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Of course traditional real estate brokers don't like Redfin! Who in their right mind supports newer, younger, and cheaper competition?
What else can we think of that technology has replaced?
- Travel agents? (These went away when the airlines stopped paying them.)
- Insurance agents? (Many people search online)
- Stock brokers? (Discount trades are the norm)
- Bank tellers? (ATM machines and on-line access has replaced many of them)
Folks - you can laugh all the way to the unemployment line about how Redfin doesn't serve people the same way you did. Stock brokers, travel agents, insurance agents, and bank tellers all did before you! I can't guarantee that Redfin will make itl, but I'm a buyer and once I discovered Redfin I don't think I'll ever use a full service agent again. I'm craving for my $10,000 check they'll write to me once the house I buy closes.
In the next 5-10 years, I guarantee you that there will be several discount real estate companies all operating off of Redfin's basic model and it will be serious competition for full service agents.
Redfin moved into the Los Angeles area a few months before I retired and moved out of the area. Since most of my clients (both buyers and sellers) were internet savvy, I got a lot of questions about the site. I didn't lose one client to them. In fact, not one of my clients even liked the website because they found the information either out of date or didn't like the fact that they wouldn't show property. Can you imagine trying to work with an agent that won't show property? Of course, at the time gas was about 5 dollars a gallon.
As long as agents provide personal service, they will never be replaced by a machine.
Quote:
Originally Posted by bigtrees
Of course traditional real estate brokers don't like Redfin! Who in their right mind supports newer, younger, and cheaper competition?
What else can we think of that technology has replaced?
- Travel agents? (These went away when the airlines stopped paying them.)
- Insurance agents? (Many people search online)
- Stock brokers? (Discount trades are the norm)
- Bank tellers? (ATM machines and on-line access has replaced many of them)
Folks - you can laugh all the way to the unemployment line about how Redfin doesn't serve people the same way you did. Stock brokers, travel agents, insurance agents, and bank tellers all did before you! I can't guarantee that Redfin will make itl, but I'm a buyer and once I discovered Redfin I don't think I'll ever use a full service agent again. I'm craving for my $10,000 check they'll write to me once the house I buy closes.
In the next 5-10 years, I guarantee you that there will be several discount real estate companies all operating off of Redfin's basic model and it will be serious competition for full service agents.
Not only is it the level of customer service that's the issue with a business model like Redfin, it's also the lack of market expertise and negotation that hurts buyers. I was noticing on their website that for an additional fee, Redfin will help sellers price their properties.
So, from a buyers standpoint, here's what you get: the promise of a commission rebate, saving them up to $10,000 off the price of their home purchased through Redfin. Sounds pretty good, right?
Here's what they don't tell buyers: "You're sailing uncharted waters. The homes we have listed for sale may be priced tens of thousands over market value. You're on your own, though, so you better know the local real estate market inside out because we're not going to help you figure out if the house you like is overpriced. Oh, and by the way, you'll have to negotiate the contract yourself. We'll fax it to the seller, but that's about it. We're certainly not going to advocate your pricing position."
My guess is that, even with the rebate, I'd bet most buyers working through these types of companies probably end up spending more for a house than they would have by going through a Realtor(R).
My guess is that, even with the rebate, I'd bet most buyers working through these types of companies probably end up spending more for a house than they would have by going through a Realtor(R).
Certainly that's the battle cry of a full service agent. However:
That's the exact same thing travel agents used to say - buy your ticket through me because I have access to the airline schedules and can get you a cheaper ticket than you can on your own. I know which airlines have the best prices for a given flight and I know which hotels are good and I can bundle all them together for a great price.
That's the same thing insurance agents used to say. They know the market, they have access to all the insurance products, they understand what a policy should cost, and they know how to bundle policies together so you get a great bargain.
That's the same thing that stock brokers used to say. How do you know a stock is a good bargain if you go with a discount house like Vanguard? Who helps you decide what a good stock price is? How much should you pay and what are the implicaitons of the investment?
And the bank teller - you have me there. I can't say the bank teller gets you a great bargain on anything, but the teller is a real person and does give the bank a human face.
With the first three, notice that people are willing to do much of what they used to have an agent/broker do for them? The same will happen with real estate, it's just a matter of when.
It has multiple features I haven't seen on any other website. Like the ability to search all the listings in one area on a map (for school district searches), or the ability to see the previous sales figures. The information is much more complete. And, in my area at least, they're listings are the first updated, so when "news" breaks, it breaks on Redfin first. With pictures.
We're using a realtor this time and I won't renege on that relationship. But next time around, depending on what Redfin is offering, I may use them.
Certainly that's the battle cry of a full service agent. However:
That's the exact same thing travel agents used to say - buy your ticket through me because I have access to the airline schedules and can get you a cheaper ticket than you can on your own. I know which airlines have the best prices for a given flight and I know which hotels are good and I can bundle all them together for a great price.
That's the same thing insurance agents used to say. They know the market, they have access to all the insurance products, they understand what a policy should cost, and they know how to bundle policies together so you get a great bargain.
That's the same thing that stock brokers used to say. How do you know a stock is a good bargain if you go with a discount house like Vanguard? Who helps you decide what a good stock price is? How much should you pay and what are the implicaitons of the investment?
And the bank teller - you have me there. I can't say the bank teller gets you a great bargain on anything, but the teller is a real person and does give the bank a human face.
With the first three, notice that people are willing to do much of what they used to have an agent/broker do for them? The same will happen with real estate, it's just a matter of when.
I actually have an independent insurance agent. And I personally feel that I pay much less in insurance because I do. Not that I didn't check out the online insurance companies. But I found their premiums to be much higher than what I paid thru my agent. About once every couple of years I have her rerun my coverage to see if I'm still getting the best deal out there. Some years we switch, other times we're good. She does all the work - I reap the benefits, including saving money.
Re stockbrokers - I think a good stockbroker would be invaluable right now. Unfortunately I don't have one and I'm kicking myself that I didn't get set up with one when my 401k still had some money in it.
The one professional you left out of the mix, bigtrees, are accountants. You've got CPA's, you've got the discounters (H&R, etc), and you can do it yourself (TurboTax, etc). I've been in accounting. I've got a good idea of how to save money on my taxes and how to file the forms correctly. However, I no longer keep up on the myriads of new tax codes that come out every year. I also know from firsthand experience the amount of money that CPA's are able to save certain clients. Of course, many people see no value in their services and figure that one of the discounters can do just as much for them. They have no idea the $1,000's that they're giving away, just because they haven't structured their business properly, or because the guy getting minimum wage to fill in the blanks at the discount place is clueless that there's a specific tax law pertaining to that taxpayer's specific situation.
I've found very few people that are willing to spend the time it takes to keep up with quickly changing real estate trends. To the Average Joe r.e. looks very simple. For those of us in the business, we know that there are specific issues with certain houses, locations, building and mechanical systems, weekly changes in the market, etc, that affect the value and resale potential of specific properties. I'm not saying that Average Joe can't educate himself, but I am saying that it takes a commitment and a lot of time that most people don't have. In this case, what you don't know can hurt you . . . in the pocketbook. Of course, those that get burned are clueless that they've made a bad deal. All they know is that they "saved the commission".
Personally I welcome seeing varying real estate business models, and compeition is always a healthy thing. I'm not saying that status quo is ideal, either. Competition can also make for an improved industry. I think we both agree that it's the consumer who will ultimately decide whether a knowledgeable full service realtor saves them money and headaches, or not.
Certainly that's the battle cry of a full service agent. However:
That's the exact same thing travel agents used to say - buy your ticket through me because I have access to the airline schedules and can get you a cheaper ticket than you can on your own. I know which airlines have the best prices for a given flight and I know which hotels are good and I can bundle all them together for a great price.
That's the same thing insurance agents used to say. They know the market, they have access to all the insurance products, they understand what a policy should cost, and they know how to bundle policies together so you get a great bargain.
That's the same thing that stock brokers used to say. How do you know a stock is a good bargain if you go with a discount house like Vanguard? Who helps you decide what a good stock price is? How much should you pay and what are the implicaitons of the investment?
And the bank teller - you have me there. I can't say the bank teller gets you a great bargain on anything, but the teller is a real person and does give the bank a human face.
With the first three, notice that people are willing to do much of what they used to have an agent/broker do for them? The same will happen with real estate, it's just a matter of when.
This is the same discussion that has gone on for the last ten or twenty years. If it was going to happen it would have.
The problem of the discounters is that they don't survive down markets. The model works OK in 2004/2005...but in 2007 they all go belly up...insufficient revenue to pay the overhead. In Las Vegas the vast majority of the discount firms went away or scaled way back. And these were mostly conventional RE Agents simply using discounts to attract customers.
The transaction is simply different in kind from those things that have gone to the net.
Ten years from now two other guys will have the same discussion...and it will have the same outcome.
I do know that when Vulcan Capital, one of Redfins largest investors, chose to go with a full service brokerage to market their new condo developments instead of using Redfin.
I also don't think they have over 1% market share in any of their markets.
I think Redfin was profitable. I remember reading something about how they were turning a profit this year. Redfin was growing and trying to be in many markets, but I am guessing they slowed their expansion plans due to the market.
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