Friday Flash: Loosey-Goosey

Redfin laid off a hundred people this week.

How they explained it caught my attention:

“As we hire more Redfin Next agents and our current agents become more entrepreneurial and self-sufficient, Redfin needs less support and managerial staff.”

Redfin Next is the company’s new commission-split comp model. Redfin had always offered agents a salary until recently, which made it very hard for them to make money, but enabled tight control over service delivery and maximized agent productivity.

Redfin has now learned what the rest of the industry has known all along: It pencils to keep things loose.

Letting agents be “entrepreneurial and self-sufficient” is cheaper than having to meet payroll every two weeks. Of course, as many brokers will tell you, it’s no bed of roses. But generally speaking, it makes sense.

Or has made sense.

Because this loosey-goosey arrangement doesn’t exactly lend itself to having your shit together when your business practices are under microscopic scrutiny.

“Self-sufficient” agents are more likely to be:

Sloppy agents.

Uninformed agents.

Sleazy agents.

Untrained agents.

This is not always the case. Of course not. And I’m not saying a good brokerage can’t maintain standards. But what is increasingly evident is that our shambolic way of being is now vastly more problematic than it used to be.

At a time when the federal government is watching the industry like a hawk, and thousands of ambulance agent-chasing attorneys seek to feed at real estate’s sloppy litigation gravy train, letting agents be “self-sufficient” feels like a nightmare from which one cannot wake.

I am hearing two kinds of stories since the settlement terms went into effect:

“We were ready, most clients are cool with it, and it’s turning out to be not that big of a deal.”

“I cannot *$@#$ing believe the stupid stuff agents are doing.”

To think that the second story won’t impact the first is naive.

I’m not sure how we get out of this. Many brokerages have become less profitable and more lightly staffed in recent years, and cheaper, more arms-length alternatives have gained share. Some oversight and training has been picked up by teams, but not enough.

The legal jeopardy produced by this reality seems unending.

For a long time, this chaos-by-design actually protected the industry from disruption. How do you systematically change something that is intrinsically unsystematic, diffuse, irrational, personal, and cushioned by a fee model that numbs people to the pain of payment?

You don’t.

It took regulators and lawyers to do what entrepreneurs, MBAs, and venture capitalists could not do. They are real estate’s kryptonite.

The stupid %$#@ and the consequences it provokes aren’t going to go away unless we make them go away, and I suppose that’s the opportunity in all this. If you’re a serious agent, broker, brand or team leader, don’t play it loosey-goosey. Fight the stupid with the same intensity as the regulators and plaintiff’s attorneys do.

Become a leader of the industry we are being called to become.