Of the two “innovative” cowbird brokerages discussed in this morning’s New York Times, the stronger of the two is BuySideInc.com. They’re rebating even more of the buyer’s agent’s commission than is Redfin.com, but their actual profit center is in originating the loan — a well-understood, fast, cheap, office-job function. Even this is not without complicating factors, especially RESPA. But in pure dollars, BuySideInc.com will make more money per buyer than Redfin.com.
But if Redfin.com really wanted to isolate traditional listing agents, they would triangulate Clinton-style. Instead of giving two-thirds of the buyer’s agent’s commission to the buyer, they would give one-third each to both the buyer and the seller. That way, the seller would regard Redfin.com not just as another source of buyers but as a potential small windfall at close of escrow. The interests of buyer, seller, and Redfin.com would coincide, at least to that extent, and the listing agent would feel a very strong pressure to get his own ass on board.
I still think Redfin.com is not earning its commissions, using the standards of procuring cause that would apply to any other brokerage, but a strategy like this would be much more effective, in the long run, at getting away with it than whining to the New York Times…
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