bio: peter comitini »

market knowledge
Manhattan market report »
townhouse report »

follow peter comitini

peter's newsletter
sign-up here »

the topics
blogs & sites
design
downtown
economy
for sale or rent
green city
headroom
market reports
professional
property geek
questions & answers
tips for buyers
tips for sellers
videos
newsreal bookmarks
peter's photos


real estate services
home page
selling your property
buying a home
browse listings
recent press
contact peter


recommended
design & ideas
green design
neighborhoods
nyc resources
real estate
real estate: overseas

the archives
April 2014
November 2013
April 2013
February 2013
January 2013
June 2012
April 2012
March 2012
February 2012
January 2012
December 2011
July 2011
February 2011
January 2011
December 2010
October 2010
July 2010
June 2010
May 2010
February 2010
January 2010
December 2009
October 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
all archives

« previous: Buying in a new development: risk and reward   |  next: Buying in a new development: the closing costs »

Tuesday, May 15, 2007

You get paid all that money for just 60 Minutes of work?

60_minutes.jpgid_tech.gifI wish that I could take credit for the above headline, but it was from a commenter on the CBS News Web site about a fluff piece for Redfin, the Seattle based, limited services "broker" on 60 Minutes titled "High-tech Real Estate Moves In". It comments on a part of the story where Lesley Stahl interviews Kelly Engel, a former full service agent now working for Redfin, who thought that she had no right earning her salary, "I had done quite a few deals where I spent maybe five hours total working on the deal. I never saw the house. My client found it online and, you know, I would make $12,000 for four hours of work. And I thought this cannot keep going on like this. I felt like I was going to get caught!"; well this slacker agent has certainly found the right company to work for. Would you want someone representing your interests who feels guilty about collecting her own salary? Might she feel you were making too much profit selling your home too, because you've owned for just a few years? This kind of quick deal scenario is truly the exception. The Redfin pitch is full of self serving misrepresentations about easy money.

"The show featured interviews with a representative from the now-defunct eRealty and the president and CEO of Redfin, but no one from NAR, even though NAR twice offered and prepared Association spokespersons for interviews with Leslie Stahl."
Redfin is an Internet start-up with significant venture capital and a slick PR machine behind it. It bothers me when we see spin substitute for subject matter expertise and healthy skepticism. The result is spoon fed Redfin publicity. The lack of balance in the reporting is glaring. In a story that purports to be about changes in the Real Estate industry why was no one from the NAR or REBNY included to provide an another point of view? The NAR has since published a rebuttal on their site. Instead we get Deborah Arends, a local, suburban ReMax agent making the case for full service brokerage. She's clearly an unqualified and embarrassing spokesperson for the industry on new business models. CBS News should know better. How much does Lesley get paid for her 13 minutes of work? Apparently too much as this can hardly be called journalism.

Redfin is not a great defender of consumers or efficient markets. They just have another product to sell. People buy into the no service pitch in part because the full service industry practitioners and their governing bodies in the form of the NAR and REBNY do a really weak job of weeding out the bad apples. A focus on innovation in marketing techniques, technologies and services is what will cause us to hold and gain ground, rather than cede it to second rate providers who can't do it better, but might appear at first glance to do it cheaper. People have always had the option of using discount brokers, or selling on heir own, yet traditionally turn to full service agents because they are more effective at achieving high sales prices, and relieve their clients of the substantial burden of doing it. We heard no spin about that.

There is probably room in the low end of the market for FSBO (for sale by owner) services like Redfin, as long as you are willing to spend your own time, effort and money selling your home; and are willing to work with buyers who feel the commission savings should go directly into their own pocket. Your sales person has no vested interest in getting you the highest price possible. I'd suggest that if people want to sell on their own, they try completely free services like Craigslist which already has far better reach than Redfin. They are a "no service" broker that does not show your home or promote it beyond letting you post it to their Web site. I'm not sure what's revolutionary about that. They will make it a point to insert themselves into the process however, as the checks are being written.

Comparisons are often drawn to the the Travel Agency business which has been largely disrupted by online ticket vendors. Do you pay less today for your air fare than you did a few years ago? Are you spending much more of your own time planning and researching travel plans? Where did the commission savings go? The spin that cutting out sales incentives and providing a web site will result in any great benefit to consumers is a myth. The landscape is more complex than that, especially with a product like Real Estate, where every parcel is both local and unique.

related stories:
Redfin spins the New York Times
The Real Estate Commission Debate: Same "Stuff," Different Day
via True Gotham
Redfin Gets Its 15 in 60 Minutes via Matrix

updated May 16th

reader comments:

There are many alternative real estate services that use technology to cut costs and share those savings with their clients. Check out http://BetterHomeSelling.com & http://BetterHomeBuying.com

 
 

Agreed Richard, consumers have many options. Note what I said:

"People have always had the option of using discount brokers, or selling on heir own, yet traditionally turn to full service agents because they are more effective at achieving high sales prices, and relieve their clients of the substantial burden of doing it."

The Redfin misinformation is in positioning the services as equally effective. They offer no metrics to back that up. They don't have a sales force because selling real estate is a labor intensive process, and that would make their margins shrink and their business model fail. What they are doing is putting the agent's work back on their clients. It's a little like buying furniture and having lumber, nails, and a diagram delivered. It's like anything else, you get what you pay for.

 
 

post a comment:

to help fight spam, your comment may need to be approved by the moderator before it appears





we don't collect or share email addresses


email this to a friend:


recipient's email address:


your email address (required):


we don't collect or share email addresses

your personal message (optional):

a link to this page will be included with your message.