I called Redfin Today And......

By
Real Estate Agent with RE/MAX Compass, formerly RE/MAX WHP

Some people read the headlines off a tabloid when they're bored. I on the other hand find it interesting to investigate weird and strange occurrences that are intertwined with our industry. Unless you Realtors have been sleeping under a trillion tons of bed rock than you've heard of this ::clearing throat:: company called REDFIN.

I called the 800 number & SWEAR this song was playing while I was on hold:

 

I thought this was really funny. For those of you that can't follow the lyrics, it's titled .. Burning Down The House by the Talking Heads. After being on hold for about 5 minutes a guy answered and said he was with customer service. Here's what I found out.

1. Redfin only represents buyers looking $175,000.00 or better.

2. Redfin won't show a buyer who wants to look at Short Sales or any listing that has a "3rd party involved."

3. They are only available by phone until 6 p.m.

4. A buyer IS NOT guaranteed to work with the SAME agent throughout the entire process. A buyer may work with MULTIPLE "agents" while viewing properties and even during inspections. When a buyer is ready to submit offers they are asked to do so ONLINE with a TRANSACTION coordinator.

5. Redfin will only show 6 houses within a two hour period.

 

Redfin also advertises on their company website that they SPLIT the commission with their buyer.

Personally I find it unfortunate that a buyer looking up to say 160k cannot use Redfin. The message in my opinion is that "there isn't enough commission to share" so the deal isn't worth it. Doesn't this speak about the business model itself? What do you think?

Wouldn't you EXPECT to work with the same buyer's agent from start to finish? I would. I would be pissed if my agent whom I had just developed a level of trust with vanished!

Wouldn't you EXPECT the same agent who showed you properties to also be the one to SIT DOWN with you and explain the offer and do so in person versus doing it ONLINE with some TRANSACTION COORDINATOR! What is the transaction coordinators background, education and expertise? Is it the same as the agent who showed you property? Well, actually the same as ALL those agents who showed you different properties?

Wouldn't you EXPECT to be able to contact your REPRESENTATIVE at the office after 6 p.m.? I WOULD.

Wouldn't you EXPECT to have the ability to see maybe 8 houses in two hours? What if you were only in town that ONE day?

I'm curious as to JUST how dedicated an agent would work if he or she is spoon fed buyers, then only getting paid a salary to do so. Being a REALTOR for the MOST part means you are business person. An entrepreneur of sorts. You wear lots of different hats and you work you fanny off to BE THERE when the client needs to you the most. I've NEVER met a Realtor who got licensned with the intent to work for SOMEONE else. Maybe they HAVE to because they couldn't make it on their own. I'm not sure I'd want a washout representing me, but that's just my opinion.

Not all business models are created equal and not all are expected to operate the same. I do however believe that the HUMAN side of our industry can never be washed away by buying our clients or treating them like CELL PHONE customers. And I promise if you call me that I will never, ever have

BURNING DOWN THE HOUSE playing on my voicemail. Sort of fitting and ironic considering I called there to get information for this blog.

 

 

Posted by

 

 
Greg Nino
, Houston area Realtor®.
Helping residential buyers, sellers and tenants 7 days a week.
Available @ 832-298-8555 

RE/MAX Compass (Formerly RE/MAX WHP)

www.GiveMeMyHomesValue.com

www.EverydayHoustonHomes.Com

 

 

The information contained in this blog is believed to be reliable and while every effort is made to assure that the information is as accurate as possible, the author of this blog, and its comments disclaim any implied warranty or representation about it's accuracy, completeness or appropriateness for any particular purpose. All information is copywritten and the property of Greg Nino.  

 

 

 

 

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Comments 83 New Comment

Rainmaker
933,603
Greg Nino
Houston, Texas
RE/MAX Compass, formerly RE/MAX WHP

All in all a good convo, thanks everyone.

December 21, 2009 06:28 PM
Rainer
30,803
Thomas Johnson
SRES, Green
RE/MAX TOP

Redfin is profitable on their income statement.  That means that they have more money coming in than going out.  My question: What about the VC guys $50 million?  Redfin is paying the rent, the salaries of the IT dept and the agents' salaries and health insurance.  Somebody just gave them another $10 million-Bernanke's zero interest rate policy at work there.  I guess the VC dudes figure if they are going to make zero in government bonds, they can just as easily make zero in Redfins.  Redfin is going to run out of $500,000 houses real quick.  Greg Swann at http://Bloodhoundblog.com put a break even sales price for Redfin at $250,000 a couple years ago.  I have always felt that Redfin's investors are playing for a Bank of America or Wells Fargo buyout.  The company has the bank CSR mentality agents in place(very nice folks, please give me a good rating on our survey - I can win a tote bag-no showings after 6PM, please).  Unfortunately some of the buyers that they may have had in mind are gone-Countrywide and Merrill Lynch come to mind.  The IPO market for real estate is somewhere over China. So now Redfin has to stay alive by finding every "geek with money" (Glenn Kelman's target market) in America that might buy a house through a cool website.

When they come to Houston, I can think of about half a dozen zipcodes where they might be able to hold a $350,000 median sales price.  When they come here with the salaried agents I have one bit of advice for Glenn and Matt: car allowance.  You won't keep them running from Sugar Land to the Woodlands (200 mile RT) for very long without it.  My guess is that Redfin's Texas entry will be DFW.

December 21, 2009 11:20 PM
Rainmaker
933,603
Greg Nino
Houston, Texas
RE/MAX Compass, formerly RE/MAX WHP

Thomas - so very, very true! They will certainly have a challenge with that! I agree with you about their model, profit margin and length of likely survival. I can't see how anyone can be successful for the long term when you "buy" their business. As it stands it costs me 40% of every check to run my shop. I can't imagine doing all that I do and also "giving back" 2/3rds of my pay. It's unthinkable. These guys solely depend on VOLUME in order to survive. VOLUME as we all know doesn't equate to quality. Like you stated, they won't find "quality" agents willing to drive all over our city for $4.34 in commission.

Welcome them with open arms. Let them spend hundred's of thousands of dollars in advertising just like Assist To Sell, Buy Owner and the countless other companies who thought they could "come to cow town" & run our homeowners from their money. Bad news travels at light speed in Houston and surrounding areas when it comes to Real Estate "companies" and the stinch that follows.

Blaze your trail.

December 22, 2009 12:11 AM
Rainer
30,803
Thomas Johnson
SRES, Green
RE/MAX TOP

Remember, they not only have to cover agent salaries, but a huge IT overhead which may or may not be calculated into their "profitability", all on 4 grand gross commission or so per deal. Those "nice non marketers" also can't sell. Kelman says so. To wit:

http://www.bloodhoundrealty.com/BloodhoundBlog/?p=7922

Redfin's referral agents blow the doors off their salary folks. Good salespeople "connect" or "click" with clients because we have hearts.  I find it telling that agent productivity is not a hiring criteria. Say what?

If I am Kelman's VC I want to know why he hasn't rolled out the referral/partner agent business line in every market. The deals close faster and probably with a higher net after not having to carry at least grand a month in benefits. If J Philip is an indication, looks like there is 1.25-2% for the partner, maybe .5% client rebate max and maybe a 3/4 point to Redfin with no addition costs laid on top of their fixed overhead. I would be screaming to get more revenue off my $50 million machine. Or. cut my losses and sell to Google for a day or two of PPC ads.

 

December 22, 2009 12:51 AM
Anonymous #85
Anonymous
Joe cline
I think redfin will enter Austin as the Texas entrance. Just saw in our realtor mag that they designated a realtor here. I wonder if theyknow how many limited service brokers we already have in Texas? Should be a quick way to burn thru some of that $10 million! :) one of the other nasty out of the gate discounters who accused all agents of being scumbags is here in Austin but aren't making blanket accusations anymore either. They got humbled too and now are rolled into PLR I think.
July 02, 2010 04:25 AM
Rainmaker
933,603

Greg Nino

Houston, Texas
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RE/MAX REALTOR® serving all of Houston, Cypress, Katy, Spring and Harris County. Available 7 days a week. Residential resale, new construction and leasing.