Glenn Kelman (Randy Stewart photo)

Redfin CEO Glenn Kelman walked into a bit of a lion’s den Monday morning, hosting a conference call with real estate professionals on Active Rain. Kelman discussed a wide range of topics on the popular online real estate network, speaking mostly about the failure of the company’s recent Scouting Report service.

But the most interesting part of the discussion were Kelman’s not-so-subtle attacks on “media sites” who he said are going to “enslave” real estate brokers if the industry doesn’t wake up to the changes going on in the industry.

And while Kelman didn’t name names during the remarks, the message was pretty clear that he was referring to the likes of Trulia, Zillow and other ad-supported businesses. Kelman’s remarks, however, weren’t so much directed at those fast-growing companies but were meant as a wake-up call to the real estate industry.

Near the conclusion of the talk, Active Rain’s Nikesh Parekh asked Kelman about his predictions for 2012. The question sparked this fascinating response from Kelman:

“I think we are at the crossroads where the media sites will enslave us, I know that is a colorful term, but if we outsource our brains to them, they are going to make all of the money, and we are going to do all of the work. Or, the brokerages can decide that we have gathered all of this information, we have provided all of the service and we should be the ones who offer the best online experience to our customers. And that’s really the big question. I don’t worry so much about whether Redfin can hire the best agents or continue to grow our business. I worry about whether the fundamental choice we made five years ago was the right choice, that if we played by the rules and used MLS data that we would be able to build a better Web site or a worse Web site. And, I think, the jury is still out there. But, I promise you, if brokers aren’t building the best Web sites for real estate consumers, we are headed for pain. Pain for the customer, pain for the broker.”

Parekh followed up those strong statements by asking Kelman if he’d advise brokers to remove their listings from Trulia and Zillow. Kelman responded:

“No. I wouldn’t advise anyone to pull listings just because it is in your customer’s best interest, the home owner’s best interest, to get as much exposure. I think the solution is to make sure that the rules that we abide by as brokers are not so restrictive that our Web sites are hamstrung. Belonging to the MLS should be an advantage, not a disadvantage. So, the collective action I am looking for is not a strike against a media site. The action I am looking for is all of us working together to make sure that our listings by the MLS show up on every social media site and that other data gets surfaced. And this isn’t just about Scouting Report. This is a larger question about who is going to have the relationship with customers online. If media sites are going to have that relationship, I think it is really hard for us to build a new business — not just Redfin –I mean all brokers.”

Earlier in the program, Kelman noted that the company had not given up on the Scouting Report service, which provided a scorecard of sorts for more than one million agents across the country. Redfin pulled the controversial product earlier this month after data problems and protests from Multiple Listing Services.

In his remarks Monday, Kelman said that they would consider rolling out Scouting Reports one market at a time. To Kelman, the offering is part of of a larger battle.

“I have no doubt that people wanted to see it,” said Kelman, adding that it was an immediate hit. “The point I’d like to make to the brokerage industry is that we can be the purveyor of information about our own performance, or we can let someone else build a directory of real estate agents. If someone else does that, we will be paying those people for the rest of our lives…. If Redfin has to pay a media site for traffic, we will not be able to make real estate better.”

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Comments

  • Spot on

    Glenn is 100% correct.

    “I think we are at the crossroads where the media sites will enslave us, I know that is a colorful term, but if we outsource our brains to them, they are going to make all of the money, and we are going to do all of the work”

    That is exactly what Zillow has done. Piggy backed off real estate agents and mortgage brokers information and expertise. They in turn do nothing for the indiustry but muck it up.

  • Anonymous

    This isn’t really news.  This argument has been going on for the last 10 years.  There was a point where brokers didn’t even want their listings on IDX never mind the likes of Trulia and Zillow.

    The issue is systemic including the fight that started for franchisors to get IDX feeds from the franchisee markets.

  • Guest

    Right on to Glenn. As a real estate buyer, I want the shortest possible trip to the real estate seller. Redfin has that as its business model. Sites like Zillow which simply aggregate and bomb Google with MLS data add no value to my buying experience.

    “Agents,” in human form, are a dying breed. In ten years we’ll wonder why we needed a human being just to put two other human beings in touch with each other to do a routine business transaction.

    • http://jphilip.com J Philip Faranda

      I just love how someone eventually concludes “agents are a dying breed” from just about anything they read in an article. 
      If brokerage were going to be killed by technology, it would have occurred a long time ago. If anything, technology has made my business what it is. Real estate is far too clunky to be reduced to eBay. 

      Do a better job of choosing your agent and you’ll see the value. 

      • Guest

        Does an agent sort out the paperwork? No, lawyers do that.

        Does an agent identify homes for sale? No, dozens of websites can do that.

        An agent is really just a person who puts a homebuyer in touch with a homeseller. In five years we’ll look back on them like we looked back on personal shoppers, travel agents, stockbrokers, car salesmen, and life coaches: a nice convenience for the wealthy and ignorant, but a secondary part of an experience for the well-informed.

        All a Realtor can do is say, discreetly in the SUV she deducted as a business expense, “You don’t want to live here. A lot of blacks live here.” They call this “local knowledge.”

        • Cbosse

          It sounds like you are largely misguided about what a Real Estate agent does.

          In California we do all of the paperwork and keep track of all of the contingency time periods. A lawyer is very rarely involved at all in the process.

          Agents involved in REO or Short Sale transactions have duties such as negotiating cash for keys agreements (many times with hostile tenants or homeowners), negotiating with lenders (sending hundreds of pages, many times), and keeping everyone involved notified for months until the deal closes.

          There is also the issue of the data on these websites. Who writes the descriptions, uploads photos, and makes sure that it is maintained. It may not sound like much but its not free. You also have to consider who is paying for all of these websites including Zillow and Trulia. The real estate agent. If the agent goes away the sites do too. They can’t exist without funding.

          I am a 3rd year agent and make wayyyy less per hour then what I was making serving tables, but that’s my choice. I am not complaining but illustrating that we are all not greedy middlemen but mostly people who love helping others and give our time graciously. 

    • Guest

      Do we really want to bring back a time when buyers were not represented and homesellers ripped them of left and right? Someone takes the money and someone pays. Who has the most to lose? Buyers do not pay a commission, so why would they choose not to have someone fighting for them and representing their best interest is truly beyond me. It isn’t common sense.

  • http://www.realtown.com/ardell/blog Ardell DellaLoggia

    The Number One answer would be for the “Public MLS” site to beat the pants off any other site, Redfin’s included. Unfortunately large brokerages fight that effort in order to hypothetically draw the attention to their own sites. But all they are doing is losing the eyes to Zillow, Trulia…and Redfin. 

    The mls using “the data” to perfect the best source of Real Estate Information on a Public Site is the answer…not giving one Brokerage, be it Redfin or any other, the right to use the mls as a playground to test and try…whatever.

    A Public MLS site that most people would use to search for property, because it is THAT good, would prevent the dangers that have been “forecast” in this interview, without one Brokerage “wielding the power” over the data and the rest of the Brokerages. I’m not saying they should “hoard” the data…just that The Public MLS should be the best “go to” site for all things Real Estate. 

    At present they make the Public MLS Site the worst…by intention and design and vote of the largest member brokerages. So much so, that you likely don’t know there IS one.  Reversing that thinking is the best answer.

  • http://twitter.com/sbonert Sara Bonert

    As someone who represents a media site (Zillow) and listened to today’s interview, I’d like to respond to the two quotes you highlighted.  I strongly disagree that agents have outsourced their brains to media sites.  Yes, we have data on the site, but the brains part comes into play when interpreting the data and applying to very local neighborhood conditions with a customer’s personal situation.  This is something that a media site will never be able to do and thus why they’ll always be the need for your local real estate agent. 
     
    I also disagree that “if brokers aren’t building the best Web sites for real estate consumers, we are headed for pain. Pain for the customer, pain for the broker.”  Do you think 15 years ago people were saying, “if brokers don’t work on creating and printing the best newspaper for customers, they are in for pain”?  No, because the newspaper was just a media outlet and agents were the ones that actually made the transaction happen.  In fact, agents are in a better position today from a media standpoint, because they can do so much for free online versus being held hostage to newspaper classified fees.  Having various media outlets available to leverage helps free agents up to think more about selling homes and less about Google rankings, which is where their money is made.  It is very expensive to build and operate an innovative real estate website, something that most professionals would not be able to take on.  So exchanging data for exposure is a great partnership. 
     
    Media sites are there to spark the interest of the consumer and have evolved into a marketplace where they then can then be matched up with the agent who is best suited for their real estate needs.  I do believe this was the direction the Scouting Report was trying to go.  Had data accuracy not been an issue, it was just the difference of another broker website hosting this information or a more neutral, third-party media site.  Understanding this difference makes it more obvious why Glenn extended this plea for looser MLS restrictions, as he is someone who has a heavy investment in technology. 

    • http://jphilip.com J Philip Faranda

      Sara, Glenn’s job is to make waves. He’s on a hell of a VC fundraiser. That is pretty obvious. 

    • http://blog.redfin.com GlennKelman

      Sara, 

      Would it be fair to say that Zillow has ambitions to be far larger than the real estate section of a newspaper?

      I have no issue with your taking that role but we both probably agree that Redfin would have to raise the prices we charge consumers if we had to pay Zillow or any other media site to introduce us to those consumers.  

      I also think there is a difference between the reporting performed by newspapers and the directory of listings and agents offered on Zillow, only because every broker offers its own directory of agents and listings, and none attempts to report on real estate news the way a journalist would.

      This doesn’t make what you’re doing wrong in any way, only more competitive with services brokers have traditionally offered to the public in order to meet customers. Real estate journalism is largely additive to — or at least totally different from — what brokers do; Zillow’s listing search and agent profiles overlap.

      It is also worth noting that Zillow has no claim to neutrality, at least not in the way a journalist does. Are the agents it recommends determined by which pay Zillow a fee? Can you imagine if a journalist you were pitching only included advertisers in his story? Redfin and Zillow would never get covered anywhere!

      Let’s just have consumers decide where they’d rather get the data.I don’t take issue with your wanting to publish listing data or agent profiles, but don’t think you should take issue with brokers’ wanting to do that either.

      We probably agree that the company that can develop the best listing search or agent directory should win in the marketplace. We have only asked that brokers  license to ourselves the same data that we license to you, so that the best technology can win, and so the consumer can choose whether to get the information directly or from a third-party.

      Do you think we’re wrong to make that request?

      • http://blog.findwell.com Kevin Lisota

        Glenn,

        How is Redfin any different than Zillow in markets where you utilize partner agents? You have direct agents in high-priced markets, but exhausted those and are now expanding with a partner-based model where you charge non-Redfin agents referral fees.

        In your new cities, and I’m guessing in all of your future national expansion, you are a broker only in name, but are not providing brokerage services. Even in Seattle, you don’t provide brokerage services for properties under $200k. You are a website that serves as a matchmaker between consumers and agents, which is no different that the media sites you decry. The mechanism by which you collect your fee is different, but you are collecting the match-making fee, just like Zillow and Trulia.

        I think it is a bold statement to say that the media sites will “enslave us,” when your partner model charges the same sort of fees that you seem to have such a problem with.

        • Renee Burrows

          Amen Kevin!  This is exactly what Redfin is here in my market (Las Vegas area!)  That’s why I didn’t “get” what he was bashing media sites for during this conversation.

          They have a one person shop (the broker) no agents and no transactions.  They APPEARED like they had brokerage transactions for the 5 days the scouting report was live because they rode on the coat tails of their partner agents.

          I don’t exactly call that transparency.  It is misleading and deceptive advertising making Redfin out to be bigger than they really are. Maybe his hide was chapped because he is actually licensed and has to live by the laws and regulations of our areas.

          • http://blog.redfin.com GlennKelman

            I wasn’t bashing media sites. I was saying brokerage sites need to compete with media sites, by being able to publish the same information that media sites do. If we decide not to publish information, ceding the web to media sites, we will become dependent on them in a way that severely limits our profits.

            We have completed something like $6 billion in home sales through our own agents, and published a review for every customer we have worked with, deal or no deal.

        • http://blog.redfin.com GlennKelman

          We will offer direct service in every city we enter Kevin. Like any brokerage, we will refer business we can’t handle well ourselves, more when we are just opening a market with very little local presence. Today, the partner business is about 5% of revenue.

  • Renee Burrows

    You should have included some quotes on his thoughts on communism and younger people working for Redfin.

    That was really the good stuff IMHO.

  • http://profiles.google.com/joeconnector Joe “The Connector” Kennedy

    I think it’s funny that he said that Redfin has played by the rules – and that Redfin will have to raise their “prices” (commissions) to compete.  Oh really?

  • Lyn Sims

    I think that Kelman seems paranoid. Build your website & the buyers will come that’s what all the other sites did & will continue to do. Since RF is not a listing based company they will be using other’s companies hard earned listings to attract buyers. Gee, how novel is that? Using others work to gain profit?

    • Israeli Rothman

      here are some good rules of thumb: if it pouts you on a page populated by your peers, or that nobody ever sees, pass.  if it is exorbitantly expensive, pass.  what you said is not true though: they wil not come just from building it, you need to market it.

    • http://www.housingblock.com/ The Housing Block

      Agreed.

      It’s all about exposure.  I mean, the name of the real estate game is to push the product, with the ‘product’ being houses and homes.  It’s just natural for any company to downgrade its competition in hopes of generating more buzz for their efforts.

    • Danny Roberts

      we are a full service brokerage with buyers and sellers Lyn.

  • Noel Freedman

    I went into real estate in 1958 and retired in 2002 when I moved out of the Seattle MLS area. At the time i entered real estate, agents complained if there were more than 15 licenses hung on the wall. I remember when the first Post Sign with a Flyer Box was hung, my Sales Manager lamented:  “It is only going to make agents lazier than they already are.”  When the computer entered the real estate industry, I was reminded by Bill Gates that his computer intent was to eliminate the middleman….Ah so? 
     
    Too wit: Via a referral, I was called to open a keybox for a family who spoke no English, except for the son who flew from CA to WA to represent his mother, who wanted to live by her sister; who lived next to this subject home. 

     I wrote the Purchase and Sales agreement on the kitchen counter; and Signed Sealed and Delivered to all parties concerned: same time, same motion.  I asked the son where he was going to seek a mortgage.  He said off the internet.  I asked him about Title selection: He said off the internet.  I asked where too Escrow?  He said: Off the internet.  We shook hands goodbye.

    Over the FOR SALE post sign, I stuck SOLD.   I never heard hide no hair from any of these folks again.  However, 30 days later my commission arrived.

    Where have all the salesmen gone; long time passing……..

    Noel Freedma
    Stanwood, WA

  • Leti Vandensteen

    How can we control the situation?

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