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Realtors, Get Your Boats


Rob has been asking me to step into the Notorious ring for months. And while I have a lot of things to say, I don’t use nearly as many words as he, or Notorious S.A.M., or the other guest contributors. So. Many. Words.

But here goes …

I moved to Houston in February, which is one of the pivotal moments of my life. Not because I had lived in Washington my entire life. Not because I was leaving the community I had been ingrained in for over 20 years. But because it made me an honorary Texan. If you don’t believe me, I’ll show you my mug. H/T to Jennifer Archambeault.

That’s my mug!

I travel a lot for work. I spend far more nights in hotel rooms than I would like. But I’ve never seen anything like what I have seen from Texans during my short tenure in the Lone Star state. There is a sense of pride and humble gratitude. There is a strength of character. There is common courtesy that has been lost in so many other places.

I have felt a profound sense of helplessness since Thursday, August 24th when I landed in Denver. I haven’t been able to get home since. What was supposed to be a quick overnight trip has turned into 10 days and counting. Away from my home. Away from my dog. Away from my new community. All I can do is watch and wait and pray.

Everyday Heroes

I am humbled by my new community. People have been coming together to help each other. We’ve all seen it on the news. The horror is not over; but the transformational healing process has started. And it started with some of the most unexpected heroes.

It’s not the folks in charge that I’m talking about when I speak of heroes. It’s the folks coming from across the country with cargo trucks full of food and supplies. It’s the strangers in fishing boats rescuing those who can’t rescue themselves (including animals), the most famous of whom is the Cajun Navy but includes hundreds of unnamed and unsung people who have done the same. It’s the furniture store owner opening the doors of his showrooms to people who have lost everything, so they can feel a little comfort in the most uncomfortable and uncertain of times.

They’re not showing up because it’s their job. They’re showing up because it’s their responsibility as human beings. They’re showing up because Texas pride teaches that they take care of each other; that they are all in this together; and that they will not let others slip through the cracks. They see the need and say, “We have work to do.”

Yes, the leaders at the local, state and Federal levels have all done their jobs. They worked tirelessly, made decisions that none of us want to have to make, showed up taking responsibility when things didn’t go as planned or the public didn’t understand the reasoning.

But it is the everyday heroes who inspire us. We are all seeing just a small percentage of those people on the news and social media. But we are feeling the impact of all of them.

I’m proud to be an honorary Texan. And as soon as I’m able to get home, I’m ready to roll up my sleeves and help however I can.

What The Real Estate Industry Can Learn From This

In addition to being a Texan, I am a real estate nerd and industry lover. And I have been feeling utterly helpless for the past 13 years, as I watch the industry I love destroy itself.

An idea that I can’t get out of my head is this:

If everyday Texans can come together in a time of crisis to help heal the lives of those around them, can’t the everyday Realtor do the same to help heal the organization and industry?

I’m not talking about NAR staff or elected leaders. I’m talking about ‘boots-on-the-ground, feeding-their-families, building-communities’ everyday Realtors. I think that the majority of the over a million Realtors are these folks. They’re not the ones who get the recognition and the glory. They’re not Madam President or Mr. Chairman or Director of anything. They’re the ones that practice real estate as their chosen profession, without the need for outside recognition or the desire to push a political agenda.

NAR leadership and staff have work to do, just as the elected leaders across Texas did: make the tough calls, be held accountable, and stand up for the decisions and direction of the organization. But these people aren’t going to be the movement that heals the Realtor organization — not by a longshot.

I’m sure a lot of people reading this will say “The everyday folks aren’t true Realtors. They don’t feel the need to get involved. They’re unprofessional and untrained.” Trust me, Rob says this right here on Notorious, as well as on stages across the country. But some of those same naysayers, including Rob, might not have thought that random guys would risk their lives, boats, and trucks for strangers. They might not have imagined that average people would get involved to the extent in which they have and become heroes.

I’m not saying that every Realtor has the best interests of the public and community at heart; but I believe that a majority are good people. Just like I think that a majority of people on this planet have good intentions. Maybe I’m naive. But I don’t think so. And thousands of Texans are proving me right day after day.

So only 15% of members respond to NAR Calls to Action. Maybe it’s because the rest feel disenfranchised from an organization that has been run by political agendas instead of the original core values — an organization that has lost its way. Maybe they feel like their voice doesn’t matter because only the chosen few hold all of the power.

Or maybe the other 85% don’t know that it’s raining because they are so busy serving their clients, taking care of their families, and trying to balance it all that they haven’t slowed down long enough to feel the rain.

People, it’s raining.

I think the everyday Realtor is more powerful than she might understand, and certainly more powerful than she is often given credit for. I believe that she will rise to the occasion in times of crisis.

Well, folks, the crisis is upon us. The Realtor organization is terribly broken. Some may say irreparable. Some may say NAR needs to be burned to the ground for a fresh start. <raises hand/>

Realtors, get your boats.

Instead of waiting for leadership to fix the problem of professionalism in the industry, go out and help your fellow Realtors by offering guidance and support.

Don’t publicly shame them because they “Ask the wrong questions.” Words DO matter, but actions and character matter more. How are we supposed to heal a broken organization if we aren’t willing to treat each other with dignity and respect? Why should consumers treat us as trusted advisors when we stab each other in the back?

Granted, there are some truly crappy agents out there that don’t care about their clients or the industry. They don’t know the contracts. They put their needs above their fiduciary duties to their clients. They see people as leads.

Those people need to go. But those people aren’t the majority.

Realtors, drive your truck full of supplies to those who don’t have the resources that you do. We know that all brokerages are not created equal, and some leaders make better mentors. But that doesn’t make the Realtor under that leadership less worthy or less professional.

Use these moments as opportunities to serve one another and provide a better experience for everyone involved. Don’t wait for NAR to rescue ‘the others’ while you sit comfortably high and dry.

I am a recovering broker; and as one person, I did the best I could to serve the agents in my office. But as one person, I fell short at times. I acknowledge my limitations and take responsibility for them.

But I didn’t wait for the Realtor organization to solve my problems. And frankly, I don’t think it can or will. Just like the leaders in Texas couldn’t save every devastated community. We have to save each other. We have to serve each other.

So to all of the NAR leadership, both paid and volunteer, keep doing what you do. And to all of the Realtors doing it to provide a living for their families and create vibrant communities, get your boats. We have work to do.

Glasnost Comes to NAR: Bob Goldberg and the Culture of NAR


So as most of my readers know, the Coronation of Bob Goldberg just happened. Sure, he’s been in the job officially since August 1, but his “coming out party” (Bob’s own words) was Tuesday at the 2017 NAR Leadership Summit. That was followed in short order with a 1-on-1 interview with Andrew Flachner, CEO of RealScout, and a friend of Notorious. And then he must have done an interview with The Real Daily, because that story (complete with many typos, suggesting hasty transcription) came out right afterwards.

I’ve watched all of the videos and read The Real Daily and Inman News stories from the day.

And then, I spent the last couple of days reaching out to dozens of people trying to scratch an important itch. What I’ve learned is a little bit tragic, but ultimately hopeful for the future of organized real estate. It also makes me believe that Bob Goldberg is absolutely the best man for the job today. He is the right person at the right critical time.

For the TL;DR crowd, the takeaway (some of you young Millennial types might want to consult Google and history books):

Bob Goldberg could be the real estate industry’s Mikhail Gorbachev: the ultimate insider who rose to power at the right time to bring about a revolution. He could bring about perestroika and glasnost to NAR and change the culture of the organization at a time when it so desperately needs to change.

For the rest of you, who don’t mind thousands of words, let’s go on this journey together, shall we?

The Impact of Redfin Post-IPO: Part 3 — Technology Vendors


Okay, it turns out that Part 2 was the difficult one to write, because of how complicated organized real estate is. Part 1, the impact on brokerage, is here in case you missed it.

The final question is the impact on technology vendors in real estate. They are actually a pretty important part of the industry, after all. If you’ve already read Part 1, then you know the general direction of this thought experiment already.

In any event, let’s get into it.

The Impact of Redfin Post-IPO: Part 2 — MLS & Associations


I have to be honest here. I thought this post would be easy to write after Part 1, where I talked about impact on brokerages. Turns out not to be the case.

There are several reasons why, but the biggest is that there are a lot of “if-then” branching scenarios that made me get into some game theory for a while. Plus, organized real estate is really, really complex. It’s not clear how the various players would react.

Nonetheless, in the vein of “crappy product shipped is better than perfect product on the drawing board,” I figured I should just think out loud with everybody and take my lumps where I’m just misguided or wrong.

So let’s do this together, shall we?

A Ray of Sunshine: Krista Kenner and the Power of Storytelling


Okay, so look, I know that I have a certain reputation in the industry. Pot-stirrer, trouble-maker, truth-teller, all around pain in the ass, and so on. Even my friends know I can get argumentative about some things. And I do wish that I could post positive uplifting things all the time, but you know, when you’re working to reform the industry, it isn’t very often that I get positive uplifting things to talk about.

But today, I got one for y’all and I was so impressed I had to share it with everyone, and tell you why it struck me so, and why it represents one of the reasons why I do what I do.

I’d like y’all to meet Krista Kenner. She’s a brand new agent at Coldwell Banker Bain in Bellingham, WA., who got her license in September of last year. That’s right, she’s been in the business less than a year.

Despite being new, Krista just sold a house. And she wrote about it. Go read the whole thing, right now. Then come back. I’ll wait.

This is the best thing I’ve read on the real estate web in a long time. It gives me hope for the future, and reminds me why I do what I do.

The Heat Is On: A Response to Sam DeBord


I know, I know… another post about Redfin… that isn’t Part 2 which deals with the impact on parts of the industry that aren’t brokerages. But I’ve been busy, and still thinking through the impact on MLS, Associations, tech vendors, etc. In the meantime, my good friend and regular guest contributor to this blog, the Notorious S.A.M. DeBord wrote an excellent post, in which he throws some cold water on what he believes to be my overly optimistic view of Redfin.

I promised to respond, so this is a relatively brief response on his massive and entertaining post. Go read the whole thing if you haven’t already.

His main points are:

  • Redfin’s per agent productivity numbers are lies, damn lies, and statistics.
  • Redfin’s volume numbers are misleading, and it isn’t anywhere close to being a top 5 brand in real estate.
  • Zillow is not a good comparable for Redfin
  • If Redfin is an agent team, then other agent teams are better, and brokerages can compete
  • Can Redfin grow its agent base enough to deliver high levels of customer service, like a traditional brokerage can?

There are other minor points, like Redfin’s dependence on web traffic, which can be flipped on its head, which is… well… a stretch. I mean, hell, someone could invent a far better search engine tomorrow and kill off Google. That too would be disastrous for Google.

So let’s deal with the major points.

Follow-Up to the Redfin Post-IPO Post: BooM!


I had planned on my second post about Redfin to be its potential impact on Associations, MLS and maybe tech vendors. But you know, this whole Redfin thing is sorta big news in certain circles — tech and finance journalists as an example — and there have been a couple of interesting articles on Redfin recently.

Plus, I managed to find myself a Deep Throat of sorts who reached out to me and pointed the way towards even more interesting tidbits of information. So I thought, let’s do a follow-up before continuing to the speculations about the impact of Redfin, post-IPO.

Redfin IPO: Hot or Not Edition

Redfin IPO: Hot or Not

Redfin’s long-awaited IPO is here. Rob’s as-usual-lengthy breakdown is here. It’s full of interesting angles to consider, and some real positives for Redfin’s outlook. As you probably guessed, since I’m here guest posting again, I think a few points might need refining.

Why, you might ask, would a broker be giving credit to a competitor? We’re all talking about it, whether publicly or privately. There are some really interesting things happening at Redfin that all brokerages should be watching, whether or not they follow suit. This is Notorious, so I’ve taken a few to their potential extremes, which some of you will dislike very much.

Since this is a “hot or not” edition, some extra music seemed appropriate. On to the hotness:

Market share

Annual growth of market share is about 20 percent in Redfin’s most mature markets (1.66% share in Seattle, SF, LA, Boston, DC, and Chicago combined), which is admirable, even if currently nonthreatening to the bigger players in these markets. The trend bodes well for the brand if its service levels engender repeat customers. Market share is less than half a percent in newer market entries.

Brokerage revenue

This stood out in the S-1:

“Brokerage revenue grew 48% during the year, primarily attributable to a 47% increase in brokerage transactions and a 1% increase in real estate revenue per brokerage transaction. The increase in brokerage transactions was primarily attributable to higher levels of customer awareness of Redfin and increasing customer demand and market share in most of our markets.”

Customer awareness is key to Redfin’s success since there’s no brick and mortar or independent agent prospecting. Consumers have to seek the company out online, and if this revenue growth is truly due to customer awareness, it says a lot about the brand’s strength.

Of course, if I was a potential investor, I’d want to confirm that there’s truly brand awareness/loyalty behind the growth and not just huge additional spending when cost of revenue is near 90 percent. Brand loyalty has to be grown to attain long term profitability.

Brokerage technology

Redfin’s tech is top notch. There’s really no industry argument against that. From the S-1:

“Our proprietary Redfin Agent Tools automatically captures information on millions of customer interactions every year, and provides templates for our lead agents to recommend listings, follow up on tours, prepare comparative market analyses, and write offers. “

Having employee agents allows Redfin to require adoption of its tools. That’s something that traditional brokerages really struggle with. Since Redfin’s agents all use the same tools, the brokerage can focus its technology spend there with greater effect on the bottom line.


For consumer-facing tech, it’s clear that many other brokers’ clients use Redfin’s tools for a reason. They’re totally focused on the consumer experience.

This is where Redfin’s technology rubber hits the road. The best brokerage tech keeps agents and consumers in contact with each other. Redfin has built community and loyalty to an extent through its forums, reviews, feedback, etc. in its VOW platform. These things could have staying power.

Lab Rats

Many brokers (like me) quietly appreciate the investors who’ve allowed us to watch Redfin test out a wide range of pricing structures and technology ventures. I don’t have $200 million to lose on experimentation.

We’ve learned that buyer rebates are good for some initial press, but they’re limited for long-term buyer attraction. Glenn Kelman himself called Redfin’s continued offer of rebates irrational. The company has minimized rebates repeatedly and will only service certain property classes that it views as in its financial wheelhouse. The model requires the company to be choosy.

Discounts may have some staying power on the listing side. This is an area of growth for Redfin, especially in new markets that the company moves into. Sellers are more price (commission) sensitive than buyers. Is there a limit on the segment of society looking for a discount listing broker vs. a person they already trust? We’ll see.

Instant Transactions

This is a fascinating piece that Rob pulled out of the S-1:

“Moreover, we believe listing more homes and drawing more homebuyers to our website and mobile application will let us pair homebuyers and home sellers directly online over time, further improving our service and lowering our costs.”

Let’s go down this rabbit hole. It would be monumental compared to the other instant offer platforms currently available. Redfin flipping homes to outside buyers isn’t nearly as transformative as doing in-house transactions between its own registered buyers and sellers who never step foot outside its own toolset.

Redfin can take a commission on the sale. Zillow can’t. Opendoor has to charge much higher fees and pay taxes to fix and flip properties.

If Redfin can continue to grow its online market share, and create a critical mass of buyers and sellers, there’s a potential for this direct sales model to have legs. Don’t expect competitors to let that happen without a fight.

Many others have tried and failed to create this direct connection marketplace—it’s a monumental task. Probably none of them had this much financial and online heft, though.

Is a direct sale on Redfin a bad idea for a consumer? For most, of course it is. Full market exposure trumps all when seeking maximum financial return. But could it happen at a highly discounted commission rate? Likely. Are there some folks who’d eschew the additional full market equity for a quick sale? Absolutely.

The sneak peek marketplace

Buckle up, brokers, because you’re not going to like this. While we’re in “what if” land, let’s lay out an unlikely, but plausible scenario. Assume that Redfin grows its brand identity to national prominence at a level where it can move the consumer mindset significantly (a huge assumption). Might it then leverage its online customer base to create a proprietary marketplace for sellers to test brand new listings out in a low cost environment?

Today, there’s really no successful pre-listing marketplace. Zillow has “Make Me Move”, but it’s a drop in the bucket. In general, the traditional MLS is known as the place to first access all new listings.

What if Redfin created a 14-day “sneak peek” brokerage listing agreement, with no MLS advertising, to be marketed only on Redfin? Homeowners might list solely on Redfin for 14 days. If a consumer wants to buy the home through Redfin, the company charges a highly reduced commission (1% total ?) to close the transaction. Maybe Redfin offers 1% on each side if the buyer has an outside agent. If it doesn’t sell in 14 days, sellers are free to re-up and list on the MLS with Redfin, or relist with any other brokerage.

My fellow brokers are shaking their heads at me right now, wondering why I’d even suggest it out loud. I guarantee you that some of Redfin’s investors are at least thinking about these kinds of ventures. Tell me that Realogy and RE/MAX aren’t toying around with ideas about instant offers, etc. If we’re not exploring these possibilities, we have our heads in the sand.

In a low inventory environment, the sneak peek market could potentially attract enough attention to become the brand of the pre-listing marketplace. If buyers recognize that some homes are only available on Redfin for the first two weeks, and sellers are willing to take the risk of limited exposure in return for a massive discount on commission, it might be enough to move the marketplace a bit. It’s Zillow’s Make Me Move, but with broker representation.

Could other brokers with huge brand awareness do the same? Depending on local MLS rules, they could. Would most? This limited exposure model is not beneficial for most sellers. MLS exposure would still be a much greater benefit for the vast majority.

Lest we forget in our terror, sales are initiated by real people who often first call their trusted agent and say “How do we get started?” Those loyal clients will be guided to the MLS in most cases.

Still, it could be an attractive brand play for Redfin…or I could be completely wrong and I’m sure I’ll hear it from you. The dynamics of client loyalty to agents, buyers’ agents’ duty to clients, etc. in this scenario are a huge can of worms that I won’t open here. But there are cans of worms exploding all over the industry right now. It’s an interesting time to be in business.

Now, we apply a little cold compress to the Redfin Fever.

From Rob’s post:

  • $16.2 billion in sales volume in 2016, which makes (Redfin) #5 in RealTrends 500.

  • 25,868 transaction sides in 2016, which makes them #10 in RealTrends 500.

  • 763 employee agents (“lead agents” in Redfin parlance)

“…it looks like 34 transactions per lead agent.

It also looks like Redfin makes $350,000 per lead agent in revenue. Anybody out there with over 50 agents want to claim the same?
As a point of comparison, the only publicly reporting brokerage in the country, Realogy’s NRT did 77,536 transaction sides in 2016 and generated $4.3 billion in revenues out of 780 offices and 48,000 agents. So… that’s 1.6 transaction sides per agent, and $89,583 in revenues per agent. So Redfin makes 4 times in revenues what NRT does from its agents?”

Per Agent Productivity

Lies, damn lies, and statistics…Redfin’s lead agents may write the contract, but they also have showing agents who are contractors, and transaction coordinators who carry the sales through. We don’t know how many licensees touch each transaction, we just know it’s a lot more than 763 total.

So that’s a big nothing burger for statistical comparison, but it looks good in an S-1. I imagine (hope) that investors understand this. It’s very possible that NRT is equal, worse, or better on agent productivity, but we just don’t know.

Biggest “Brokerages”

“(Redfin has) $16.2 billion in sales volume in 2016, which makes them #5 in RealTrends 500.”

This is true. But it’s probably misleading to those who don’t know how our convoluted definitions of brokerages work in rankings.

Redfin is a national brand. NRT is a multi-brand brokerage in about 30 states. Investors want to know if Redfin can compete with RE/MAX, not RE/MAX Results in Eden Prairie, MN. Redfin’s ranking would drop significantly and the gaps above it would be exponentially larger with a true brand comparison. Start with Coldwell Banker ($166 billion) and on to RE/MAX, Sotheby’s, Keller Williams, Berkshire Hathaway Homeservices, Better Homes & Gardens, Century 21, and Windermere ($30 billion as a regional brokerage). Maybe there are others.

That’s not to scoff at $16B in sales, which is quite a feat, nor the credibility of even being in the company of those industry giants. It’s just context. Redfin has 1.66% market share in its best markets. It’s nowhere near the #5 brand (brokerage to the layperson) in real estate sales.

Web traffic and the Zillow crutch

“Comparables are hard to come by in the real estate space. But let’s just take one stat: website traffic. And let’s just take Zillow as a comparable — which we might as well since the entirety of the financial press is doing that.”

No, let’s not. Until Redfin starts selling advertising next to its listings on its websites (which isn’t going to fly with MLSs’ IDX/VOW rules for brokers), the revenue models are vastly different. These companies are competitors in some facets of business, but my brokerage is a competitor with moving companies in some facets of our business. That doesn’t make us good comps.

Read an article on Realtor Magazine or Inman News about a new technical development in real estate and you’ll get the scoop. Then read the financial press’s attempt to understand/relay it.

They know finance, but they’re often significantly under informed when comes to the deep dives in real estate logistics.  I know this because they’ve called me in increasing numbers over the last couple of years. Hedge funds, banks, investment groups—I was surprised at first. Most of them are extremely smart people, but they don’t always understand our inside baseball. That’s why they use Zillow as a comp.

Redfin is not a brokerage; it is an agent team.”

“Let that sink in for a moment.

Redfin is not in the recruiting & retention business like 99.99% of brokerages are today. They could care less about recruiting the superstar elite agents.

Redfin is in the business of helping people buy and sell homes — just like an agent team. They have employee agents who must use Redfin’s systems, must follow Redfin’s procedures, and the people they work with are not their clients, but Redfin’s clients — just like an agent team.

And just like an agent team must have a superstar lead-generation lead agent, Redfin has one… in its website and mobile app.”

This is a really interesting way to analyze the company. Redfin’s “#1 team in America” did $16.2 billion in volume last year. It lost $22.5 million. Investors are still lining up to fund it.

So if Redfin is a team, and investors are willing to keep ponying up cash, is the value of this team actually in its systems and not its agents? Why wouldn’t these investors just pour money into Ben Kinney’s team, which has been growing the team model for many years and has multi-millions of profits on an annual basis? Is removing the super agent the goal?

“What today’s Realogy, Long & Foster, Howard Hanna, HomeServices of America, Keller Williams, Re/Max, and others have to figure out is whether their superstar agent teams can play the game that Redfin is playing. And the answer is not good.”

It’s possible that brokerages aren’t building well-oiled teams quickly enough, and Redfin will catch up with them. So far, though, it looks like brokers who are embracing teams—and paying them hefty commissions splits–have a pretty good idea how to compete. Brokerage margins may be slim, but they’re better than Redfin’s…and there’s always that service level question that we’ll get back to later.

What are Redfin’s defensible assets?

Web traffic

SEO can be very powerful for generating traffic and customers. But, just as many formerly popular online businesses have learned, it can be a fickle lifeline.

Maybe Redfin’s rankings and traffic will continue to grow organically. Maybe Google will flip a switch on its algorithm and turn the table upside down. Maybe Amazon will drop a billion dollars on a competing venture. Without strong relationships built between consumers, agents, and a brand, a loss of search traffic would be disastrous for Redfin. The next big thing would steal away that bleeding edge customer base quickly.


Discounts are the most disruptive thing in real estate since listing books were printed in color. Most agents at traditional brokerages are taking discounts on listings when it’s a lead-in to a multiple transaction situation, or when it’s just the best way to start a relationship. Redfin doing it out loud isn’t defensible, it’s just a loss leader until the investors make a margin call.

Online reviews, VOW websites with property feedback, community forums

Redfin has built superior products. They’re susceptible to being copied and improved upon by other companies, though. In fact, it’s faster and less expensive for the new entrants to rebuild these tools as they stand on the shoulders of Redfin’s experience and see what has and hasn’t worked.

Brand Loyalty

Redfin’s brand and its ability to create a loyal customer base will probably be its most defensible asset if it can deliver quality service. There’s no barrier for another well financed group to build the same tools, starts its own instant investor offers platform, and offer the same discounts. They’d be light years behind in development of the user base and brand recognition that Redfin has grown, and that’s where Redfin will have to capitalize.

Can Redfin provide a service level that retains clients when the best and brightest agents have much higher paying options? Will its training program merely be an incubator for other brokerages with higher splits?


Can Redfin grow an agent base that keeps customers “just happy enough” because they value its tech and discounts? Call it anecdotal, but in Seattle, we hear repetitive stories about overextended agents and frustrated customers. Redfin is, respectably, open with their agents’ reviews.

This call to our agents is not uncommon: “Can you show me this home Friday, my Redfin agent says he can’t get there until Monday”. Buyers in a fast-moving market who finally give up on the discount because their agent is overextended are not rare.

There are, of course, hourly-wage door openers available. But anyone with experience knows that what’s said inside the home between agent and consumer is a massive part of the value proposition. It’s a transfer of customized knowledge, on-site, on-demand.

Most consumers today still seem to prefer the concierge service of an almost-always-available consultant to guide them through the home sale process. The transaction won’t be commoditized like a flight or a hotel room. So Redfin will have to be able to hire and retain quality agents, and find consumers willing to work in the production line process for the tradeoff of great tech and discounts. The company is doing that now to an extent. Whether that agent and consumer pool is limited is in question.

If Redfin can’t/won’t work with homes below a certain price point, or on transactions with complicated logistics, it might hamstring itself on brand loyalty. Great agents work with anyone, often even at a loss, because their friends are referrals and eventually they’ll transact again. Does the current model allow that kind of personal loyalty to flourish?

Conclusion: It’s complicated.

From Redfin’s prospectus statement:

“And we pay Redfin lead agents based in part on customer satisfaction, not just commission, so we’re on the customer’s side”.

“In part” says a lot about the evolution of the company’s mindset. You can’t change everything in the industry at once. If you’re going to be a tech broker, and a discounter broker, you might not also be able to remove a salesperson’s ambition for commission-based pay at the same time. The purity of Redfin’s initial credo has become a less grandiose, more pragmatic vision.

There’s a lot of value in Redfin’s tools, its ability to drive traffic, and its willingness to experiment. There just aren’t similar companies for a good financial comparison. Portals aren’t. Traditional brokers aren’t. Other discounters aren’t. Investors are going to have to hedge their bets somewhere between a tech company and a brokerage.

When the IPO happens, there will still be 1 million-plus agents saying to their friends and family, “Are you thinking about buying or selling any time soon?” That kind of loyalty can be chipped away over time, but as Redfin’s 13 year progress has shown, market share grows slowly in real estate, even for the best-financed ventures.

Brokers should keep an eye on what’s working in Redfin’s model, and either adapt parts of it to their own businesses, or define themselves with a distinctly different or superior value proposition. If it’s not defensible, it’s susceptible to being replaced.

Will the IPO meet expectations? We’ll all be watching. We’ve been waiting to see this for a long time.


Sam DeBord is a guest contributor to Notorious R.O.B., VP of Strategic Growth for Coldwell Banker Danforth, and President of Seattle King County REALTORS®

The Impact of Redfin Post-IPO: Part 1 – Brokerages

Lobby of Redfin's new corporate HQ

Since I wrote most of the last post about Redfin’s IPO off-the-cuff without thinking too hard, I promised I would have something more substantive on Redfin’s IPO and the possible impact. Well, as it happens, I’m writing up a fairly significant white paper on the future of brokerage and this goes right to the heart of it.

So first of all, if you’d like to get a copy of the brokerage white paper once I’m done, drop me an email and I’ll add you to the list.

Having said that… the Redfin IPO is one of two things.

It could be one of those moments we’ll look back on in 4-5 years and realize “that’s the moment everything changed” much like how we view Zillow going public back in 2011. Don’t forget, all you Zillow Haters, that few people paid much attention to Zillow back in 2010-2011.

Or, it could be a total fizzle like Ziprealty, which went public in 2004 and did precious little of anything until it was acquired by Realogy (where it still hasn’t done anything), and the industry will be emboldened in the status quo.

I am very much in the first camp, because Redfin is a contemporary of Ziprealty, and competed head-on with Ziprealty when ZIPR was a public company flush with cash. Redfin was gaining online when the competition was even fiercer with Trulia as an independent company.

So let’s assume that Redfin will successfully complete its IPO, raise $100 million, and be valued in the neighborhood of $3 billion. Let’s further assume that Redfin behaves like intelligent business people, as they always have, instead of buying private jets for Glenn Kelman or some such thing. (Which they won’t, since their S-1 stressed “frugality” as a virtue of and culture in Redfin.)

What are the likely consequences?

In this part, I focus on a couple of thoughts in the brokerage side of things.

For the TL;DR crowd, Redfin kills off any non-boutique large brokerage… unless they swallow their pride and go beg Zillow for help.

Random Thoughts on Redfin Going Public


I have been waiting, wanting, hoping for Redfin to go public for a few years now. For a bunch of reasons, mostly having to do with getting another company in real estate to have to report publicly about their operations and their numbers.

Well, my wish has been granted. Redfin just filed its S-1 to go public a couple of days ago.

I don’t have any strong opinions at the moment, besides wishing Glenn Kelman and crew lots of luck. But looking through Redfin’s S-1, I had a few random thoughts. I figured I’d share them with you all, taking a bit of a break from the internal machinations of NAR.

This is a game changer. The industry as we know it will never be the same after Redfin’s IPO. I’ll post on that later, but I wrote most of this before I started thinking harder, so I figure I might as well share this with you all while I work on the bigger piece.