From VentureBeat:
For this, Redfin has been banned [false] from operating in Oregon [false], New Jersey [false] and now Tennessee [false]. Additionally, the site has been fined by the National Association of Realtors [false], which owns the Multiple Listing Service [false], a national database [false] of home listings.
That’s two sentences, seven errors of fact.
Redfin can operate all it wants in Oregon, New Jersey and Tennessee. Those states ban commission rebates, which is vicious and wrong, but that doesn’t forbid Redfin from working there. In general, you will not find Redfin in any market where homes are affordable, because its cost-structure can only work — if it can work at all — on high-priced homes.
The second sentence is so rife with errors, I’m not going to bother trying to fix it. If you want to know what really happened, it’s here: Defending Redfin: Sweet Digs weblog buried by inane MLS rules.
Nevertheless, I am so glad that there are fearless guardians of truth willing to take money for this level of ineptitude. It would be an awful curse if we had to depend for news on people who care about facts and are actually paying attention.
Jeesh!
So as not to be unrelentingly negative: Newspapers got some bad news this morning, but for-pay journalism is not dead. But if journalists hope to portray themselves as “trusted professionals,” they need to catch a clue. The audience in the aggregate may net out dumb enough to buy crap like this, but the audience in particular contains individuals who know a lot more than you do about whatever you happen to be writing about. In the past those people were silenced by circumstance. Now each one of them can stand at the narrow end of an international megaphone. Not coincidentally, the best of the for-pay journalists are becoming webloggers, like John Cook, who broke this story and who managed to get it right in the first place.
Technorati Tags: disintermediation, real estate, real estate marketing, Redfin.com
J. Ferris says:
At RedFin’s current rate of press whoring and seemingly impossible crusade towards profitability they will land themselves in the real estate funny pages for the next half century. I’m all for reform in this business, God knows we need it, but it seems to me that Glenn is basing his entire company and it’s future profits on the fact that real estate sales will remain exactly as is for the next 20 years. Any decent VC firm would have dumped him before he even got off the ground based on a little background of the industry. Why? Ask yourself this: Is real estate still being practiced the same way it was in 1987? In fact, is the industry even remotely the same since 1987? That’ll give you Kelman’s fate and save you the years of boredom waiting to see what “ground breaking” thing he’ll do next.
If Glenn would be so kind as to take my advice: Try becoming profitable in Seattle or California before expanding to other parts of the country. An unprofitable business model in California is even less likely to succeed on the east coast.
Greg, this whole “discount broker goes national but still has yet to turn a profit” thing seems like Deja Vu to me… I just can’t seem to figure out why. Oh yeah, ZipRealty. Have they started profiting yet?
I do have one thing to thank Glenn for however and that is for working towards change in the industry. It might not be the best kind of change but it’s change nevertheless.
July 18, 2007 — 12:25 pm
Eric Eldon says:
Ouch. Let’s talk about where you think I was false:
1,2,3,4: Oregon, New Jersey and Tennessee ban Redfin’s business model of rebating commissions. So Redfin, as a startup company with rebates as its core business, would not be able to give rebates in those states. That’s a ban just like there’s a ban on casino companies opening up casinos in most places. Is Harrah’s going to build a non-casino casino in Salt Lake City? No.
5. The Northwest Multiple Listing System/Service has publicly fined Redfin, I know; Kelman told us the NAR has been coming after him, too. Maybe you and I are working off of different sets of information?
6. While NAR and MLS serve different roles, there is clearly a lot of overlap. For example, in some of their regional offices. http://www.nwmls.com/discover/nwreporter.cfm?SectionListsID=25&PageID=3877
7. Sure, the MLS isn’t just a national database, but what do you call this, a nationwide collection of databases? http://www.mls.com/
In the second sentence, I was trying to summarize a Byzantine set of relationships for readers who are focused on tech investing, not real estate.
But for sake of precision, I’ve clarified my words. Please go take a look, and let me know if you have a better 1-2 sentence description.
You can also contact me at ereldon@gmail.com.
July 18, 2007 — 2:41 pm
Greg Swann says:
This is better, but not by a lot:
1. Redfin’s business model of giving rebates to homebuyers is banned from Oregon, New Jersey and Tennessee.
Giving rebates is banned. Has nothing to do with Redfin, which could operate in those states on a different basis. Discount listings are perfectly legal in all three states.
2. Additionally, the site has been fined by the Pacific Northwest regional listing office
No, by the Northwest MLS, a Washington State corporation owned by real estate brokers in that state.
3. of the Multiple Listing Service,
No such thing except as 900 separate operating entities.
4. a nationwide database of home listings.
There is nothing like this, so far. People pine for it all the time.
5. It has also taken heat from the National Association of Realtors,
Only in the form of rhetoric. The NAR has been very careful to tread lightly around Redfin.
6. which in many cases owns local and regional MLS offices.
I believe this is completely false. Most MLS systems are owned by local associations of Realtors. NWMLS, the system Redfin ran afoul of, does not require member to be Realtors.
7. The reason for the fine, Kelman says, is that RedFin was altering the data after receiving it to include independent reviews by its users of the properties.
NWMLS says that Redfin was violating its rules against advertising other broker’s listings without permission. I disagree with this interpretation of the rules, but the issue didn’t come up out of the blue. They volunteered to obey the rules, then broke them.
Specious analogy. Buyer rebates are banned, practicing real estate is not.
And all that’s missing to support his claim is evidence.
Even so, you are speaking of separate operating entities. The connections you imagine but cannot demonstrate are called conspiracy theories.
Here’s one for you: Do you have any idea why working real estate agents object to Redfin.com, particularly, among Realty.bots or discount Realtors?
July 18, 2007 — 3:07 pm
Eric Eldon says:
I think this is getting a bit nuanced and opinionated for most readers/consumers trying to understand the basics. I’ve read what you have to say. I’ve read what Redfin has to say. I’ve read what other blogs have to say.
To your question: Redfin is trying to put whoever it can out of business by offering a cheaper online-based service that works at least as well for home buyers and home sellers.
I’m not saying they’re going to be successful everywhere, but customers are responding well enough for the company to be growing and for investors to be placing bets on it.
Don’t shoot the messengers of that news. But for sake of accuracy, I will try to incorporate the perspectives seen here as I write more about online real estate.
Also, if you know of real estate agents successful developing new models that work better for home-owners, I’m all ears.
Greg, I see you’re already thinking along these lines:
http://distinctivephoenix.com/.
July 18, 2007 — 4:00 pm
J. Ferris says:
Is it just me or has this article completely changed from what it was earlier today? I was looking to verify this but Google and Yahoo! both do not have it cached. Either way this entire article has now become one giant joke. I know Greg just did a once over on this but I think it should be addressed further.
I don’t even know where to begin…
First, the words of denial. Where he thinks you were false? You were 100% false. That is the maximum amount of falseness possible. You could not possibly have been more incorrect in your article which is why you “clarified” it.
Thankfully for Redfin there are loopholes in everything. Greg is right that they could certainly operate in a slightly different way and still do business in these states. I should hope it doesn’t take another $12 million to figure out how to do that.
5/6. Greg answered.
Far be it for me to question journalistic integrity or your researching abilities but why would you base your assumption that there is a national database based on the fact that you found ONE website that aggregates MLS information from hundreds of MLS’ across the U.S. as the end all to there, in fact, being a national listing database. IN FACT, had you taken the time to call the local MLS or even Google “National Listing Service” or “NLS” you would have found the Point2 NLS which is completely independent of any real estate association and serves as an advertising platform. THAT is the closest thing there is to a “nationwide MLS” and it’s far, far, far from it. I’ll even kindly link you to the NLS site F.A.Q. so you can learn what it is and what it is not.
As for the article itself:
Wrong. When Redfin needs to show a house who do they call? When Redfin is negotiating the sale of a home who are they negotiating with? A far more correct intro would read “Redfin is one of the more controversial web companies trying to make home buying and selling more profitable (all the while still not being able to muster up a profit themselves). Their goal is to reduce the role of a real estate agent in a transaction by way of opening buyers and sellers up to more liabilities.”
Your clarification requires clarification. You do not clarify WHY Redfin was fined by the PNWRMLS and your link to “Multiple Listing Service” is to some third party aggregator of listing data. Also, “in many cases” would imply majority. Are you implying that the National Association of Realtors owns a majority of local and regional MLS offices? Interesting. Kelman even admitted that he altered the data after receiving it. Perhaps the agreement stated the data could not be altered? And you think it’s a bad thing that Redfin was fined for this?
Thank you for another absolutely irrefutable source on how Realtors are banding together and charging that Redfin is running with our money because of their super efficiency and online magic. I suppose it was this super efficiency that forced Redfin to “stop taking listings” for a while. I can only imagine there were just armies of home sellers pounding down Kelman’s door dying to take advantage of the service. The site you cited is a joke by the way. It’s a blog of a “discount Realtor” with all the credibility of about two posts complimenting Redfin and by his own summation stating that Realtors are afraid of Redfin stealing all their money.
I’d suggest you scrap the entire article and start over again. Then again, I digress. You may very well have found the perfect site to write for with Matt Marshall, the site and VentureBeat founder, offering up gems like Redfin: One more nail in the coffin of the wealthy Bay Area real estate agent. Clearly unbiased writing is not one of VentureBeat’s key goals. I expect a name change to RedfinBeat any day now.
July 18, 2007 — 4:16 pm
Robert Kerr says:
Three topics in a row on the main page, all dedicated to Redfin. For a failed venture that no one’s worried about, that sure is a lot of attention.
July 18, 2007 — 5:50 pm
Greg Swann says:
> I think this is getting a bit nuanced and opinionated for most readers/consumers trying to understand the basics.
Hi, there. Welcome to BloodhoundBlog, where even the nits have nits to be picked. 😉
I don’t want to quibble with you. I think you’ve demonstrated a lot of guts by putting your head in the lion’s mouth like this. Instead, I may write a post about why Realtors don’t like Redfin.
July 18, 2007 — 6:26 pm
Jay Thompson says:
Eric Eldon wrote: “7. Sure, the MLS isn’t just a national database, but what do you call this, a nationwide collection of databases? http://www.mls.com/”
Personally, I call it crap. It’s a network of agent sites that pay Homegain to be listed as “the source” of MLS listings in a given area.
Take a look, for example, at the agent in my hometown of Gilbert, AZ — an agent that has paid Homegain to be included in their “MLS”. His link leads to a non-existent page (here)
How does this serve the consumer? Heck, how does it serve the agent or Homegain?
Just because the domain name is “mls.com” does not a MLS make it. It’s a collection of IDX searches (which are NOT the same as the MLS) linked to by Homegain — who is paid by these agents for the linkage.
It’s about as far from a national MLS as one can get.
July 18, 2007 — 10:30 pm
Eric Eldon says:
I’m going to let my part in this discussion simmer down now.
@Greg Swann: I’ve respectfully joined the ranks of loyal readers for this blog.
@J. Ferris: your blog is offline, apparently due to technical difficulties (http://blog.motivatedbuilders.com/?p=192).
@Jay Thompson: point taken, but doesn’t this suggest a new opportunity for the people who pool their data to create the MLS’s?
July 19, 2007 — 12:12 am
J. Ferris says:
Eric,
The blog needs to be fixed on the host end. It keeps committing suicide for some reason. If you were planning to reply you can certainly do so here. You’ve made a wise decision to start reading BHB more often. This is hands down one of the industry’s very best blogs on real estate.
July 19, 2007 — 12:19 am
Jay Thompson says:
Eric wrote: “I’ve respectfully joined the ranks of loyal readers for this blog.”
Watch out Eric, it’ll suck you in and never let you go! 🙂
I concur with Greg’s statement – you demonstrated a lot of guts stepping into the fray. Gotta respect that.
“but doesn’t this suggest a new opportunity for the people who pool their data to create the MLS’s”
Opportunity abounds. With 900ish disjointed MLS’s spread far and wide, it wouldn’t be easy to create a true national MLS. BUt if there was one, it’d be a grand thing.
Jooshua – Go with WordPress…
July 19, 2007 — 5:11 am
Eric Eldon says:
Thanks, and glad to be here.
July 19, 2007 — 7:51 pm