Last night I received a company wide email from one of our "top brass" urging me to turn on 60 Minutes to view their story on discount online real estate brokers and the demise of the 6% commission. Based on this report which was comprised of a "smart" appearance by Glenn Kelman of Redfin, and the frightening "rebuttal" by ReMax agent Deborah Arends (check out her marketing plan), even I came away feeling disdain for my own industry. But heh, that’s nothing new if you read this blog regularly. It’s no secret that a multitude of real estate agents across the country are providing little or no real service for the amount of commissions they charge. This is precisely why services such as Redfin will continue to gain footing and change the face of our industry by providing more options for home buyers and sellers. This is the most widely discussed topic in my industry and the one that brings the highest levels of anxiety to most traditional real estate agents. If you or someone you know is one of these agents, be afraid, be very very afraid.
I feel fortunate to be working in the Manhattan real estate market where I believe full service brokerage will outlive most other markets around the country. I also believe that those in my industry who bring more to the table than simply sending out flyers and mailing postcards (are you kidding me?) will continue to be sought out for representation in real estate transactions. Marketing expertise and negotiating savvy can be worth a significant amount of money when the average market price is $1.4M. Of course, as I have said in the past, a broker shakeout is coming. Having said that, I still don’t see Redfin handling the sale of a $24,000,000 celebrity apartment on Central Park West.
Douglas,
I agree that an agent shakedown is coming, but I disagree that firms like Redfin are sources of fear. Redfin simply wants to practice real estate without abiding by any code of ethics or Realtor dues- that’s greedy… wait, didn’t the “give back” so much? I’m certain that rebates don’t outweigh Realtors who have negotiation skills, face time, can perform a CMA, market a home and OH YEAH, uphold a unified code of conduct!
Douglas, today, the 60 Minutes’ piece graced Realtor Wives also- let me know what you think!
Very well said. I am frightened at times by the low bar some brokerages have when it comes to client services. Great synopsis.
Hugo
ARW,
As I practice my business in a market where very few are “Realtors,” I can’t speak to your “code of ethics.” I suspect however that much like our “self-governing” body REBNY, just because a code of ethics exists doesn’t mean that everyone is playing by the rules. Of course there are some real pros out there who bring real value to a transaction but you can’t ignore the multitudes who provide very little and continue to charge standard commissions.
As far as Redfin, I would go a step further and suggest that many in our industry also fear the information giants like Zillow and Trulia. And just wait until Google gets in the game in a more active role. Things they are a changin’. Transparency of information and discount internet brokerages will absolutely have room in our marketplace. Having said that, I think traditional brokerage will only be traditional in fee structure as agents are going to have to continue to reinvent themselves and the services that they provide to stay competitive in a very dynamic industry.
Thanks Hugo. I think the problem with those brokerages that you mention is more often the inability to police their own. Many of these companies provide extraordinary portfolios of services but they are limited by the ability of their agents to execute what is being offered.
Hey Douglass – this topic is just getting heated up. I threw it up on Barbara Corcoran blog and ours also tonight..lets see how it gets shaken out.