Every year we hear how the industry is going to change, and specifically, how the internet will cause the sellers of real estate to change their ways.
Zillow and Trulia sell advertising to realtors. They will be in full support of the status quo, as seen below in the video. They want the full-commission model to stick around so agents have more money for advertising!
The R-team brokerage is a solo operator who relies on their whiz-bang website to generate customers. But that makes them potential enemies with Z&T. Glenn takes a shot at both in this piece, while doing his usual touting his company:
But his company’s formula has a weakness. The agents showing the houses are just part-time door-openers, while the agent who writes the offer is back at the office – they have never seen the house.
They are hoping that reduced commissions and fancy tech talk will overcome this structural flaw. But without expert advice in the field, buyers will hedge a little on price, and as long as there are multiple offers, they will struggle to compete. Plus, in a bidding war, will a listing agent select an offer from the red team in a close race? I have done so, but I’ve also heard grumblings from other agents about doing the opposite.
Then you have Harcourts, who announced this week that they are bringing their auction expert from Australia to show America how to do it. If they and auction.com could get some traction, maybe the industry will head that way. But the reserve prices and auctioneers bidding against buyers will be a turnoff.
Zillow seems to be leading the way, so status quo will probably win out.
What do you think?
I would agree with you on Redfin being at a disadvantage if most other realtors weren’t awful. I had an excellent agent when buying my house, but I did more research than my friends before selecting an agent. They all had huge issues with their agents that impaired them from competing on houses, from poor bidding strategies to complete lack of trust in the agent as the agent tried sleazy things to try and get them to raise their offer. As long as the majority of the agents operate in this manner Redfin has nothing to worry about. They’ll still do worse than good agents, but that’s such a small slice of the market as to almost be irrelevant.
Good insight, and I agree.
Any thoughts on why people don’t research their agents?
Let’s also note that all attempts to create agent-rating websites have been pummeled by agents, not consumers.
There are always buyers and sellers that are well-informed (or think they are) who trust more themselves and their knowledge, than the realtors (sleazy realtors in the industry just feed that feeling). They just need someone to handle the paperwork and that commission refund is very tempting. The majority of real-estate deals does not require any expert knowledge. Redfin fits that niche perfectly.
I think the full-commission model is probably going to be more marginalized, replaced with a more flexible spectrum of options from ForSaleByOwner, Redfin, Zillow, to expert realtors (short-sales, bidding wars, auction specialists). It just makes sense to “get what you pay for”, even though the establishment is fighting it.
Not sure about that – isn’t that the standard response?
None of these new or experienced industry leaders do anything to fully educate the consumer about the process, and the differences between agents.
If you go to any personal website of individual realtors, they all sound the same.
What’s the difference? The industry doesn’t care if you know, and isn’t going to help you find out.
Keeping consumers in the dark protects the big brokerages and the larger profits they make on their lousier agents.
Zillow and others opened the door to the data, but all that does is give consumers part of the puzzle. They think they have it all though, and figure any agent will do.
I went with Team Red as a buyer, after interviewing realtors. The reason I didn’t go with Jim is that inventory was my enemy and I wasn’t looking in his hood. I didn’t see how Jim’s skills can fix inventory. I wanted to see listings as fast as possible, which Redfin gives, plus their I had a great experience with their divided labour model – someone was always available to show properties for me. In the end, the listing agent I purchased from did everything by email because they were professional flippers, so there was no social engineering possible that a good buyer’s agent could provide.
Title, Escrow and mortgage funding experience was frustrating though – but buyer doesn’t get to choose escrow or title companies. I am cheering on Redfin to get the finance side as smooth as the rest of the experience.
Jim, I would want you as a seller’s agent or if I were looking for properties in your hood.
Thanks Edna, and I can live with that.
This is where I lose out – some readers make assumptions about me – he’s too busy, he doesn’t work my hood, his nose is too big, etc. – that may or may not be true.
Give me a call or email to find out – I’d like to help more people. Between Richard and me we can show any property, anywhere, any time.
Your nose is too big.
But on the business side, if I asked you to sell my house in Manhattan Beach and find me one in Palos Verdes, could you do it without taking away from you bread and butter sales?
I can rep sellers anywhere because my system ensures top dollar. You probably remember me selling my mom’s house in the Bay Area without ever selling a house within 100 miles of there – and got top dollar.
On the buyer side it is case-by-case, and if I can’t help people I usually try to find a top professional in the area without insisting on a referral fee. Referral fees take away from an agent’s motivation.
I’d just like a chance to review the wants and needs to see if I can help. If I can’t, I’ll tell you because it needs to be a good fit all around.
No need to call to confirm big nose though, no question there!
Jim,
Based on my friends, people don’t research realtors because they don’t see them as having specialized skills. They see all realtors as just showing people houses, so they take the first recommendation they get from a friend. Very few read blogs or know what questions to ask. The idea that negotiating skills or construction knowledge is valuable doesn’t even come up. It’s not like NAR advertising tries to stress those traits. Nor do most realtors, who boast about the number of sales they’ve made rather than the quality of those sales. The friends to whom I recommended my realtor used him without talking to anyone else. They realize this is an issue when their realtor turns out to be awful, but by then tend to stick with the realtor just to get it over with. Now how to do an effective marketing campaign that stresses the above qualities I haven’t a clue. I know you do that in your blog as do a few others, but it’s not exactly mass marketing and is unlikely to reach the people who actually need to understand it. People who read your blog are already inclined to search for good realtors. Now you can structure your business so that those are the majority of your customers, but I’m assuming that’s too small of a demographic.
Buying or selling RE can be ridiculously stressful! But with JtR, you not only get RE knowledge, 25+ years of experience, tenacity and integrity that he’s known for but also his sense of humor. Size of his nose doesn’t matter! Ask if he charges extra for his sense of humor (My 2 cents, it’s worth every penny)…