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For Online Brokerage, A New Twist on Tradition
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In 2002, fewer than 2 percent of home sellers used "alternative" brokers, according to a survey by the consulting firm Real Trends. By 2005 that had grown to 11 percent.
The Internet has proved to be a boon to home shoppers.
Almost 80 percent use the Web to scope out for-sale properties, the National Association of Realtors has found. And most are online long before they hook up with an agent -- positioning firms with data-rich, technologically savvy sites to capture these shoppers as clients.
At stake is a lucrative piece of the commission pie. Generally 6 percent of the home's sale price is paid by the seller. Half goes to the seller's agent, half to the buyer's agent.
On a $430,000 house, that 6 percent is almost $26,000.
Large, experienced firms defend their commissions.
"We have new technology, but we're not just sitting behind a computer screen," said Lennox Scott, chief executive of John L. Scott Real Estate. "We know the neighborhoods. We're in the houses. We know the nuances."
"We really hold our buyers' and sellers' hands through the entire process," said Jill Jacobi Wood, owner of Windermere Real Estate. "It's the biggest transaction they do, and every single transaction is totally different because of the buyers, the sellers, the financing."
At Redfin, employee bicycles are propped against walls in a warren of offices that have a casual, just-moved-in look.
Initially Redfin was heavily committed to a self-service model. Buyers would be responsible for finding houses and gaining entry themselves, either at an open house or by calling the seller's agent and requesting a tour.
Meanwhile Redfin's agents would be in-office only, working 9 to 6 and communicating mostly by e-mail and fax. Competing agents soon voiced fears that dealing with Redfin would force them to do all the work; one even refused to consider an offer from a Redfin client.
"There was prejudice against us," recounted Redfin agent Allie Howard. "But by summer, word was out that Redfin was a player, and [other agents] realized we wouldn't leave them doing all the work."
