by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Bob Haywood, an Owasso, OK real estate agent makes a case for why you should be aware of Redfin.com. Bob articulates, from behind the cloaked wall on Active Rain, why Redfin.com is the REAL agent of change in the real estate industry. Read what Bob has to say:
You should pay as much or more attention to Redfin and what they are doing than you do to Zillow. Am I saying we should ignore Zillow? No! But the group who has the potential to really change real estate is Redfin, not Zillow. And here’s why…Zillow is just an information source. So they give lots of information. Yippee. The information real estate vault is now open to the public. Zillow is just one of many players in the information delivery game. And guess what? Zillow exists at the 20,000 foot level. Their information is not very accurate. You and I exist on the ground level. We know our local real estate market in ways that Zillow will never know. We know what actually sold. What it sold for. What it is actually worth and often, what is about to come onto the market.
Fear Zillow.com? “Not so much”, says Bob and I agree with him. Zillow introduced the Zillow Mortgage Marketplace and it has had no impact on my business these past 18 months. Only one consumer has referenced Zillow’s mortgage rate quotes in their negotiation with me. That consumer did speak a lot about the Zestimate and its inaccuracy; that inaccuracy actually helped me in the negotiation with the consumer because it threw a shadow of doubt upon the accuracy of the mortgage quotes they offer.
And that is why you should watch Redfin. Redfin is a ground level company. They are attempting to take the information and link it to agents on the ground. That’s what makes them dangerous. If they ever get their feet under them and decide that they actually want to be a player nationwide, they could just change the way real estate is bought and sold. And if they do, they could end up owning (many of) us. Already, there are agents becoming Redfin agents in the markets they serve. And as I understand it, when you work for Redfin, they set your commission. Their marketing pushes out the idea that the consumer saves a ton of money by NOT having to pay the standard commission to agents.
Redfin.com is a completely different story. They have built an incredibly strong following among tech-savvy, do-it-yourself types. Moreover, they set expectations of and limits to their service offering and (here’s the important part)… Redfin sticks to them. Consumers fully understand those limitations and expectations and understand the trade-off between perceived service levels, performance, and price.
I can think of a hundred things Redfin could do better. I could think of a thousand things full-service real estate agents could do better and a million things lenders could do better. What Redfin does very well is define what it will and won’t do for the money it charges a customer and that appears to be what consumers really want today.
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PS: Republishing content without permission, from behind the Active Rain “Members Only” wall is a violation of its terms of service. I’ve secured permission from the author, Bob Haywood to republish his parsed commentary here in Bloodhound Blog.
Jessica Horton says:
Welcome to Atlanta! Hope they brought the gigantic beanbags and the Fat Tire (beer) with them from Seattle.
They are a great group of people and I wish them much success.
December 21, 2009 — 5:14 pm
Robert Worthington says:
Hi Brian, every time I see Glenn’s picture on the right hand side bar, I instantly respect what he is doing. Glenn actually just expanding to the Atlanta market.
December 21, 2009 — 8:59 pm
Louis Cammarosano says:
Hi Brian
I read the blog post on AR today and I was not certain what there was to fear from Redfin.
Some sites connect consumers to THEIR sites, not to agent/brokers’ sites, in order to sell ads USING agent/broker data. In this fashion these sites appear to be the provider and thus the expert soure of the data. I understand why agents don’t like that seeming usurpation of their authority.
If Redfin, however is actually providing a service that connects consumers with agents in a way they wish to be connected what’s the problem?
There is more than one way to do a real estate transaction, full service commission, discount broker, even FSBO. Unless I am not following close enough Redfin seems to be filling the needs of an increasing niche market of real estate services, far beyond just providing recycled agent/broker/public data in an effort to sell ads.
Perhaps to my mind, they should be feared less and respected more.
December 21, 2009 — 9:18 pm
Maureen McCabe says:
I think both Redfin and Zillow ought to be respected and studied carefully for what they are doing right.
Instead many of us focus on what these companies are doing wrong. I don’t think there is much to learn out of that, personally. Ridiculing Zestimates has been great sport for three years, but there is so much more to Zillow.
December 22, 2009 — 5:54 am
Joe Dallorso says:
I think the idea that Redfin advances, less service for a lower price could very well take hold with younger more techie buyers. Much like there are kids who don’t think they should pay for music, that it’s just something to get free online. This represents a fundamental shift in how society views goods and services.
As far as Redfin is concerned I see flaws in their biz model. They seem to be in markets with fairly high home prices & good size commissions. Can they invade a market like Ocala FL with $100K homes being the average? What about agent turn over? How many houses does an agent need to sell to survive at Redfin? Depends on the market I guess.
December 22, 2009 — 8:16 am
Teri Lussier says:
>They have built an incredibly strong following among tech-savvy, do-it-yourself types. Moreover, they set expectations of and limits to their service offering and (here’s the important part)… Redfin sticks to them. Consumers fully understand those limitations and expectations and understand the trade-off between perceived service levels, performance, and price.
I think you’ve nailed it Brian. This will be crucial to real estate service providers going forward, and whether or not Redfin succeeds, they’ve set in place a consumer-centric business model that’s not going to go away.
December 23, 2009 — 6:55 am
Maureen McCabe says:
Talking about Brian on ActiveRain today, about this post coming from content on a “Members Only” post and why we’d post something about the real estate industry members only… Jay Thompson asked yesterday WHY post Members Only??
December 24, 2009 — 9:16 am
Jay Thompson says:
I’ve never understood the fear of Redfin (or Zillow, or whoever). I’d much rather learn from them than fear them.
Why not take things they do right, modify them for one’s own purpose, and improve one’s own business? Conversely, take what they do wrong, learn from that and use it as well?
There are a BUNCH of ways to skin the real estate cat. That’s what makes this business great. Why re-invent and re-learn everything?
I wrote a post almost three years ago titled “Why do so many agents fear Zillow?” I didn’t get it then, I get it even less now.
December 24, 2009 — 9:18 am