BloodhoundBlog

There’s always something to howl about.

Category: Redfin.com (page 4 of 8)

October 2, 2007

Oh, good grief! He went to JARED…

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Suburban Phoenix Real Estate Broker

Author website

Joel Burslem cites a Glenn Kelman quote from a comment to John Cook’s post this morning, but I think this one is more interesting:

By the way, no matter how many times the real estate industry insists that we’re JARED (Just Another Real Estate Discounter) we can’t help but add that our goal is to be different and better, whereas discount brokerages simply aspire to be the same but less expensive. This is why we say we’re not a discount brokerage, we’re an online brokerage.

“JARED” is a genuine neologism as far as I can tell, and a boon to the taxonomy of real estate brokerages.

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October 1, 2007

Budgeting Redfin: Making the numbers work in a corporate brokerage

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Suburban Phoenix Real Estate Broker

Author website

Last week Peter Coy at BusinessWeek made a point of asking Redfin’s Glenn Kelman a real estate question. Kelman’s answer wasn’t awful, but it wasn’t great. (The negotiation advantage for unsold spec home occurs once a quarter, not just once a fiscal year.) But it was funny to me, because of this: Why would anyone expect Kelman to know about real estate in the trenches? He’s not like RE/Max’s Dave Liniger, an ex-grunt with a corner office. He’s a corporate guy, a veteran of securitized start-ups.

And that is a completely different world. Kelman provides a pretty candid peek into that world today at Guy Kawasaki’s weblog, a run-down on Redfin’s budgeting process and how things worked out in real life. There is a more corporate take on similar material at Redfin’s blog. Joel Burslem remarked briefly on these posts, and Sandy Kaduce provides a thoughtful analysis at the Seattle Post-Intelligencer‘s real estate weblog.

BloodhoundRealty.com runs out of a 300sf room in our home, and, especially, the passenger cabins of our cars. Glenn Kelman lives in a world I know nothing about. I find the idea of salaried agents interesting — by which I mean exotic — and I could see a benefit to a coordinated, centralized back-office operation, although this might introduce licensing problems across state lines (another good reason to do away with licensing). In any case, I am grateful to everyone who fingered these posts by email, but I don’t think I have anything to add to the discussion.

In comments here yesterday, Kelman said, “At Redfin, we would prefer it if both buyers’ agents and sellers’ agents each charged a fee.” That would be much easier to effect if the commissions were divorced, a topic I definitely am interested in taking up again — and again.

In the meantime, give a look to Kelman’s post at Guy Kawasaki’s blog. It’s a fascinating glimpse into a side of real estate most of us don’t have to think about.

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September 6, 2007

Unlike venture-capital vampire Redfin.com, Iggy’s House seeks suckers on Wall Street

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Suburban Phoenix Real Estate Broker

Author website

John Cook’s Venture Blog:

Despite challenges in the national real estate market, Chicago discount real estate service Iggy’s House plans to try its luck with an initial public offering that could raise up to $15 million, according to a filing with the Securities and Exchange Commission.

If successful, that would be just $3 million more than what Seattle-based Redfin, one of Iggy’s primary competitors, raised in its venture round in July.

In addition to traditional real estate firms such as Prudential Financial, RE/MAX and Realogy, Iggy’s House also faces direct competition from upstarts such as Redfin, ZipRealty and iNest. It also may face competition in the future from Zillow.com, HouseValues and others, according to the filing.

Iggy’s House, you’ll recall, is the ultimate discount lister.

How ultimate? All the way. Allowing for the buyer’s agent’s commission, Iggy will give you a limited service MLS listing for free. A sister company, BuySideRealty.com, will rebate 75% of the buyer’s agent’s commission when they (don’t actually) represent you as the buyer.

How can they do it? They’re lenders. Both real estate businesses exist to drive loss-leader business to their loan brokerage business. Pondering the spreads on the loans they underwrite will probably repay your effort.

And: Even though the company is appealing directly to share-holding suckers, rather than the venture capital suckers favored by parasite sites like Redfin.com, Iggy is so far living up to what you might anticipate for its financial performance: “Iggy’s House posted revenue of $425,000 and a net loss of $5.1 million last year.”

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September 5, 2007

Why do traditional Realtors despise discounters like Redfin.com?

by

Suburban Phoenix Real Estate Broker

Author website

This is me, guest-posting at Blown Mortgage while Morgan Brown is on vacation:

So why is a limited-service listing unlikely to succeed? If you’re in a high-demand market like Seattle, it just might. But in most of America, right now, a home must be marketed perfectly from the first day or it will sell slowly and at a deep discount — if at all.

The one difference between a true FSBO and a limited-service listing is the searchable record in the MLS database. The home will be offered by-owner in all other respects: Priced wrong, prepared wrong and inaccessible to buyers and their agents. This is not a necessary consequence, but it is very, very common. In the case of our newly-listed competition, the home is offered at $200,000 over its market value. Presumably because of the recent re-financing craze, it is encumbered at about $75,000 over market. This home will not be a threat to our listing.

But it wouldn’t be a threat even if it were priced right. There are too many weapons that a professional home marketer will bring into battle for an amateur, no matter how dedicated, to compete. A limited-service listing comes with none of the professionals’ arsenal. So much the worse, it shouts out a warning to skilled buyer’s agents to stay away.

Why would that be so? Because even if it’s competitively priced, even if the buyers love that particular home, it is being marketed by an amateur who will, in all innocence, make egregious errors again and again. Worse, the seller will have no one to turn to for advice, exposing the buyer’s agent to double the legal liability in the transaction, potentially even creating what a judge might regard as an undisclosed dual agency.

The same situation obtains in reverse with discount buyer’s agents like Redfin.com or Buyside.com. Their vaunted cost savings come not from their technology, nor even from picking the low-hanging fruit of well-prepared buyers. The savings they pass on to the buyer come from pushing the costs of buyer representation onto the listing agent.

I wrote this essay a couple of months ago, when Redfin.com Read more

August 18, 2007

Redfin: Lessons in How NOT to Succeed

by

Realtor, Associate Broker

Author website

No apologies for the topic. As many problems as exist in the real estate industry — many more than the practiced elites would like to acknowledge, many fewer than the bubbleheads need to satisfy their tantrums — Redfin has made itself a prominent example of how not to improve things.

A few days ago in a comment section I wrote that Glenn Kelman’s a phony. It was the heat of the moment and I only wrote it because, well, he is a phony. He has to be.

On the one hand he has to corral capital and customers by feeding the realtor stereotype of the venal do-nothing narcissist, exemplified here in the Sixty Minutes shtick. But on the other he desperately needs the cooperation of the very people he’s trashed if his model has any chance of succeeding, thus the apparent charm exuded at Inman Connect. He creates a crisis of disdain for the full service agent, sets himself up as the champion of the little guy to quell the crisis, then calls on the full service agents to help him do it. Quite a dance, that.

But.

I admit I haven’t spent a lot of time on the Redfin website. It’s not in my market, and I’ve read and seen enough to know it’s a model that’s not likely to succeed. I’ve left the particulars to others and the market to its natural flow.

But I never thought the champion of the little guy would be dumb enough to try to con: the little guy. The following comes from a BHB reader, Leonard Wallace, who…I’ll let him tell it:

I’m a broker in Maryland where Redfin arrived last month. I’ve read many of your [BHB] posts about Redfin, but I haven’t seen anyone comment on their blatantly false advertising. Here’s a screen shot of a listing in the Washington area:

Leonard goes on to point out:

Redfin’s minimum commission on any buyer transaction is $3000. That never came out in the Sixty Minutes piece or anything else I’ve seen: note here, the first page of the ‘how to buy’ section. That’s why, I suppose, a $500,000 selling price Read more

August 16, 2007

The extinction of the pterosaur – If your goal is long-term profitability, skimming the surface can kill you.

by

Realtor, Associate Broker

Author website

From the San Diego Union Tribune, dateline August 16, 2007:

Paleontologists studying pterosaurs had theorized that some the extinct flying reptiles fed by skimming along the water with their mouths open. However, a new analysis by British scientists indicates pterosaurs were too large and would have created too much drag to feed in this way.

And this is precisely why I see the traditional real estate agent not only surviving but thriving. Many predict the demise of the likes of me. They predict a future where I have been stripped of my MLS, at least in the proprietary sense, and where I have been stripped of my paycheck, rendering me crippled and ineffective chum.

Good, successful traditional agents find their sustenance in a much deeper ocean, while this point seems to be lost on the new fisherman, the alternative for-fee, for-less business models, and even the fish.

360-Marlow wrote last week about how Lennox Scott of John L. Scott Realty, speaking at the recent Inman Connect conference, “seemed unable to articulate why a commissioned sales person may be preferable to one paid on salary”. Well, let me give it a shot.

  • The salaried employee is not required to front their own money (in my case, thousands of dollars per month per assignment) on the promise (not to be confused with “guarantee”) of some future paycheck.
  • The salaried employee does not run the risk that, having worked on their employer’s behalf for months (and months and months), their employer will “change their mind”.
  • The salaried employee does not bear the burden of their employer’s overhead.
  • If the salaried employee’s employer is unsuccessful in selling their product to the end user, the salaried employee will still be paid for their time expended.
  • The salaried employee wakes up each morning knowing they have a job, a job secured by a single interview, where their commission-based counterpart must attend job interviews on a daily basis. (Job interviews take time and money; let’s, just for fun, call them “non-billable hours”).
  • The salaried employee is assured lunch breaks and days off. The salaried employee clocks out at the end of the shift.
  • The salaried employee’s job description does Read more
August 9, 2007

In closing… and on hiatus.

by

Realtor, Associate Broker

Author website

To be fair, Sweet Digs in its current form is innocuous enough. It didn’t begin that way, but that’s where it has landed.

And, to be fair, my mini-eruption this morning had nothing to do with Sweet Digs but everything to do with the role Redfin has assumed of industry hate monger. Take the Forums.

I made reference to a comment posted on the Redfin Forums in which the writer referred to traditional agents as conniving and greedy con artists. I had seen this remark a week ago and the words had been on a slow boil in my brain since. Redfin the Real Estate Company didn’t pen these words, but in effect they did. Their rhetoric from inception has been carefully crafted to incite riot. When I go to an appointment with a buyer or seller, I go intent on demonstrating how I bring more value than my competitors. What I do not do is attempt to elevate my position in their minds by criticizing and demeaning others whom they may be considering.

And, now we have gotten to the bottom of my recent attack on their little locally focused blog, and my sudden unease with even talking about this Redfin stuff at all. I listened to Glenn himself say recently that you should never promote yourself; let others do it, and it becomes viral. Is cancer a virus? By just “putting it out there”, I am giving their business model and their business practices (which I find offensive on many levels) increased exposure and credibility. By lambasting that with which I am in disagreement, I do them one better. I set myself up to be portrayed as that agent living in fear of their “new and better way”, the personification of the old industry guard which has become their poster child for all that is evil in the world.

Traditional agents hate us, traditional agents fear us, traditional agents are pond scum – These are the battle cries of a Redfin trying to get noticed. While they are so obviously wrong on each count, every Redfin rant I post will suggest otherwise to Read more

August 9, 2007

“They are conniving and con artists” – Redfin launches Southern California Sweet Digs

by

Realtor, Associate Broker

Author website

And for the record, Redfin, the title was a quote taken from one of your Southern California Forum posters, and it was directed at me, or rather my ilk. I started writing this with every intention of giving you the publicity you asked for, the “don’t promote yourself, let others do it, and it will become viral” marketing which has been your hallmark. I changed my mind.

This morning Redfin issued a press release announcing expansion of the “Online Magazine Formerly Known As”, well, something else.

SEATTLE — August 9, 2007: Online real estate broker Redfin Corporation today launched its online real estate magazine, “Sweet Digs,” for Southern California. Home-buyers in Los Angeles, Orange County and San Diego neighborhoods can read daily, local real estate market information via the Sweet Digs blog or email newsletter.

The new Southern California Sweet Digs will offer as many as 40 candid, saucy and analytical write-ups each week of recent sales, price reductions, open houses and real estate trends in local areas, including Beverly Hills, Irvine, Newport Beach, Ocean Beach and Westwood. Southern California already boasts some of the top real estate blogs, and Sweet Digs complements them with its hyper-local, data-driven format written by real estate fanatics, not agents.

We are talking about real estate fanatics here, as in, people marked by extreme enthusiasm for real estate, not agents, since we all know real estate agents have little interest in real estate. Fanatics, as in people being paid to show extreme enthusiasm for that for which they were paid. One of my first jobs was at Bob’s Big Boy (during the Steel Age). I was fanatical about the Big Boy Combo, but this was in large part due to the fact that the Big Boy cut my paycheck.

Okay, in all fairness, I know what you were trying to say. The newsletter-blog thingy will be written by non-industry professionals. I get that, and I can see an appeal. And, in the name of fairness, I wouldn’t enlist contributors to my Blog who were Redfin disciples.

Sweet Digs launched December 2006 in Seattle and February 2007 in San Francisco to provide Read more

August 1, 2007

Quick notes on Inman’s Bloggers Connect

by

Suburban Phoenix Real Estate Broker

Author website

I’m juggling eggs in negotiations on between $0 and $2.2 million in new listings, but I’ve been following Inman’s Bloggers Connect off and on by RSS feed and email.

Paul Chaney at the Blogging Systems Group Blog was going great guns this morning, but I think maybe his laptop battery died. His summaries of this morning’s events are very good, though.

Kris Berg emailed that Teri Lussier and I did not win the Project Blogger contest, but I would have been stunned if we had. If you’re going into a competition with the intention of doing everything your own damn way, your only chance of winning is if the judging is based on how well you do things your own damn way. In that regard, BloodhoundBlog should win the Inman Innovator award — but I won’t be stunned if we don’t. Doing things your own damn way is its own damn reward, after all.

Mail from Teri:

Well…
 
My apologies to Cathy and her indignant cats, and I hope I didn’t let you down. OTOH, I’m quite pleased with my blog.
 
I had an interesting comment on TBR last night that made me think that I must be doing something right with it. And this reader is a Daytonian, and not in real estate, and has little patience for Realtors.
 
I don’t know if I would have changed anything to do it again… Although. If I had put an idiot widget and a few goofy graphics in occasionally to bust up the dreaded “wall of text”, I suppose Cathy’s cats would be well fed tonight. But since I really hate those, I’d probably end up hating TBR as well.  ;)
 
I’ve enjoyed the journey enormously!

Indeed. Likewise. And that “Well…” is just too perfect. Eudora Welty lives on at The Brick Ranch.

Inman Blog reports that Redfin.com’s Glenn Kelman claims that I am sending them business:

“Greg has long been my antagonist, and of course he is our best friend,” Kelman said. “Everytime he writes about us, he brings us business.”

I find that difficult to believe, but Kelman also said, of 60 Minutes Reporter Lesley Stahl:

“She kept saying I was full of s__t.”

This I find Read more

July 19, 2007

In Defense of Buyers’ Agents

by

Realtor, Associate Broker

Author website

This came into the comments section of this post yesterday, from Joshua Ferris:

What type of services do you expect a buyer’s agent to offer in order to create a “real value”?

Thank you, Joshua, for the set up! Timing couldn’t be better; there seems to be a confluence of events. Redfin has apparently duped a new round of investors (“Honest! It’s the last time I’ll ever need funding!” is the fourth great lie); Redfin is capitalizing on what seems to be an emerging anti-realtor trend; and I had more conversations with local realtors yesterday who are getting “I’ll only deal with the listing agent!” sign calls.

I wondered if there was anything that was helping drive it, so I just Googled “How to buy a house” and found this site:

“Real Estate Agent” Is Just Another Name For “Salesperson”
Don’t ever lose sight of that fact. Their only mission is to sell, sell, sell to YOU. Don’t ever let on that you are in a desperate situation, or that you need to sell a house fast to pay for emergency bills, or that you are in a desperate crunch to buy this house now, because you are being transferred into town this week. It’s simply none of their business and as far as they are concerned, you are not in a rush to buy a house.

Excellent. What good could possibly come from telling your agent how quickly you need to buy or sell?

HouseBuyingTips.com Buyers Warning
One of the biggest mistakes many home buyers make is assuming that their “buyers agent” is working for them. They could not be more wrong. Also, never let a real estate agent choose your attorney. You must choose your own attorney, not one with a cushy relationship to the salesperson who is trying to sell you a home.

Punctuation is oversold, and non sequiturs simply don’t deserve that negative reputation…

If you are buying a house instead of selling a house, you really don’t need a real estate agent.

When the Carnival of Praetorian Cranks Posing as Something They’re Not is launched, this guy — Jeff Ostroff — will win every week. He’s apparently Read more

July 18, 2007

Make no mistake, without the thoughtful, dispassionate accuracy of professional journalists, the world itself would crumble

by

Suburban Phoenix Real Estate Broker

Author website

From VentureBeat:

For this, Redfin has been banned [false] from operating in Oregon [false], New Jersey [false] and now Tennessee [false]. Additionally, the site has been fined by the National Association of Realtors [false], which owns the Multiple Listing Service [false], a national database [false] of home listings.

That’s two sentences, seven errors of fact.

Redfin can operate all it wants in Oregon, New Jersey and Tennessee. Those states ban commission rebates, which is vicious and wrong, but that doesn’t forbid Redfin from working there. In general, you will not find Redfin in any market where homes are affordable, because its cost-structure can only work — if it can work at all — on high-priced homes.

The second sentence is so rife with errors, I’m not going to bother trying to fix it. If you want to know what really happened, it’s here: Defending Redfin: Sweet Digs weblog buried by inane MLS rules.

Nevertheless, I am so glad that there are fearless guardians of truth willing to take money for this level of ineptitude. It would be an awful curse if we had to depend for news on people who care about facts and are actually paying attention.

Jeesh!

So as not to be unrelentingly negative: Newspapers got some bad news this morning, but for-pay journalism is not dead. But if journalists hope to portray themselves as “trusted professionals,” they need to catch a clue. The audience in the aggregate may net out dumb enough to buy crap like this, but the audience in particular contains individuals who know a lot more than you do about whatever you happen to be writing about. In the past those people were silenced by circumstance. Now each one of them can stand at the narrow end of an international megaphone. Not coincidentally, the best of the for-pay journalists are becoming webloggers, like John Cook, who broke this story and who managed to get it right in the first place.

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July 18, 2007

Why stop now? Tell Redfin that there’s more where that came from.

by

Realtor, Associate Broker

Author website

Of course Greg scooped me. If you believe his 11:53 PM time stamp, he was analyzing and typing away while I was dreaming up another real estate vignette. At least now I know to check the blog first. Bloodhound has all but replaced my feed reader.

In any event, a routine 6:00 am review of my email box found the news from Redfin’s Cynthia Pang that they are the proud parents of a $12 million bundle of VC joy. This, they say, should do it. Said CEO Glenn Kelman:

We expect this to be our last round of venture financing, so we looked for a guide on the long journey ahead who could help us generate profits and lead our market.

One obvious reaction might be, “Who possessing a pulse would sink $12 million dollars into what to date has been a completely failed business venture?” One obvious answer would be – people with money and brains in inverse proportion.

This came to me a few days ago from “IDRIS”:

I am writing you this letter because I believe that you are capable of helping me. I am looking for a reputable business partner to invest a huge sum of money in lucrative businesses in your country.

A huge sum? Say, $12 million? A coincidence? I think not.

So, I say to Glenn, don’t stop now! I am here to tell you that there is plenty more where that came from, and I now realize that the $12 million dollars you secured was all but mine had I just read my emails closely and not been so distracted actually representing buyers and sellers in successful transactions.

Of course, I didn’t listen. Frederick Mugabe from Zimbabwe recently offered me $450,000 to help him handle the placement of $14,982,000 into a “profitable business investment”. And, just yesterday, I learned from bank officials in Amsterdam that my email address was attached to the “winning ticket”, entitling me to 2 million euros. On second thought, forget that one. The exchange rate isn’t favorable.

On the other hand, last week a nice God-fearing lady in Darfur who recently lost her husband and is now Read more

July 17, 2007

Redfin cops another $12 million, raising investors’ stake in the discount realty.bot to $40,000 per closed transaction

by

Suburban Phoenix Real Estate Broker

Author website

The indefatigable John Cook:

Redfin has raised an additional $12 million in venture funding, money that the Seattle discount real estate broker will use to enhance its Web site and expand into new markets.

First up for Redfin are the Washington D.C and Baltimore areas, which are being unveiled today. Next on the agenda are Sacramento and Chicago, which the company hopes to open later this year. Redfin, which refunds two thirds of its commission to home buyers and offers a flat listing fee of $3,000 to sellers, already operates in Seattle, San Francisco, Boston, San Diego, Orange County and Los Angeles. Since its launch 17 months ago, more than 500 homes — valued at more than $350 million — have been bought and sold through Redfin.

To put things into perspective, Russell Shaw’s team of around ten people sold approximately 600 houses in the same span of time. With a head-count of 75 people — so far — and a capital investment of $40,000 cash-American per closed transaction, Redfin.com is somewhat less efficient.

But: Pay no attention to the man behind the curtain! Redfin will be profitable any day now. Scout’s honor!

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June 23, 2007

Seven Days of the Dog: BloodhoundBlog is the real estate weblog to turn to for hard-charging hard news reporting

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Suburban Phoenix Real Estate Broker

Author website

BloodhoundBlog is celebrating its first birthday this coming Friday, so I wanted to take a little time to highlight some of the best work we’ve done over the last twelve months.

There is a limit to how much primary reporting a real estate weblog can do. The webloggers are each stuck in one spot, for one thing, plus we all have day jobs.

But if we choose to, we can do exemplary work at evaluating new product releases. We’re end-users of the products we report on, so we already know what we like, what we don’t like, and what we wish were different. In our own particular case, BloodhoundBlog contributors like Brian Brady tend to go over new products in exhaustive detail, wringing out every conceivable facet and implication. We’re eager to know what the vendor thinks we’ll find in a new tool, but we’re even more avid to unearth the capabilities their software engineers had not foreseen.

So: Watch us work. Here are some of the breaking news posts we have generated over the last year:

June 12, 2007

Catching a sniff of the stench from Tennessee: Why being right about the real estate licensing laws matters

by

Suburban Phoenix Real Estate Broker

Author website

Well.

It is beyond all doubt that readers here are thrilled to the core to cogitate on the implications of real estate licensing laws and their hypothetical repeal. So far the silence has been deafening, with nothing but a host of fallacious arguments, some charming insults and something new under the sun: green-baiting. (It’s like red-baiting, but for Capitalists.) What we have not had is a rational defense of the law.

That’s a real shame, because we are on the verge, potentially, of a revolution in real estate brokerage. Take note:

By means of its “Make Me Move” feature, Zillow.com is engaged in the essential act of real estate brokerage, the introduction of buyer to seller. Zillow’s efforts are not subject to state regulation because it is not performing brokerage for compensation.

IggysHouse.com is going to list homes for sale for free. The state may try to regulate IggysHouse, perhaps by arguing that the co-broke is compensation, even if IggysHouse keeps none of it.

Either way, the stench from Tennessee is too thick to ignore. What are traditional real estate brokers going to try to do with state laws when they come up against competition willing to work for free?

And: Does anyone want to argue that the proposals the traditional brokers come up with will be good for the consumer?

Why has no one been able to rebut the argument that real estate licensing laws are contrary to the consumer’s interests? How about because the argument is correct?

But: I’m here to help. The laws themselves are not going anywhere. Rotarian Socialism rules the country, and it will for quite a while. But you can know what is right and what is wrong, and you can apply your mind to figuring out who is to be benefitted and who penalized when new laws are proposed — as they will be.

Give a look to these questions. If you answer them honestly, you will understand why the real estate licensing laws should be repealed — even though they won’t be.

Like this:

In the absence of real estate licensing laws, are consumers more likely or less likely to investigate the education, qualifications Read more

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