ve made a reasonable request?
March 2, 2007 — 5:16 pm