It was called the most disruptive, game changing move in the real estate industry in at least a decade. And it lasted all of four days.
In other words, it pulled back the veil and showed consumers which agents produce, and which agents don’t. And it was met with howling screams of protest from the moment it launched.
First, some background.
Myself, I am all for disclosure. I am for disclosure because I work my tail off, I close more transactions that 90% of my competitors and I have absolutely nothing to hide. So bring it on. The Redfin app made me look great, and for those three glorious days of full disclosure, I was walking on air as I strategized how to leverage this awesome windfall of information into even more business for myself.
Behind the scenes, however, Redfin’s move set off fire alarms within the industry.
Nationally speaking, there are about one million active members of the National Association Realtors. This year, there will be about four million residential resales. Do the math, with two transaction sides per deal (buyer and seller), and you see that it averages out to about 7.5 transactions per year, per agent.
You cannot call yourself a full-time agent, nor provide for your family, on 7.5 paychecks per year.
Real estate has always been the ultimate turnstile business, with half of all new licensees quitting in their first year and three-quarters of all new real estate licensees walking away during their first three years in the business. Only the strong – or those with other means of support – survive.
And there’s the rub… because the consumer at home has always had a difficult time figuring out just exactly who is who. Are you a producer, or a pretender? Do you close deals, or do you dabble in the business? Redfin’s new app cranked up the floodlights and put the data out there.
So what happened?
Within hours, backlash and threats of litigation filled the air, most of it tied to the use of MLS data to publish these reports.
MLS, for the uninitiated, is short for Multiple Listing Service. In most cities, the MLS is a subscriber-based service that collects membership fees from real estate brokers (up to $1,000 per year, in many areas) and provides an online platform for sharing and promoting new real estate listings. Companies sign "subscriber agreements" with the MLS systems which govern what can and can't be done with the data.
And in the case of Redfin, a whole lot of agents and companies felt that public disclosure was a violation of those rules. Many agents called their local MLS boards to complain, or to threaten withdrawl, if Redfin was allowed to publish production data.
Agents who belong to teams (or who previously have been on sales teams) immediately complained that the data lumped their sales under their team leaders, which made them look unproductive while making team leaders look like giants. Smaller companies (which often welcome lower-producing agents) felt betrayed by the MLS systems they support, and so the outrage was real and immediate.
With 96 hours, Redfin pulled the plug, finding that the potential price of facilitating this disclosure of information was just too high.
And so, today, the consumer once again lives in the dark.
It will be interesting to see what happens going forward, because once the Genie pops out of the bottle, it’s hard to put him back. I am sad to see Redfin’s play foiled, but if it advances the agenda of making more data available to the public and helping the public think more critically about who they are working with, then it has been worth the drama.
