I hate to admit it — I so often have to — but Greg Swann was right. A few months ago,we got into a debate about whether venture-funded technology companies were squashing little brokers. I told Greg the little brokers had no brains — why aren’t they all trying to build a great search site? And Greg said we had no heart — which comes in handy when you’re trying to connect with a client as a human being.
Well last March we surveyed 1,058 people who were using our site about what they wanted in a real estate agent. Some of the answers were gratifying for us to see — transparency was tops on the list — but one that stood out was the answer as to why people who had already chosen a traditional agent had decided against using Redfin: 47% cited a pre-existing personal relationship and 33% talked about “just clicking with someone.”
Translation: Greg was right. It’s probably why our partner business — which allows people using our site in the Inland Empire or the California wine country to meet a partner agent right off the bat — converts better than our direct business.
Meanwhile, with our own agents, Redfin will keep trying to strike a new balance. My movie script for Redfin’s place in real estate has always been “Revenge of the Nerds.” Greg’s has always been something written by Aeschylus. In fact, Redfin’s story is more like one of those crazy Choose-Your-Own-Adventure books written for 12 year-olds, which is only to say that we’re still finding out way.
Of course, it’s telling that our guide on this journey is a big pile of data. We didn’t believe Greg until we ran a survey with 1,000 data points soI guess that proves Greg’s point right there!
David G says:
“it’s a relationship business” and “real estate is local” are two truisms I don’t expect technology or transparency to change. Where you live and how you afford your home is deeply personal. What the web is changing is the way in which we form those relationships.
April 17, 2009 — 3:33 pm
Greg Swann says:
Bless you, Glenn. I think you’re giving me more credit than I deserve.
David Gibbons: > What the web is changing is the way in which we form those relationships.
FWIW, I think many folks in the SMM world are over-estimating the depth and importance of real estate relationships. We have clients who have become good friends, with whom we share quite a lot of time and affection. Mainly, though, the social relationships with clients are kind of like a utilitarian marriage: Very intense, highly emotional and stone cold over at Close of Escrow.
The personal relationship does endure — provided the practitioner does much of the work of maintaining it — so it’s not purely and perfunctorily transactional. But until there is another house to be sold or, especially, bought, the flame of affinity will be more a pilot light than a conflagration.
There’s much more — very much in support of Glenn’s presuppositions — so perhaps I’ll write more about this soon.
April 17, 2009 — 4:17 pm
David G says:
Greg,
Yours a common mis-perception; i.e. that SMM “relationships” are or must be “friendships.” I don’t subscribe to that; quite the opposite. In fact, the closer your relationships become the less financially valuable they are to you (it’s the corollary of Ganoveter’s Strength of Weak Ties.) When I say “relationship” I mean it in the sense that you having one with your customer is a natural by-product of 100% of the work you do and technology is making it much more efficient to make and remain connected to a more scalable set of “weak ties” than ever before.
Make sense?
April 17, 2009 — 4:30 pm
Greg Swann says:
> Yours a common mis-perception; i.e. that SMM “relationships” are or must be “friendships.”
Yes, of course. This is obviously so, given that I said just the opposite. 😉 Interesting that there’s theory for it.
April 17, 2009 — 5:40 pm
Don Reedy says:
You guys (David and Greg) got me on the net, exploring this very interesting theory.
Here an observation I found interesting:
“From a March 2004 InfoWorld interview, Capitalizing on Communication:
IW: These projects were about strengthening ties within groups. Where does Stanford University Sociology Professor Mark Granovetter’s “strength of weak ties” idea fit in?
VK: People have a wrong impression about what a weak tie is. It’s not just a casual acquaintance. A weak tie used to be a strong tie; there was trust and shared knowledge. If I go to a conference today and meet somebody new, people will say “That’s a weak tie.” I say no, it’s an acquaintance tie. But if I also run into Peter from Disney, who I used to work with, that’s a weak tie that can be reactivated. A lot of Granovetter’s research on weak ties was based on people who had known each other better before.”
David, I think that although Greg acquiesced in his reply to you, that he’s actually onto something vis a vis the relationships we make with clients. They, though “weak ties”, are apt to make later “reactivations”, and thus import, much easier and effective.
My corollary to Granovetter’s theory then is that forging “intense though short” relationships with clients will ultimately result in the efficacy of those “weak ties” being as strong as possible.
But I am blown away by the idea that a sociologist’s theory is so very, very important to the discussion we continue to have about the integration of belly-to-belly and technology approaches to building the best client side real estate businesses we can.
April 17, 2009 — 8:14 pm
Ryan Hartman says:
Glenn are you forcing your agents to blog and promote their wares in person locally? If not, want some help? 🙂
I don’t know much about Redfin other than that if you ever came to my area I think I’d be pretty happy to do what it took to be an associated agent. Should be pretty easy for you to require your agent partners to produce content and then get belly-to-belly promoting it?
April 17, 2009 — 9:40 pm
Barry Bevis says:
Thanks for sharing the results.
My takeaway: The relationship has to be backed up with substance.
Mechanical proficiency without heart will not satisfy.
Heart with no substance will fail as well.
We need to care and be good at what we do.
That is what is so hard about doing our job well. We have to put all of ourselves into it. We have to be the guy at the front keeping everyone informed, comfortable and patient. While at the same time we have to be under the hood tools in hand getting our fingers greasy fixing the problem.
I do love my job!
April 18, 2009 — 6:04 am
Tom Hall says:
Interesting results. I just spent 2 weeks in Dallas putting together a business plan addressing the do-it-yourself buyers and sellers. I am not convinced that the relationship is the key. As the Millenials become a larger and larger pool of buyers and sellers of real estate, relationships matter only when they are treated as unique buyers and sellers who’s wants and needs do not fit a one-size-fits-all service philosophy. Secondly, if the service(s) doesn’t build confidence and trust, they will seek other avenues.
Example – when search results provide a map littered with pins on a Google map, the results provide very little value – the visual might look neat, but it doesn’t necessarily provide a meaningful result. To be unique, the results need to be aligned with lifestyle attributes. Millenials have been raised and conditioned to live with technology as a way of life – they will embrace a technology solution if it lays out the process in a confident and trustworthy manner as well as provides results that are truly unique to their specific needs.
April 18, 2009 — 9:57 am
Doug Francis says:
I work with young web producers, internet security folks, and people in their 60’s and 80’s.
My experience tells me that clients want a blend of savvy technology and personal contact. The under 40 group wants the IDX search but quickly understands they need help with house basics, negotiations, and process management. Most clients over 50 understand the power of the internet and leveraging an agent’s experience.
Over 95% of my clients come through personal referrals from a “pre-existing relationship” followed up with a “clicking” when we met. It is called salesmanship!
Excellent post that I will share with others.
April 23, 2009 — 7:25 am