A tale of three brokers
It’s been awhile. I’ve been on vacation, and dealing with the fallout from being on vacation.
The big developments of the past month are Redfin’s planned IPO and the appointment of Bob Goldberg as NAR’s new CEO.
These things have been commented upon amply by others, so I’m just going to cover some tangents worth thinking about.
This IPO could lead to some big things. Amazon or Quicken or Realogy may buy them. Redfin may take the Opendoor idea mainstream. They may blow out their ad spend and move from being an app people use to a brand people love.
Sure, all of these things are possible. But it’s easy to overstate the importance of the IPO. I do not believe it will be the inflection point that going public was for Zillow. Because Redfin, for all its earnestly guarded differences, is still a real estate brokerage.
A big top line and a razor-thin (or, in Redfin’s case, upside down) bottom line.
A need to pursue thorny mortgage and closing services as profit centers.
A smoldering Zillow grudge.
A dependency on non-standardized MLS rules and data.
A Sisyphean, closing-to-closing existence.
Ten years ago I wrote a series of posts here titled “The School of Redfin” in which I made the point that the rest of the brokerage community could stand to learn a lot from this easy-to-dismiss competitor. They were, and are, a canary in the consumer coal mine, going deeper on technology, messaging and differentiation than anyone else.
In that vein, here are a few things from Redfin’s S-1 that I think are instructive:
From the S-1:
Redfin is a technology-powered residential real estate brokerage. We represent people buying and selling homes in over 80 markets throughout the United States. Our mission is to redefine real estate in the consumer’s favor.
Our strategy is simple. In a commission-driven industry, we put the customer first. We do this by pairing our own agents with our own technology to create a service that is faster, better, and costs less. We meet customers through our listings-search website and mobile application, reducing the marketing costs that can keep fees high.
Such clarity. It makes me think every real estate company should go through a “mock S-1” exercise.
Our goal is to build the first large-scale brokerage that stands apart in consumers’ minds for delivering a unique and consistent customer experience, where the value is in our brokerage and its technologies, not just a personal relationship with one agent.
Every company that wants to grow in real estate – whether it’s Redin, Opendoor, Zillow or a traditional brokerage – faces the same primary obstacle: the personal networks of the agents that currently dominate the industry.
Indeed, the referral and repeat business-producing spheres these agents own are the last defense against widespread change.
Redfin understands this.
We had 53% more repeat transactions in 2016 as compared to 2015, and 81% more transactions from customer referrals in that same period. The rate at which our customers return to us for another transaction is 37% higher than the industry average. With tens of thousands of new customers each year, and higher rates of customer satisfaction, we believe we can drive future share gains as those customers choose to work with us again and refer our services to their friends and family.
I’ve said it a hundred times: Most “leads” are nothing more than a client some other agent or brokerage lost. If you don’t like portals, you could starve them to death by keeping your past clients close.
Redfin is getting better at loyalty. Follow their example. Copy their tactics.
From 2014 through 2016, brokerage transactions for home sellers as a percentage of brokerage transactions increased from slightly over 20% to slightly over 30%. We expect brokerage transactions for home sellers to comprise a greater portion of our brokerage transactions over time as we continue to focus on listings as a strategic asset that provides benefits beyond the revenue we generate from home sellers.
That listings are the key to growth is one of the oldest real estate truisms. Redfin has come to this slowly. But their local direct mail campaigns, and their app and website, have become heavily seller focused. They have a long way to go, but the effort seems to be paying off.
Redfin may actually be ahead of the rest of the brokerage community now in terms of seller marketing. Most brokers we know still present a very buyer-focused face to the digital world.
The presentation of Bob Goldberg as NAR’s new CEO was, if nothing else, a communications train wreck.
The announcement, made on a Friday afternoon, was, in a word, weak.
A video message from NAR President Bill Brown began with a thank you to Dale Stinton.
Then, the derailing.
Rob Hahn writes a blog post in which he slices and dices the decision like a veg-o-matic.
Someone then thinks it’s a good idea to have the President of NAR respond in the comments section of said blog post. This is mistake #1.
Mistake #2 is making the content of this response even weaker than the original appointment message. Apparently, both Bob Goldberg and Dale Stinton, his predecessor, are A+ leaders because they’ve been given some awards by industry people.
Predictably, Rob then comes back with a face-melting response-to-the-response that makes NAR look utterly foolish.
If the Voice for Real Estate is ever going to sing again, a good throat clearing is in order.
A final, random thought…
It’s almost impossible to find a bad real estate agent review online. The real estate industry is a shimmering temple of excellence when looked at through this lens.
Well, first of all, most reviews exist because the agent asked. They are cajoled reviews. It’s hard to write a candid assessment when you’re feeling social pressure from a person with whom you’ve just worked closely.
It’s more than just that, though. There’s the strong relief effect at play here.
Let’s say you’re on a flight that’s unusually turbulent. It’s unpleasant and frightening. When you land, a sense of gratitude for the pilot surges in your breast. He got us through.
The rough stuff, perhaps even some pilot error, is forgotten.
I think a lot of 2-star agents get 5-star reviews because of this effect.
If reviews are all gloss, and sites like Homelight, which rank agents based on sales history, don’t capture important nuances, then what are consumers left with?
The “Internet-empowered consumer” narrative is a myth. They’re still as confused as ever.
Brokers and agents would do well to internalize that fact.
Enjoy the weekend.
Smart industry takes and creative inspiration.