Excellent article by VOX on the evolution of Redfin, but it would be improved by a critical cross-examination of statements like this from Redfin’s CEO Glenn Kelman:
EXCERPT: Redfin set out to change real estate. Then real estate changed Redfin.
“…the original, bare-bones [Redfin] brokerage model would never appeal to a mass audience. So in November 2008, as the real estate market was imploding, Redfin took the plunge.
‘Redfin started life as a cult,’ Kelman wrote on the Redfin blog. ‘But our goal has always been to become a religion.””
Discussion point #1:
The article goes on to talk about how Redfin reduced it’s commission and began taking listings which from my perspective as an believer in the Common Law of Agency, is the equivalent of losing their religion.
Is that too critical an assessment, or do others share that perspective?
Discussion point #2:
No doubt Redfin’s brand has loyal followers — an estimated 6 million unique site visitors each month:
But like other Mega-Brokers, does their desire to build market share undermine their capacity to act as a fiduciary for individual homebuyers, when there are fundamental conflicts of interest?
1. Dual agency / Designated Agency
It’s impossible to simultaneously try to get the highest price for home sellers and the lowest price for homebuyers, and
2. Competing buyers in-house
How does an individual homebuyer benefit when their brokerage is representing competing buyers interested in the same property?
Discussion point #3:
To what extend does the mainstreaming of Redfin’s business process and reduction of their rebates reflect pressure from outside investors who together have put $165 million into the company over the past decade?
Does their desire to become a national brand leave them vulnerable to more nimble network of independent brokers who can offer both deeper discounts / larger rebates without conflicts of interest?
To underscore the benefit of working with small independent brokers or “indie” agents and Redfin’s lack of credibility as a a religion one simply needs to question two assertions on their home page:
1. Can you really tell competing buyers you are going to put them first when you’re submitting competing bids on the same property?
2. If I am a buyer, particularly one who has been burned repeatedly by bidding wars, do I really want to work with a buyer agent who’s website boasts, “Turn one offer on your home into a bidding war?”
From our perspective as consumer advocates over the past 20 years, those questions expose some of Redfin’s conflicted beliefs. If you’ve lost faith in their brand, you’re not alone and we invite you to learn more about our crusade — #RE2020. Our mission is to raise awareness about money-saving real estate business models who collectively could empower homebuyers and sellers to save $30 billion dollars annually by the year 2020.
Redfin set out to change real estate. Then real estate changed Redfin. Real Estate Cafe has remained true to it’s original mission and our DIY homebuyer clients. And we’re not alone. There are other money-saving business models who still walk their talk, plus some impressive new start-ups who have responded to calls to disrupt real estate.
Follow #RE2020 on Twitter to learn more.