Redfin is to Realtors as iTunes is to RIAA

edited October 2007 in Seattle Real Estate
It just keeps getting better!
My question is, why are we leaving the innovation in these areas to companies like Redfin, and why aren't we trying harder as an industry to build that mousetrap ourselves?
Same reason that the recording industry (RIAA) left the business model innovation to iTunes and the like, and is being dragged along kicking and screaming into the future of music. Large organizations are going to tend to keep doing what they know. Anything different and new is treated as a threat, rather than an opportunity.

It's the nature of the beast.
No Tim and Sandy. You are missing something of great importance. This is not the recording business. Download a tune vs buy your home. Where is the similarity in the value proposition? There is none. I think it is misleading to be nicey nice about these models without acknowledging the real issues.
There's folly in thinking that everything new and different is better than the old, tried, and true.

LP Siding? New. DriveIt? New. Manufacturing toys in China?
I was trying to get to this: what's killing the record industry is a lack of salespeople.

For the record, I really have no opinion on Redfin. But I do think that the comparison to the RIAA vs. iTunes is valid. And I think the almost angry tone that some agents get when talking about Redfin just proves the point.

Comments

  • Realtors just don't get it. That last quote from Mack about the lack of salespeople killed me, especially since there is a huge glut of realtors that is hastening the move to discount brokers/agents.

    Realtors spend most of their time selling themselves rather than closing transactions. When it was a sellers market they killed themselves running around trying to secure listing agreements. Now they're falling all over themselves trying to attach themselves to well-qualified buyers. Anyone been to an open house lately as a prospective buyer? It's like being the only pretty girl at the dance (I'm making an assumption here, having never been a pretty girl). Don't put your drink down, you might get rufied and wake up with a mortgage payment!

    The standard defense you hear from realtors is: "Oh you don't know all the work that goes into a transaction. I have to pay a desk fee, advertising, and bus billboards; it may take months between transactions." Buyers and sellers don't care about your overhead and time between transactions! What other line of business justifies their commission schedule like this?

    Sellers are tired of ponying up 6% when they sell, and buyers with having their intelligence insulted. Countless times I've heard from realtors that of course I need an agent as a buyer. And besides, why not get one? It doesn't cost me anything since the seller pays the fee. You may have believed this before (I didn't), but now we have options. If you really think a 'full service' realtor is worth it, then go ahead and spend your 6% as a seller or 3% as a buyer.

    Realtors are scared now that we have options and can use Redfin, and easy access to MLS listings makes specialized real estate attorneys an option as well.

    P.S.

    Downloading music probably won't catch on because too many people like to browse at stores like Tower Records. Besides, people don't mind paying $16.95 for a new CD when they only really want one song.
  • The amount of bitter hatred the Realtors spew towards redfin is really eye opening. All the doom and gloom and wishes of failure are unbecoming.

    Realtors, especially Ardell, seem to have a very negative, closed minded view towards this discounter in particular. Her latest anti-redfin rant over at rain city is another example of blatant bashing. She takes what should be positive aspects of their business model and manages to cast them in a negative light.

    It's sad, kind of.

    http://www.raincityguide.com/2007/10/01 ... skis-blog/
  • what's killing the record industry is a lack of salespeople.

    My god, that's classic! :lol:
  • What is LP siding and driveit?

    And, call me crazy, but hasn't it become apparent recently that the 'old, tried and true' method of manufacturing toys in China hasn't been working out too well?
  • Redfin is like Scottrade and other discount brokers. It used to cost $100 to buy a stock. Now it is usually less than $10.

    Manufacturing toys in China? Is that good or bad? Despite what has blown up in the news lately, made in China is here to stay until they find a place with even cheaper labor.
  • what's killing the record industry is a lack of salespeople.

    My god, that's classic! :lol:

    You're right. Maybe Warehouse Records and all the other brick-n-mortar music stores should hire sign-spinners (to compete for valuable busy intersection sidewalk space with the mattress store sign spinners) and their worries would be over! I can see the sign now:

    "NEW CDs! Reg. $21.99, now only $16.99!"

    Oh wait! That's not right. How about this:

    "NEW CDs! Starting from the low $16s. Only 2899 left!"
  • brettro wrote:
    What is LP siding and driveit?

    And, call me crazy, but hasn't it become apparent recently that the 'old, tried and true' method of manufacturing toys in China hasn't been working out too well?

    That's the point. He's saying that just because RedFin is a new way of exploring real estate (like the relatively new (20-30 year old) choice of making toys in China) doesn't make it better.
  • I like how half of all REALTORS refuse to type "Red Fin."
    The Fin, R, etc. Same with Zillow.

    It's like Voldemorte.
  • Great quotes Tim.

    I especially enjoy this logic.
    There's folly in thinking that everything new and different is better than the old, tried, and true.

    LP Siding? New. DriveIt? New. Manufacturing toys in China?

    I guess Mack also drives a 1970s VW Beetle rather than a 200X BMW? Or does he use asbestos in his walls rather than modern construction techniques? Maybe he's uncomfortable with light bulbs and only uses whale blubber candles in his abode?

    I think we need to add someplace where people can put fallacious realtor statements. Maybe a new group at the top level of the forum, and it could contain a single thread for each type of fallacy? Like the Fallacy of Accident for the quote above. People think newer is better. Here's two examples where that's not true. Therefore, we should outlaw Redfin. HA!


    Back on topic, I think it's a reasonable comparison. You are saying that the RIAA and Realtors both have old business models. The evidence suggests that people do not appreciate these business models, but the organization does not wish to hear that opinion voiced. Now, innovators are coming along and forcing a new business model, and the old players are finding themselves on the outside looking in.

    Here's one difference though. The RIAA actually has a more maintainable model. The organization owns the music, and therefore they can choose to sell it however they like. Making poor choices can kill the industry, but not the model.

    Realtors don't have that. They don't own the houses, they are simply a market maker. In that sense, any other market maker has equal access to doing their job. They are trying to make listings proprietary information, but the Pandora's Box is already open. People know they can sell without a traditional 6% commission and there is no going back. Back to the RIAA, look at what Radiohead just announced. They also can never go back to their old business model.
  • Exactamente RCC and The Tim.

    There are some folks who are always literalists, and do not have the capacity to comprehend metaphors, bubbles, analogies, or song lyrics. Don't expect someone who got beat at their own game and refuses to change, to acknowledge the validity of alternatives until every, last, dime is exhausted.
    In some cases, it becomes a self-fullfilling prophesy, that what they fear most comes about, not because of what others did, but what THEY did not do.

    Some things are only too difficult to do if you try to do new things in the old way. Kinda like a lot of things lately.
  • brettro wrote:
    What is LP siding and driveit?

    I don't know about "driveit", but see here for problem with LP siding:
    http://www.siding4u.com/failing-siding-help.php
  • Seriously, these jackass realtors have done more to turn me off from using a REAL-TOR(R) (is that a character from an 80's cartoon series?) than anything Redfin could ever do.

    I pledge to totally avoid using a full-service realtor for a real estate transaction. There's nothing they can do to save their reputation or the large numbers of newly minted realtors that were created in the last few years. It's swirling the bowl, it can't be stopped.

    I will never use a Realtor from the buy-side, and if a seller uses one for our transaction, my lawyer and I will do everything I can to minimize the realtor's involvement and commission. It's just common sense and good business.

    The world needs fewer pointless middlemen.

    D-I-S-I-N-T-E-R-M-E-D-I-A-T-I-O-N. Learn to spell it, realtors.
  • B wrote:
    ...newly minted realtors that were created in the last few years.

    Lol, reading that gives me a picture of a big Realtor(R) assembly line cranking out the new models with that old cartoony factory theme "Powerhouse" playing in the background
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