If the New York Times devotes 2700 words to a puff piece on Redfin.com, how many of those words would you expect represent the contrary point of view? If you said 1,350, to reflect the chimerical idea of balance, you haven’t spent much time reading the New York Times. If you said zero, you spend too much of your time reading Little Green Footballs. The Times would never, ever present a completely tendentious article without at least a feint at balance. Marlow Harris, whom I admire no end, gets to offer this extensive and comprehensive counter-argument:
Some agents say the biggest problem with Redfin is that it complains too much. “Someone may be trying to manufacture controversy, even going so far as to bait other real estate practitioners, invite ‘war stories’ on their blog and whine to Congress and to newspaper reporters that they’re being treated unfairly,” said Marlow Harris, a Seattle agent with Coldwell Banker Bain Associates who also runs the real estate blog 360digest.com.
I can’t imagine how much of Marlow’s time the Times wasted in order to stuff her mouth with a straw man, but I will bet a very tall dollar this is not all she had to say.
In reality, the piece is Redfin.com PR, but the hook is a couple who were turned away, like Mary and Joseph, by an evil innkeeper of a real estate agent. I’m going to fisk this article a little, not a lot, because it’s interesting.
First, did the Times lack the opportunity to present a contrasting point of view? Of course not:
But the seller’s agent refused to show it to them. Why would she turn away an eager buyer?
How about because she could double her legal liability for no additional compensation? Was that so hard?
“You can find out more on the Internet about an eBay Beanie Baby than you can about a $1 million house,” said Glenn Kelman, chief executive of Redfin, a licensed broker in Washington State and California.
Oh, good grief. I think the “secret” fields in an MLS listing are stupid, but there are damn few of them, and none of them occlude or obscure material facts about the property.
Traditional agents still firmly control the M.L.S., which allows all participating brokers, including Redfin, to view almost every home for sale in a particular area, even those being offered through competitors’ agencies.
This is sly. Traditional agents are distinguished from Redfin because they are… alike and equally members of and participants in the MLS system. Two legs bad. Four legs good.
Happy news, though:
As it turned out, the Wolfs’ offer was the highest of five bids made for the house they wanted, and they were able to buy it despite the balky broker.
But wait. There’s more:
(They toured the house with a friend who is an agent.)
Who does the friend work for? Did he stop to think about his own liability? Are there no real estate regulators in Washington? Right there in the New York Times, the Redfin PR team is trumpeting its success at defaulting on its fiduciary duties to its clients while diverting its legal liability to a (presumably) uninvolved patsy.
What’s wrong with Redfin.com? You would have to work at the New York Times not to be able to figure it out…
BuySideInc.com, an online buyer’s broker in Chicago that offers a 75 percent commission rebate, said that at one point 12 percent of its customers reported that traditional agents had refused to show houses to them.
When you call a listing agent and say, “My Century 21 agent can’t come with me, but I want for you to show me your listing on Griswold Street” — what happens? What happens when you show up at a new home subdivision, telling the sales reps that you want to be represented by your absent Coldwell-Banker agent? Innocence, ignorance, incompetence or malice — who can tell the difference?
The battle by the traditional agents reveals how vulnerable the broker’s 6 percent commission has become. Agents are quick to point out that the average commission may be closer to 5 percent — a 17 percent decline over 10 years, they say — but no one knows for sure because no one collects data on that.
Title companies do. I don’t know if they could or would reveal the information, but I’m sure they have it. HUD and the IRS know, too.
I love this:
Buying a home online is not too different from ordering a book at Amazon.com or a computer at Dell.com.
I can’t wait for that to come out in a negligence lawsuit.
In order to do a little math, we’re going to connect the dots from two different places in this article:
Redfin opened in 2004 as an online real estate listings site for Seattle, and now has 35 employees, including 12 agents in Washington State and California.
His agency, he said, has closed 89 transactions and returned $900,000 in customer rebates.
First, a brokerage of 12 agents should have at most 14 people on staff, 13 is better, 12 is best — the broker should be selling, too. Particularly if they’re going to give away two-thirds or more of every gross dollar coming in the door. I would imagine the management burden on each one of those agents is oppressive. That might explain why they’re only doing about one transaction side a month, each, despite their high-tech advantage, their fabulous rebates and their fawning press attention. Work the numbers: 89 sides divided by 12 agents divided by seven months = 1.06 sides per agent per month.
In a traditional real estate brokerage, an agent producing one side a month finds another job. But we can make allowances for the Redfin agents. They work surrounded by a vast horde of managers who think a gross income of $65,000 or less per month — with a head count of 35! — is a business. Work the numbers: If they have rebated $900,000, they kept $450,000 or less. Divide that by seven months and we get… a Chapter 11 filing. Only in the New York Times could a business this inept get this much press. When they fail, you better know it will have been the fault of the big bad bogeyman and not because not a single one of those 35 employees can do arithmetic.
More, just for fun:
Ms. Howard, for example, said that in her first days at Redfin, several agents for sellers said they were too busy to show a house to her clients.
And not only that, they said they were too busy to babysit her kids, too! O, the ignominy! O, the humanity!
When that happens, Redfin agents contact the sellers and let them know that their agent will not show the house.
I would expect that this is a violation of agency law. It would be in Arizona.
When Redfin said it would try to make peace with rival agents by sending them gift cards for coffee, some of them told Redfin that such a move could violate a Department of Housing and Urban Development regulation having to do with transactions between agents.
Do you remember that Kelman touts himself as a broker? He doesn’t know RESPA? He doesn’t know procuring cause? Guess what else he doesn’t know?
Redfin posts pictures of agents on the Web so that customers realize, as Mr. Kelman says, “they won’t be talking to a person in Mumbai, India.”
Right there, in the New York Times, Kelman admits to a bald-faced Federal Fair Housing Violation. But work the numbers: The fine is $11,000 per violation, which puts the fear of god into ordinary brokers — which is why they take the trouble to learn the law. Redfin has $8 million in venture capital, though, which means Kelman can commit this kind of bone-headed mistake 726 more times before he has to dip into his own pockets. Even then he should be fine. Heck, his radically innovative high-tech real estate brokerage is bringing in over $2,000 a day…
Here’s the cute part:
AMID its battles, a funny thing happened to Redfin. It realized it was not primarily a tech company, but a real estate broker. It moved to stylish offices in Pioneer Square in Seattle because many customers wanted to meet agents the old-fashioned way: in person.
This “business” discovered its cost structure only after it had promised to give away most of its income.
Obviously I am a huge fan of innovation in real estate. I’m in a good position to judge what does and does not make sense because I am actually in the real estate business. The first big shake-out among the dot.com players in this industry will come when the companies whose “innovation” consists of whining about persecution hit the auction block. Redfin.com might be an obnoxious cowbird. But it sure isn’t much of a business…