Redfin meets TV Watching America
60 Minutes broadcast a piece on real estate commission reform that introduces Redfin to a new national audience of TV watchers. The "60 Minutes formula" for consumer advocacy is at work throughout the broadcast. Here is the standard script:
- The Revolution is happening - The real estate industry is at the brink of an internet-based shakeup of an archaic system of commissions, similar to what has happened in the travel industry.
- The Savior appears - Glenn Kelman and Redfin are positioned as white knight reformers of this "screwed up industry".
- Those upholding the status quo portrayed as being barriers to reform - the counter argument interview with a Seattle full commission agent has been edited to skeptically show her explaining how her expenses - postage and gas - have increased to support her stand on maintaining the 6% commission. Her adamant (even abrasive?) stand on 6%, labeling Redfin a Walmart, becomes a caricature for the type of agent 60 Minutes is implying must succumb to the revolution.
- The Conspiracy Theory
- 60 Minutes talks with an early discount realty pioneer, who claims
that Realtor Associations blocked his listings from the MLS. The NAR is
portrayed as a powerful lobby, run by Realtors who have a vested
interest for maintaining their commission structure. And that they are positioned against consumer savings.
- Denouement - 60 Minutes broadcasts a positive message for the reformers of real estate.
- 60 Minutes is for consumer advocacy... Realtor counter-arguments, particularly how divorcing the commission split as espoused by Greg Swann is a better model than Redfin's, are way too arcane to explain to the 60 Minutes audience, let alone an arguably more sophisticated Techcrunch author. Therefore, producers (who likely also don't know much about real estate) follow the simple script above because it makes good copy.
- Realtors could never win in this arena... media is
biased and everyone knows it. Our Seattle agent had to know she was
walking into a trap and in all fairness did a fine job presenting her
value... it's all in the editing.
- Looking at the bigger picture, I applaud Glenn Kelman's reform message... any mass media exposure about the real estate industry and how it works, from any angle (that's why social media is powerful... bias is subject to exposition and dialogue), will accelerate new thinking and change.
- Yes, Redfin may not have the final say - it's business model may have flaws from the Realtor perspective - but at least Glenn is talking a different tune that stimulates dialogue... name me anyone else in the industry creating the kind of controversy he does.
Technorati Tags: redfin, NAR, erealty, glenn kelman, discount broker, real estate commission
Very good summery and observations. It will be interesting to see the fall out of this story. Coming from a TV marketing background, I imagine it will not make much difference in the long run.
It is obvious that NAR is really taking real estate 2.0 websites seriously. They have been very pro-active with their propaganda lately.
You do a great job with your blog, just wanted to let you know that I really enjoy reading your work.
Jake
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Good summary.
It's interesting to read the posts by Realtors over at ActiveRain this morning howling about the 60 minutes spot. Good for Kelman.
I don't know if the guys over at Redfin will be the ones to turn the market inside out...but someone will. As an investor I'm thrilled that new business models are breaking out. In terms of transaction costs real estate is wildly inefficient. The market will eventually figure this out.
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Great summary of a very interesting, and perhaps groundbreaking, new mantra in the real estate space.
With redfin recently making their way into the Boston market, there has been a lot of rumblings on the street.
A struggle will continue to grow now between the classic participants in the real estate industry (NAR, agents, traditional brokers) and the rising contingent of redfin-like threads that are being spun up across the country. The former are working to make as much information as possible available to consumers, but strive to "control" the pervasiveness of the information. The latter are trying to leverage access to the available information to the fullest to try and provide a pure look at what is available on the market.
This will stay fluid for at least the next 18 months, but a shake up, which has already started, is definitely forthcoming.
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Pat...Great piece. Been so busy I haven't been keeping up with the usual Media buzz. On a 'macro' level,this business will be unrecognizable 10 years from now. The 'hybrid' realtor had better begin focusing on the 'micro' aspect of his business now or be left in the dust and ashes of whatever's left of this industrty by those looming retirement years---which for me is not soon enough.
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There is plenty of room for new business models. It is just too bad that redfin has to bash traditional models and the traditional companies have to bash the redfin model. makes us all look bad.
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Great addition to the discussion, thanks Pat. It's not about the particulars of Redfin's model. It's about the media & the current Zeitgeist of Realtor Bashing. Traditional agents are on the wrong side of that fence & Redfin is able to use it for cheap brand exposure. Loved your producer's script angle.
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The reform message is great but there's nothing revolutionary in what Redfin is doing the longer you examine the model. Their listing philosophy is no different than any other flat-rate company, some of which have been around for almost a decade. Leveraging the Internet isn't all that remarkable ... many of us are doing it without the backing of venture capitalists.
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Hi Jonathan, all the more intriguing how Glenn can achieve notoriety as an industry reformer based on an old business model... HelpUSell and Zip aren't making much noise to the consumer. It takes a character like Glenn to make the charge...
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Business models that compete on price usually do so by cutting service. Since the consumers decision in choosing which business model to support, will be based on what they perceive to be as being important; the true sales job will be in educating the public as to why/how Realtors fees are justified.
Overcoming price objections is standard in most sales positions, so why shouldn't real estate industry be any different?
The only Realtors that are resisting this new model of business, are the ones of incapable of selling themselves, and overcoming price objections.
I can understand the NAR trying to protect it's industry, but they're failing to differentiate their competitive advantages, and that's why consumers are choosing the discount brokers. What has happened to the economies of scale in the traditional model?
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Well in this market I think sellers are willing to pay a little more to get a little more. Marketing is key. Internet marketing is the gate. I heard just by putting a listing a craigslist you increase traffic by 9% compared t just having it on mls. But there is some much an agent can do on top of that. So why would a discount broker go out of his way, when his focusing on volume.
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I feel Kelman has done something many others have failed to do. He created brand recognition. Nobody knows most of the agents in his town...they know Redfin don't they? And many disgruntled agents contributed to making the brand. Shrewd guy!
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Just found this post while digging around...I think given the current marketplace people will see how valuable a good agent really is.
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