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There’s always something to howl about

60 Minutes’ Redfin.com story delivers 400 hits in 60 minutes flat . . .

Who says the old media is dead? In the hour just ended, Redfin.com’s Real Estate Consumer’s Bill of Rights: A wolf in sheepskin clothing had over 400 hits from organic search. Just think what might happen if the NAR made reasoned arguments instead of trying to club reality into shape with legislation…

(This search is why we’re getting the traffic. As with Zillow.com, we are the highest-ranking discouraging words on the topic. It’s up to you to determine where the intellectual leadership of the real estate industry resides…)

More: real estate 2.x emerges from its Howard Hughes-like seclusion to comment.

Further notice: Well. That was pretty lame. You can see the video here. Wouldn’t it be cool if a reporter could ask an intelligent question? Wouldn’t it be cool if both sides of a story were actually presented? Even so, the bottom line is: Big deal.

Still more: I commented on the TechCrunch.com post, not that anyone other than insiders cares about accuracy on these issues.

My initial comment:

[Quoting Michael Arrington]> Redfin is doing their best to completely remove real estate agents and brokers from at least half of a home sale.

This is incorrect. Redfin’s cost “savings” consists of pushing the cost of buyer representation off to the listing agent and the buyer. It “saves” money by not doing the work the buyer’s agent’s commission is intended to compensate. The net consequence, if no other changes are made in the real estate industry, is that sellers and listing agents are likely to change the way they provide for the buyer’s agent’s compensation. Redfin.com has never turned a profit, and, if its business model actually gets traction, the money it “rebates” will no longer be available to it.

This was Arrington’s response:

Greg – the fact is that the real estate market is seriously screwed up and needs to be disrupted. Agents are overpaid and often do little more than underprice a house to ensure a quick sale. The model needs to change, and Redfin is changing it. Good for them.

That rejoinder is devoid of any actual response to what I had said, but people are rarely objective about their own betes noir. My own riposte did not make the TechCrunch cut-off on comments [no, that can’t be right; there are comments posted after this failed to appear], but here it is for posterity:

> the fact is that the real estate market is seriously screwed up

I agree.

> and needs to be disrupted

I agree.

> Agents are overpaid and often do little more than underprice a house to ensure a quick sale.

Sellers set prices, not Realtors. In any case, Redfin does far more business on the buyer’s side than on the seller’s side.

> The model needs to change,

I agree. The ideal change would be to divorce the Buyer’s Agent’s commission from the Listing Agent’s commission. If this were done, Redfin would go belly up overnight, since its business model consists of rebating commissions it does not expend the effort to earn.

> and Redfin is changing it.

And that is completely false. Redfin discovered a way to betray, Tragedy of the Commons-style, the cooperative compensation model of the MLS system. That betrayal may work for it in the short run — although the company has yet to turn a profit — but if the betrayal persists, then the cooperative compensation model of the MLS system will be changed — to the detriment of all home buyers.

This is important: Actual reform in the way real estate commissions are paid would destroy Redfin.com. It exists by means of exploiting the contradictions in the real estate industry it makes a point of decrying in public.

If you want to explore this in detail, I know a lot about it.

I’m not holding my breath. Even so, that’s the best short statement I’ve ever done of the Redfin contradiction.

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