Chicken Little and the Future of Real Estate

Chicken Little, 1943

Foxy Loxy : “This is the Voice of Doom speaking! Special bulletin! Flash! The sky is falling! A piece of it just hit you on the head! Now be calm. Don’t get panicky. Run for your life!”  – Chicken Little , 1943

Ours is a business that seems to simultaneously embrace and fear the future. Any new business model that gets national attention becomes the topic of passionate conversation about why it will or won’t change the way consumers buy property. Experimentation in the business is not really new,but the appearance of online communities where we can discuss the matter, worrying away at each new idea like a dog gnawing on a bone, allows even minor aberrations to assume the importance of major business shifts.

Recently Redfin, a VC based real estate firm with a reputation for innovation due to an employee based agent model, consumer discounts, agent reviews, a high profile blog and a very smooth web presence, recently announced the publication of real-time” Offer Insights” ,  which they describe as “real-time statistics and notes from Redfin agents about thousands of offers submitted on behalf of our clients”. Within 3 days a blog post from a Massachusetts Attorney specializing in real estate appeared raising the issues of confidentiality and ethics issues that might arise from the program, and a conversation had started on Facebook debating the Pros and Cons of the program.

While the conversation talked about transparency and consumer oriented thinking, to me its just more of the same old stuff. One company trying to find a way to drive consumers to their site and their agents as opposed to another. Redfin writes ” We publish Offer Insights throughout Redfin.com, showing nearby deals when you look at an individual property but also highlighting juicy details about pending sales as you browse our map of listings…And if you want more detail about an Offer Insight, you only have to ask, via an online form associated with each Insight. The Redfin agent who wrote the offer will respond to your questions, usually via email, usually within a few hours” Makes a lot more sense now doesn’t it? We’ll give you “juicy details” if you give us a way to contact you. Not so futuristic when its viewed that way – just another way to gain consumer attention. And not salacious at all (Groan!)

Redfin, like any other company is motivated , at their core, by a desire to be profitable and grow. And that’s fine, but professionals need not to react to every new thing thing as if the world was ending, and all the rules of the game have changed overnight. We should analyze new business techniques, and to try to understand not only what they are, but what the business reason for them is, and whether there will be any real change in the industry as a result. We should be directed by our core business vision and not become “other-directed” if we wish to succeed in our chosen field. 

I don’t see “Offer Insights” as anything approaching “game changer” status. In fact, other than the publicity it might generate, and the potential for inquiries from curious consumers, I don;t see it as a great idea. The “insights” that I have read are anecdotal, subjective, and don’t contain really valuable information.  Frankly, except for the potential for  bad communication of the facts of the matter, I wouldn’t think of it as a listing agent. With that concern however, I might be more directed in how I advise a seller to respond to an offer from an agent who tells me in advance that they might be sharing the details of a transaction that my seller might wish to be confidential . And I certainly would be extremely careful about my communications to the Redfin agent, possibly denying them information as a result of a concern that it might appear online as an insight of some sort.

….So as I took a break from writing this post to actually be in the real estate business today,  I got a call from a  Redfin agent in my market who has buyers interested in a listing of mine. She asked if we had previous offers on the property, or if there were any other interested parties. My immediate response was to be cautious about what information I made available to her because I was conscious that anything I might say could later be included in an anecdotal memoir that I would have no ability to review for factual content. I told her that I was not comfortable discussing current or previous offers since I did not know how they would be typified in the offers insight program, and I didn’t want to enter into a conversation that might at some point be detrimental to my client. I know it was the first time she heard that, but I wonder if it will be the last….She was a little taken aback since she wasn’t really familiar with the program, though she was very supportive of her company  and explained that the CEO of Redfin must be comfortable with potential impact of the program. I explained that though I have the greatest respect for her CEO, his diligent research can’t stop him from making a mistake, and it certainly doesn’t relieve me of my obligations to my clients.

I don’t know what the result of Redfin’s new program will be. It may make cooperation with their agents more difficult as co-op agents try to avoid potential ethical or moral dilemmas. It might provide consumers with partially accurate anecdotal information that could help or damage their home buying negotiations. It may drive traffic to their site or litigation to their doors. But I do think that it is less effective as a tool for consumer education than it is positioned to be, and I don’t believe that provides as much guidance as an experienced real estate agent can provide to their buyer clients about the negotiation process.

What do you think?