The real estate slump is still dragging the economy down, but real estate sites that can help people save money or cut down the time it takes to find a decent home are still hanging on. Today, regional online brokerage Redfin is expanding into parts of New York for the first time, including Westchester, Long Island, and Queens (Manhattan and Brooklyn still remain beyond its reach). And in California, it now covers Sacramento and the Central Valley. These will be added to its existing markets of Boston, Chicago, Seattle, Washington DC, Baltimore, and the San Francisco Bay Area.
More significantly, Redfin is adding up to 200 additional data fields thanks to last year’s settlement between the Department of Justice and the National Association of Realtors, which requires multiple listing services to make data available online and share it more broadly. Anything a real estate broker can tell a client can now be put online. Redfin CEO Glenn Kelman is now finding that traditional real estate brokers are more willing to hand over the keys to the kingdom. Depending on the area, Redfin will now list property details such as price history, the sellers’ mortgage history, cumulative days on the market, lot square footage, and will display addresses on a map. Other sites such as Trulia are also taking advantage of these relaxed rules.
Unlike Trulia, though, Redfin is not just a real estate search engine. It is also a discount brokerage trying to with agents and partners. Redfin is trying to rewrite the rules of the real estate industry. Instead of taking a percentage of a sale, it charges a flat fee to home sellers of either $5,000 or $7,000. And for buyers, it refunds up to half the brokerage fee. Traditional brokers don’t like this, but in this economy some of them are even partnering with Redfin.
The downside to being a brokerage is that Redfin’s site only shows listings for the regions in which it operates. Nevertheless, traffic grew 300 percent last year to 1.6 million unique visitors, according to Kelman. ComScore estimates only 324,000 U.S. visitors in March, 2009, but shows a similar growth rate. (Again, remember that Redfin listings are not national, so compare these numbers to a collection of local brokerage sites).
Recruiters, brokers, lawyers.
Used car salesman don’t even make it into the list.
This definitely is remakes a market.
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The real estate crisis is such an opportunity for so many start-ups: brokerage firms but also (and mostly) short term rentals –> owners would rather rent out their properties rather than selling it at a discount price! A very exciting startup in the field whose blog just went live:
http://www.housetrip.com/
For those that are renting out houses, they should try out http://www.tenanthost.com free property management web application.
Erick I am not sure that the additional fields you are suggesting are part of the DOJ settlement. Specifically it had to do with VOWs virtual office websites and now when we list a property we check that its ok that the information be sent to these additional websites. But I dont know that any specific fields were affected. Many real estate websites have had map searches for a long time.
The other thing I would suggest is that redfin isnt exactly rewriting the rules as far as commissions go. In fact there have been discount brokerages for some time but just as their rates are decreased so are the services. I can list dozens of things that we full time agents do versus what a discount brokerage offers. In many cases you really arent getting a deal at all. In fact there is more incentive not to sell the house under a flat fee because often there are additional fees charged for listing the property longer. What tends to happen is that the seller inflates the price to an unrealistic level, often above what the market will allow and then lists the home for sale at a discount but because the price is so high it will never sell. The discount brokerage never discusses getting the price to a realistic level and instead is only interested in signing them up. The brokerage makes a sale once someone lists the house with them and they have absolutely no incentive to actually get the house sold.
This is completely different than a full service brokerage. We do not make a penny until the house is sold. We have incentive to sell the house because we are not getting paid until it is sold. If we got paid a portion up front what incentive would we have? Maybe some to see it through but certainly not if we received the full amount from the start.
There is also a big difference in the level of service. Discount brokerages get the home listed in the MLS for a fee and then it appears on a website. There is a sign in the yard. Thats it. All this has done is put them slightly ahead of a for sale by owner in which they are not listed in the MLS but they are still at the same exact point as every other MLS listing. If this is all it took to sell a home then all the homes listed in the MLS would be sold. Obviously there is more to selling a home and these additional factors are what does it. Price is the biggest factor as I said and a full time agent will work closely with the seller to see that the price is what the market will bear. This is crucial. A computer program at this point can’t make these types of calculations nor can they get a sense of what the market is doing unlike a person who works closely in a given market.
On top of that full time agents do additional marketing efforts to distinguish themselves from the competition. This is crucial in a down market as you are suggesting the market is. Everything from video tours to hyper local blogging can be important to the sale as well. Its all about the sheer number of people you drive to the front door. Its not just about the number that come to a website. Another important element is that a full service brokerage handles showing appointments. Discount brokerages rely on the seller to make these arrangements and often they dont want to be bothered. A good agent makes sure the house is ready to show at all times and sellers often cant push themselves to do this. I have called many of these types of listings to show their houses and often they dont even call me back. They just arent as motivated as an agent who needs the paycheck to feed their family.
Sorry if this seems like a rant but its not. Nor is this meant as some sort of advertisement. I often read these kinds of articles but they dont necessarily paint a full picture. I am sure that redfin has a lot to offer and I have watched them grow. But its an unfair representation of our industry to say that discount brokerages are doing the same exact job or offer the same services as a full time brokerage offers when they do not. That is a common misconception.
Thanks and please call me 715-894-1001if you have any questions or email me.
Yeah Shane, it is a rant…and unfortunately for that 1% of realtors that could honestly itemize their expenses, time, and goodwill type benefits, your comments are BS.
I know of few industries where with so little professional education, someone can earn huge commissions. Granted, many realtors have college and graduate level education, but many more do not. Lawyers, doctors, accountants, consultants, contractors, and more all have to itemize their expenses for services rendered in order to be paid. Realtors? Nope.
This lack of transparency in part leads to the speculation and mistrust in the marketplace. If the NAR really wanted to preserve the 6% commission, they would move in a direction of protecting it by adopting a standard practice of itemization of fees, expenses, and services. That way the commission could be defended with evidence tied to work performed, as opposed to vague “claims” of work and services rendered.
Matt
It is an open profession anyone can join. So whether your real estate agent that you choose has a college education or not has nothing to do with the topic at hand. Many of us indeed have a college education and in fact a guy across the street from me has his doctorate. We are licensed by the state and do have guide lines just like many other licensed professions. If you do not feel these standards are to a high enough level then I suggest you take that up with the state.
Do we itemize our expenses?
Again whether you are limited service or a full service brokerage some of the same basic elements apply to this question. How can you itemize the cost of advertising our company all across our market? Should I send each of my clients a bill for each of our billboards? I am more than happy to discuss every aspect of our marketing but one of the misnomers of real estate sales is that many people think that we do specific itemized advertising for each specific house. Sure sometimes we do this but overall its the fact that our company is well known from our advertising that helps sell houses. Its very subjective but the majority of the advertising has been done before I even meet the clients. So should I show them a bill for all the advertising that our company has done since its inception? Wouldnt that be fair since that is why we sell so many houses? I hope you can realize the problems inherent with asking this question. Again I would emphasise that I would be more than happy to show what I do in my marketing efforts and in fact this is the clear difference between limited service and full service brokerages. I simply do more to market the home.
We also do not have a fixed commission. It is a violation of anti trust laws and is considered anti competitive behavior to imply that all real estate agents have a fixed commission or that all agents charge the same. Clearly they dont or we wouldnt have limited service brokerages. Again full service brokerages can do limited service listings. We can also charge any commission. Its up to the seller to choose the commission as its part of the contract. We dont have any one set rate. Even Redfin on their website points out that they charge an up front fee as well as a fee when they sell the house as well as a suggestion that the seller offers a buyers agent fee. This could easily add up to how much a fixed rate commission could be. Since part of the commission is payed out to the buyers agent I dont think its fair to imply that the entire commission charged is for the listing agent or brokerage.
I dont know what you are implying about mistrust because I have never had anyone tell me that they dont trust what it is I do. I am very up front about my services offered. We dont have a 6% commission nor has the NAR ever implyed this as I said above. As I pointed out above you cant itemize fees because they are subjective. A mechanic can tell you how much it costs to get a replacement part and what they charge you to fix it but the rate they charge to fix it could largely be determined by how much business they do which in turn could be from how much they spend on advertising. One of Redfins marketing bullet points is they have low overhead and therefore can spend more on marketing. True. Just as a virtual mechanic could as well I suppose if that were possible. But no matter what business you are in how much a person charges or can charge is largely determined by the market. Our company specifically can charge more just as Mercedes Benz charges more for their cars than Buick. They are both good cars but one can charge more because the market says so.
Again there is no vague claim of work or services rendered. We and I think most agents are very up front about our services and our commissions. If you dont think the agent is then hire someone else. Thats your choice as a consumer. The evidence of work performed is that the house is sold. Thats what we were hired to do and we do it.
Shane,
Looks like someone forgot to tell you its 2009…
and that the internet sites ( zillow, cyberhomes, etc) are doing a wonderful job of providing BPO, CMA, Appraisal and other public data to a borrower/seller for a very small fee.
You say you are a “full service” brokerage… whatever that means.. In my opinion all are you really providing is some comfort talk to the seller/buyer and scheduling appointments.
As far as contracts are concerned.. one could pay a real estate lawyer $500 for a fully executed contract who by the way will know a lot more than a realtor about legal contracts.
Ok lets talk about Marketing.. I am amazed that you have the chutzpah to suggest that you have a greater reach than internet sites.. If you really do .. you should quit your job and start a marketing firm as you will make tons of money driving traffic to homes..
I can understand why you would write something like what you did as your job is threatened by automation. But I would say.. get a reality check about the future of this industry and get prepared for the next generation of buyers who are very internet savvy and are comfortable trading stocks on etrade..buying cars on ebay…and groceries on amazon..
Welcome to the future..
John have you heard of listing syndication? Our MLS has all of our listings on 25+ sites. Also public data is free for the most part or should be. Its not up to me to tell the local government what to do. Anyone has access to this information for the most part as a taxpayer.
I dont think its comfort talk. I can make a very clear list of what we offer compared to a limited service brokerage. There are very important differences. I dont know about the performance of redfin in other markets as they are not in my market but in our market limited service brokerages sell a very tiny percentage of the total market. Its very easy to look at the numbers as to why we sell more. Maybe Redfin is beating people in their markets I dont know I dont work there.
Yes you can pay a real estate lawyer to fill out a contract and yes we are not all lawyers (although some are) nor are we allowed to give legal advice. If you can get a lawyer to only charge $500 for that service great. Except we dont charge for filling out forms. I dont know any brokerage that does. Its included in the service. Nor can a real estate lawyer offer any guidance in the actual purchase or sale because they dont sell or buy homes. People dont hire real estate agents to fill out forms they hire us for the experience we can offer and our knowledge of the market. An attorney is paid to fill out the form and I am paid to help them make an informed decision. Again this has nothing to do with limited or full service brokerages.
Who said I have a greater reach than internet sites? I have an internet site. Our company has one. realtor.com has one. Internet marketing works but its not the only thing we do nor is it the end all of home sales.
How is my job threatened by automation? I am here all the time. I love technology. Tech isnt killing real estate. Those of us who adapt will survive just fine. You can buy a lot of stuff on Ebay but you are not able to make an informed decision unless you have someone with experience helping you. Go ahead and buy a $300,000 home off the internet. Are you sure you didnt overpay? How would you know? Who is comparing that specific home with other homes? Did you have an experienced person tell you what you need to do before you clicked the button?
I dont have any issue with Redfin. They are not in my market and probably never will be in my lifetime. Its a completely different service. I dont see it as competition at all. Maybe other agents in tight markets that work closely with redfin do. Maybe those agents work for redfin? It sounds like a lot of people do.
At the end of the day we cannot pay enough to a good sales man. Internet will never replace a good one, however, it will replace the mediocrity.
Hi Eric,
It’s definitely an exciting morning for us at Redfin as we’ve finally arrived in the great New York. Hopefully we can get into Manhattan sooner rather than later!
Just wanted to point out that we also cover Southern California, including LA, Orange County and San Diego. And that while we do offer a refund of our commissions we do not think of ourselves as a discount brokerage since once you’ve found a home you’re interested in, we’re there with you every step of the way; from tours to negotiating to handling the closing process.
Also, since Trulia isn’t a MLS member they don’t benefit from the VOW changes that are a result of the DOJ settlement. It may be that they had those fields already and weren’t prevented from showing them.
“we do not think of ourselves as a discount brokerage”
i dont think of myself as ugly…but i realize that my opinion on that doesnt really matter.
it is what it is.
But Matt doesn’t every discount brokerage provide buyer services because after all how could you buy a house if someone wasn’t there to show them the home and write the contracts? You are still a discount brokerage in the sense that you offer less services for less money. Of course full service brokerages can offer limited service as well but its limited service and I would not want to put my clients at a disadvantage in this market. I am not going to sit and pick apart what services you offer but there are some rather dubious examples on your website that are entirely misleading and misrepresentative of what full service brokerages offer. Especially when you mislead consumers that full service brokerages charge the same commission fees.
Hey Shane. Why don’t you provide us some real examples of what you’re talking about from your perspective? For example: Say you sold 30 houses last year, and made ~$1MM in revenues from commissions before expenses. Why don’t you then break it down by house sold, then break down hour by hour per property, G&A for each property (print, online marketing, office expense, car lease expense, etc.)? Itemize all your expenses and I would be willing to bet that there’s a lot in there that has nothing to do with the sale of the house – or the value added services to the customer – but a lot to do with your choices and your operating expenses.
If we look at this just from the customer point of view, and ask what value added services are included vs. business value added, vs. non-value added, realtors – like 99% of businesses by the way – would provide <1% of value-added services. World class organizations provide ~10% value added services. Even organizations like Toyota provide only ~40%. Basically, there’s a lot of waste that customers are left paying for and that’s hard to justify and I suspect a primary reason why realtors don’t itemize their time, G&A, etc., and develop fair pricing for services rendered.
I spent 65% of my gross commission to be in business last year. I just did my taxes so I know. Of that a huge chunk was advertising costs. I cant break it down because its subjective. What did our company pay for advertising for every single year it was in business? I assume thats a lot of money but thats a large reason we do so much business. You are implying that our overhead is charged back to the consumer and thats just not true.
The pricing is fair because its determined by the market. If we are overcharging and someone can do it cheaper then naturally they will sell more houses and be hired more often. But as I pointed out there is a clear difference between what we do. If you want less services then you pay less. If you want McDonalds then you get a greasy burger. If you want steak you know where to go.
Hi Shane,
Yes, there are some services that we don’t offer. But there are services that we offer that no traditional agent does. Just because we offer a refund doesn’t mean you automatically get less. Cheaper != worse.
Something we believe is that we know when a consumer wants to use the web and when they want to talk to someone. This means that we don’t preview homes for clients, or find them houses. But it does mean that we have a kick ass website with more data than most any brokerage website out there so consumers can find houses themselves. Yes, you give something up, but you’re getting something in return.
And when you’re ready to see some homes we meet you there and show you the house. From home showings to close we offer almost the exact same service that other agents offer. Not surprisingly, we want to use technology to soon offer a better experience not just for searching but for buying as well.
It’s a good point that other agents are also refunding a portion of their commission like we do. We’ll update the site.
Matt,
I guess I just dont see what your website offers that many other real estate websites dont offer. I didnt mean you automatically get less but sometimes you do get what you pay for.
I have almost the same model as your company does when it comes to buyers. I offer my website for free and they can search for homes and do what they want with no pressure from me. I dont contact them or do anything like that. I dont suggest homes to anyone. I find what works in their price range and send them the list if they want. But what we are talking about here is the buying aspect of real estate and not selling. This is where there is a clear distinction between a limited service brokerage and full service. This is why its called limited service because the services are limited. There is an obvious difference. I dont know what services you offer that I dont offer or that most agents dont or cant offer. Like I said before I looked at your site and its sort of misleading. I realize you are trying to skew things in your favor but its not really presenting a clear picture of things. Just as your fees are not really straight forward either. You do charge an up front fee which means you get paid regardless of whether you sell a home or not which is very different than what I do. As I pointed out there is obviously more incentive for me to sell a home than you because you already got paid even if its just a portion. Likewise your fees continue in that they dont include paying a commission to a buyers agent which is part of the commission of a full service brokerage. You imply the cost is only a flat rate but thats an up front fee + the flat rate + the buyers agent commission. That could easily add up and sure its less if you are talking about a $500,000 home but I can bet they would expect more services than what you offer. The other issue I have is that its rather misleading to say that you can price a home without even setting foot in it. I see you do step in the door if they pay more but everyone in real estate knows that if you price a home wrong its not going to sell and yet you are basically starting off the listing wrong by not accurately pricing it. Its easy to pick things apart and point out differences in what we do and like I said I dont think we are competing in any way. I think there is a very distinct difference between what we offer and I think most people are glad to pay more for the additional service. In the attorney analogy I used I know for a fact I would rather have the best lawyer than pay for a discount lawyer. Its the same with houses.
open MLS??
Congrats to our friends @ Redfin and Michael Daly the market manager out on Long Island! You know that now I am going to have to come to NY too, right
Congratulations Redfin. We (Estately.com) expanded to Long Island and Sacramento / Central Valley in the last few months and we welcome the competition.
So what’s the long and short of the public availability of listing data now? Is there a feed that sites can consume of royalty free MLS (or other) listings?
I dont know that there is a public feed. I think you still need MLS access but the thing some of these limited service brokerages leave out is that this information is and always has been free to any of our clients.
yeah. it’s true that it’s free. but it’s the ‘our client’ part that makes these sites great. at times, a person may just want to browse and look at as much data to purchase a home prior to fully commiting or having any pressure from a broker.
Yup and thats why we have blogs and things like that where we offer plenty of information for free. I dont know what data you are looking for exactly but many websites provide about the same information regardless of what type of company it is. I am a big believer in free information. I think all data and information should be free. I would never charge for this type of stuff. I think what we are paid for is our experience. If computers can one day do that then by all means go ahead Mr Robot.
Max, there is no public feed. You still have to be a brokerage and jump through a more hoops in some areas, less in others to get MLS data. We have access to data from about 15 MLSes – they’re extremely technologically challenged. A typical MLS has bizarre csv-stuffed xml feeds, an amazingly slow connection, and an api that changes at their whim with no versioning – it’s mind blowing.
Additionally, each MLS has different rules about the display of their data.
As a person currently in the market, it is an exercise in frustration. I have several realtor friends (incl. my girlfriend) and they can’t provide the experience I’m asking for, so I turn to Zillow (Redfin isn’t in CO). I do still have to get the daily emails for the local MLS, then I copy paste into Zillow.
Shane Orgorman sounds extremely defensive and disingenuous; possibly delusional. The massive data silo’s that are the 1000s of MLS systems need to be dismantled, and the egregious fees reaped by realtors need to come back down to earth (~2% tops). Information scarcity is completely artificial at this point.
Here’s an odd limitation with Redfin’s search for those who are interested to experience. When users look for property for sale in San Diego, CA the user has an ability to Include MLS listings, For-sale-by-owner listings, Bank-listed foreclosures by way of a check-box. However, when a user tries to include (MLS listings, For-sale-by-owner listings, Bank-listed foreclosures) the only option available to include all of these is a radio button, hence the odd limitation to only include one or the other. Try it. My guess is its this way because of RE Infolink’s terms of service?
Also, here’s a cool search tip. 1st Search for property for sale by city. Then when the map is centered to the area of interest to you go back into the search keyword and delete all text. Now the search results will be displayed from the mapped area in the users zoom view. This is a nice hack for finding a property – just drag the map and watch it reload keeping the users search criteria as a filter for search results.
Even more interesting than Redfin’s search is the MyRedfin (ie: user profiles) One day Buyers and Investors might see suggestive or discovery tools on Redfin. Also sellers would have analytical tools and more.
** Update
However, when a user tries to include (MLS listings, For-sale-by-owner listings, Bank-listed foreclosures) in **San Carlos, CA** the only option available to include all of these is a radio button, hence the odd limitation to only include one or the other. Try it. My guess is its this way because of RE Infolink’s terms of service?
Exactly right. One of the major Bay Area listing providers has rules forbidding the display of MLS listings side by side with listings from other sources (bank-listed, FSBOs, etc…)
One more quick thing here. I am in no way representing the NAR or Realtor’s in general. I am just a guy who likes this site and I saw the article and just wanted to send Erick some information because I felt it was fair to represent both sides if indeed there are two sides to this issue. I dont really feel like an endless internet debate I just wanted to say a few things about what we offer. Its no different than attorneys charging different hourly costs. Some are simply better attorneys and can charge more. Its justified in how well they do in court I assume just as we can justify what we do by our sales volume. You get what you pay for and its no different with real estate than it is with other industries. If you really think the top law firms in the country are simply ripping people off then I think you have a very skewed way of looking at things.
Anyways I wish Redfin good luck. I saw a few reports about how well they are doing on the internet and I think thats huge. I think a lot of the big firms could learn from them because I do think the internet is important. I wouldnt be on this site if I wasnt aware of technology issues. Thanks
Did you consider all the companies that are doing this?
Also commenting on the person who was talking about NAR, did you know that there is an article floating about that I found rather interesting, it talks about how NAR is inflating is memebership numbers to seem bigger than they really are. See link to article: http://www.view..._membership.htm
http://www.view.../homes-for-sale
It has come to our attention that the author Tom Wilkins does not exist. We believe the real author is Douglas Lee, Owner of Taro Systems. Tom Wilkins is an alias; there is no Taro Systems employee with this name. Call them at their office and check it out for yourself. Phone: 616-940-0007.
We are currently investigating this publication and evaluating our legal options.
The National Association of Realtors requests that you remove this article immediately due to the fact that Taro Systems is indeed purporting some sort of fraud at the minimum. We reserve the right to pursue the matter additionally.
Unfortunately this article has been disseminated throughout the internet and we are diligently working to have it removed.
Donna Hansen, Realtor (S)
1-800-874-6500
Thanks Tony and everyone for your well wishes as we launch Long Island and Westchester.
Sadly, we didn’t go with Redfin as we try to sell our house. I was so stoked that we could use the web to disrupt the real estate cartel.
We contacted the Redfin seller agent in San Diego, anxious and ready to go with Redfin. Unfortunately, Anna Nevares, seem still inclined to be part of the old way. She would only represent our house if she could price it below market. In other words, let the price sell the house. LAME! I can do that myself.
I believe the web will fundamentally change home selling, and while redfin holds promise, they fall down on the last inch.
Hi Pete,
I’m sorry to hear that we didn’t live up to your expectations; I’ll talk to Anna about what happened and see what we can do better.
If there is anything more you want to share with us about your experience you can reach me at matt.goyer@redfin.com.
We at BiggerPockets also want to wish our best to the guys at Redfin. Congrats and good luck!
Redfin has one of the best sites in the business.
In regard to coverage, you can always use a site like http://Dwellicious.com to fill in the gaps where Redfin doesn’t current serve….yet.
Redfin is the tip of the spear. While there are some good real estate agents 90% are just trying to close a deal. They do not represent the buyer or seller’s real interests. Why in the world should they not be paid on an hourly basis – like everyone else in the game.
BTW: as to the professional ability to price the market, LOL, to all the agents who said Marin prices never ahve gone down. Ha, ha – hope you all owned a few homes. Real estate agents were a big part of the housing porn boom and bust.
Redfin is one of the best site I dont know that there is a public feed. I think you still need MLS access but the thing some of these limited service brokerages leave out is that this information is and always has been free to any of our clients.
I wish Zillow, Trulia, Redfin etc. would make it easier to add info to their sites. I’m looking through the MLS daily and could add info easily. I happen to use Zillow because the UX is best for me (aside from the use of MS maps’ loading times), but it seems I have to be the broker or owner to add any useful info.
Redfin stories will read like recent SpotRunner stories in the not too distant future. Same with Zillow & Trulia.
My iPhone sums it up best with the button I’m getting ready to hit when I’m finished writing this comment –
Done.
http://www.movoto.com is a great resource to have for anyone who is interested in detailed information on local schools, crime statistics, and neighborhood demographics. They also work with the top 2-5% of local real estate agents, so once you’ve found a home to view, you will be working with the best.
Real estate rebates are a smart way to save money when buying real estate.