Founder David Eraker to Leave Redfin. It certainly couldn’t be because he was acting too much like a hard-headed real estate broker…
Technorati Tags: blogging, disintermediation, dual agency, real estate, real estate marketing
Category: Redfin.com (page 8 of 8)
This bit from RedFin (tipped by FoREM) reads to me like a dual agency lawsuit waiting to happen.
Why?
Because RedFin is paying an extra incentive for its buyer clients to purchase a home from its seller client before the seller’s home is MLS-listed. RedFin would surely argue that no agency has been created, but in fact what they have is a pocket listing — an exclusive — and they are representing the seller as soon as they seller decides they are. I’m not crazy about the idea of implied agency, but that’s almost certainly the way the gavel will drop if this comes before a judge.
What would be the seller’s beef? By inducing him to sell without putting his home to the full test of the marketplace, by means of an MLS listing, RedFin may be cheating him of proceeds his home might have earned for him. An exclusive listing sold in-house stinks to high heaven — and if it smells bad to a jury, it doesn’t matter how it smells to anyone else.
Say what you will about Help-U-Sell, Assist-2-Sell and all the other limited-service brokerages, at least they have experience in the real estate business…
Technorati Tags: blogging, disintermediation, dual agency, real estate, real estate marketing
…about Trulia.com casting their net of free map-mash-ups all over the place? How about Redfin.com? Unless they have another fish in their pocket, they are now head-to-head competitors with ZipRealty.com, HelpUSell.com, Assist2Sell.com, etc.
Bottom-feeders of the world unite! You have nothing to lose but your investment capital!
Technorati Tags: blogging, real estate, real estate marketing
Snipped from the speech Redfin.com CEO Glenn Kelman made yesterday to a Congressional subcommittee:
that we must register our users
He said a lot more than this, of course, and you might go read it all. But much of what he said sounded to me like complaints that Redfin has been expected to hew to the same real estate laws as every other brokerage in Washington or California. The quoted matter in particular, “that we must register our users”, sounds as if Kelman is objecting to even the most minimal interpretation of procuring cause. Too late, we learn the unhappy consequences of not teaching The Little Red Hen in the schools…
Marlow Harris at 360Digest.com has much, much more.
Technorati Tags: blogging, real estate, real estate marketing
In a comment below, Jon offers this:
What are you talking about? Lawsuits against emongoo, zillow and refin? None of them are doing anything wrong…sorry to say. I looked at emongoo, zillow and redfins sites and I don’t see anywhere where they say they give legal advice.
First, I only cited legal advice with respect to emongoo.com – and we’ll come back to that. We should exclude zillow.com from this discussion, because, for now at least, they are doing nothing but running a look-up service with no legal consequences that I know of.
But redfin.com has considerable legal exposure, as does buysiderealty.com and anyone emulating the general redfin.com business model. The first and most obvious problem is the legal doctrine known as procuring cause. These sites are a procuring cause lawsuit – or perhaps a procuring cause class action suit – waiting to happen. They go out of their way to flout the rights of cooperating brokers, openly advising buyers to see homes at open houses or by contacting the listing broker directly. The NAR Code of Ethics forbids brokers from letting a procuring cause dispute impede a transaction, but there is nothing to prevent the aggrieved broker from pursuing damages after the fact. I’m not saying this will happen, but their noses are wide open.
(As a side note, the way I read buysiderealty.com’s web site, their real business is loan origination. My guess is that the real estate brokerage side of the business will be one or more separate operating entities, with the broker being hung out to dry in the event of a lawsuit.)
The entire discount sector of the real estate industry – on-line and brick ‘n’ mortar – faces huge risks on the subject of agency law. It is difficult to argue that you did everything possible to advance your client’s interests when you did everything possible to avoid knowing what your client’s interests actually are. From the outside, you might want to shout caveat emptor! But the law of agency in real estate is by now much closer to caveat venditor.
There is actually added risk for the discounters, as Read more
I have been devoting a lot of my time to some ascendant ideas in Real Estate loosely based on the Web 2.0 model of internet commerce. The ideas are ascendant, but they’re not necessarily good. I weigh in on the skeptical side for now, but I’m watching all this with interest. I’ve been wrong before.
Of all the fascinating things I’ve seen, the most impressive was the painstaking deconstruction of the redfin.com numbers. We can scale those results any way we want and they still stink. Any brick ‘n’ mortar accountant could do the math. As with Web 1.0, it doesn’t matter how many different ways you shout down the numerical analysis, ten trillion times a tiny loss is a huge loss.
So: One procuring cause lawsuit–and there are apt to be dozens… One negligence lawsuit–and the business model is proudly based on negligence… Emongoo.com is actually in worse shape, since they’re taking quite a bit less money but openly promising legal advice. The aggregators and sites like zillow.com are probably safe–though possibly not profitable. But sites attempting anything like agency have the same legal exposure as B&M brokers, but with a lot less money to cover the losses.
It’s an interesting problem…
Here’s another one:
The real estate industry has always been about seller representation. This was true historically, but it’s still a huge source of lawsuits among the old-timers. The idea of dual-agency–itself a huge fount of lawsuits–is an attempt to cling to double-commissions in the age of buyer agency.
But here is where we’re headed, at least for now: In the world of redfin.com, emongoo.com, HelpUSell, etc., buyers will have full representation, but many sellers will be essentially unrepresented.
The immediate knee-jerk answer to this would be to make buyers pay for their own representation, but, of course, now more than ever buyers arrive at the closing table with no cash at all. Good income, good credit, but little or no cash.
So why should sellers pay for the buyer’s agent? For the same reason they always have, agency law be damned: For the introduction.
So how does this shake out?
On the one hand, sellers might think Read more