Altos Research on Redfin.com and other real estate business models:
Sales guru Jeffery Gitomer puts it this way, “if you have to compete on price, You Suck!”
We all invoke financial services as the analog for real estate. What isn’t commonly noted is that as technology swept through the financial services biz, two things happened: prices went down (e-trade et al) and prices went up (hedge funds). Why did prices go up? The same reason they always do. When you provide more value to a customer, you can (and should) charge more. I for one am looking for the real estate agents/brokers/sites that blow away their clients so completely with service, that they’re happy to pay more than 6%. Those are the innovators to watch.
Technorati Tags: blogging, disintermediation, real estate, real estate marketing
Simon says:
If Jeffery Gitomer is right, then Walmart is biggest sucker out there.
I am not disagreeing that “When you provide more value to a customer, you can (and should) charge more.” What I have problem with is that you fix the price at 6% (or 3% if split), then TRY to prove that your service is worth that 6%. What “value” can you propose to justify the $120K (6%) commission on a $2M home (average home price in Palo Alto) that gets snatched up within weeks during the boom? What if no matter what “value” you propose, the consumer is not willing to cough out that 6%? What if he think the Lexus ride around the town and your translating of Zillow’s comp and your referral to your inspector cousin and loan agent wife is only worth 1 grand? In the past, you can tell him to go find someone else, but now he can go to Redfin.
In the old old days, the High Priest claimed that only they can communicate to God and only they can touch the Bible. They make the rule and interpret the laws in the Bible. People have to pay them to get God’s blessing or forgiveness. Later, when someone got a hold of the Bible and tried to understand the rules and prayed to God directly, the high priest crucified him and threaten whoever does that will get run over by a truck… You know how to story ends.
September 17, 2006 — 7:45 pm