I’d like to share my thoughts on the Redfin IPO and then weigh in on potential pros and cons of what I have labeled as the “Agent/Brokerage Consumer Centric” model and the “Marketing Company Centric” model. The central issue to me has always been about consumer choice and the level of service and brokerage knowledge they receive. Do the behemoth Marketing Companies, whose goal is generating consumer capture, marginalize the value great real estate professionals bring? And will they be able to accomplish this in a low cost environment?
Redfin and Goldman Sachs, the underwriter who helped take them public last week, were focused on positioning Redfin as a tech company rather than a real estate brokerage. Why? The answer is valuation. As a brokerage Redfin had revenues of $268 million but lost over $22 million in 2016. That doesn’t bode well for valuation at all. When positioned as a tech company they raised $138 million in the IPO, a pretty impressive result. In the IPO filing Redfin touted their technologies as a way to “consistently better customer service at a lower cost.” While technology has made it easier to purchase many products, how has it impacted the labor intensive process of helping people buy and sell homes? When you consider how Redfin silos job functionality with the consumer being passed around from person to person, in an increasingly complex transaction, do you really have an efficient system? Is there a continuum of knowledge, and solutions to the nuances every transaction has, to eventually lead to a successful close? And this, to me, is where the rubber meets the road and Redfin’s success will depend upon superior customer service to generate repeat customers.
There are stories beginning to appear about the “showing specialist” who can’t show you the property you inquire about today, until days later, the “contract specialist” who might not know what the “showing agent” discussed, the “settlement administrator” who might not know any of this and on and on. It reminds me of my frustration when dealing with silo’d job functionality in Property Management…..Has anybody actually SEEN MY HOUSE? I readily admit Redfin has very good technology but can they deliver the service level the best real estate companies and agents deliver? I have spent my entire lifetime helping impact the lives of others by building deeper relationships, asking questions, listening, helping consumers make educated decisions regarding their purchase or sale, offering expertise that saves them money, nets them more, solving problems that arise and making sure I am with them “Every Step of the Way”. I read an interesting comment last week on this issue regarding Tech or Touch… Is there a limit on the segment of society looking for a discount listing broker or rebate on a purchase versus a professional they already trust?
Every successful agent I know pays attention to the multitude of people and tasks involved in a real estate transaction making sure the jobs get done. Our work and expertise helps consumers long before the initial list or purchase of a property and oftentimes continue well after a successful close. What about our work week? For starters, in our instant response world our buyers and sellers won’t wait for answers. We’re on call almost 24/7, 365 days a year. We do this because we love helping people, because we’re building our businesses and our livelihoods depend on it. I have an old saying: ”When you’ve reached out and touched the life of someone you’ve worked with, that, you can take to the bank”. That is Touch, and while we use technology as a tool to help us, technology is not our core business, engaging people and creating deeper long lasting relationships is.