Listened to the Redfin CEO Glenn Kelman the other day on CNBC. I did like his overview of their business model, as well as his take on the local San Francisco real estate market.
However, when he mentions technology to make Redfin agents 3 times more efficient, I have to ask the question. More efficient than whom? The part time agent who doesn’t produce? The agent that is not supported by the office infrastructure, someone who doesn’t use systems? Every successful business person, or agent knows, that is it the systems that they use which makes things much more efficient.
Now I get that having technology tools to help streamline collateral marketing materials, social media marketing, CRM’s, transaction management and the like makes a huge impact on business flow, but those tools are already available via 3rd party technology companies. We have implemented similar tools in our brokerage to keep us as competitive as possible. Lets face it, it’s all about leads for the agents right? That is why an agent decides to work with Redfin, because they don’t have to really market themselves, promote their own business, or work through the struggles of being truly independent. They get leads because the company offers brokerage services at a discount, and they agree to work at a discount rate.
So where is the quality in that? Where is the expertise to navigate the pitfalls in a complicated marketplace and often times litigious industry? What does that mean to the client, or as he says, customer? (like I’m at a fast food place) Well the old adage is that you get what you pay for right, or ….you offer a discount on commission you will end up with discounted services and ultimately sell at a discount. My question to that is: When you are selling your most valued asset, is that really what you want to do? Especially in a city like San Francisco that has so many rules and regulations, codes and disclosures.
Redfin’s offer is cost savings to the customer, (I prefer the word client as we are truly advisors to people, not just sales people), what their customers miss in this model are the thousands of hours of experience, the human networks we have, the skills learned in negotiation, vital resources we have especially in our office to tackle challenges that could adversely harm you if you are not paying attention. This is what comes along with working with an professional local broker who has their clients back throughout the entire process and thereafter.
When I interview agents during broker tour, as I’m always thinking about recruitment, I learned that Redfin agents are actually employees and not independent contractors, they get a base salary and bonus. The motivation changes in the Agent / Client relationship does it not? Traditionally a profession Realtor is hustling, making things happen for the client, because if they don’t then they will lose out on a sale. When you are being represented by a person on a salary, then I would attest they are not truly motivated to push for the top and best price for the home, or may not have the hard skin in negotiating a deal. Just my opinion of course but if you are being represented by someone who is not as experienced or motivated, and just looking to save a few bucks on your most values asset, then I believe that is shortsighted.
The real estate industry is changing fast, as we go through the growth cycle of new companies pushing innovative business models and technologies, as it does I will always revert back to some simple truths. 1: This is a relationship industry, one that takes cooperation between multiple parties to execute effectively. 2: Technology cannot replace us but should be used as a tool to make us more productive and ensure smooth transactions for all parties. 3: Experience counts just as if you were to get surgery, a dental procedure and the like. Would you really want to get a root canal from a neophyte?
Treat all people with respect, support your clients, do your best and you will find success.