RISMEDIA, May 15, 2007-The real estate segment featuring Redfin that aired Sunday on 60 Minutes sparked widespread reaction yesterday throughout the industry, especially on industry blogs.The piece, reported by 60 Minutes correspondent Lesley Stahl, focused on how the Internet is changing the real estate business by highlighting Seattle-based discount broker Redfin and its founder Glen Kelman.
Kelman stated the real estate industry “is the most screwed up industry in America, and we feel like things that Amazon or eBay or Yahoo have done of other industries, we can do for the real estate industry.”
But according to many industry blogs buzzing today with commentary on the piece, agents who work for traditional real estate brokerages, disagree.
One blogger, Jonathan Dalton of Century 21 Arizona Foothills and Dalton’s Arizona Homes, wrote, “In light of Sunday’s 60 Minutes piece – shedding light on the real estate industry, if you believe the Inman news hype, or simply glorifying rebate-model proponents such as Redfin – in which Redfin’s Glenn Kelman featured, the question becomes how much time is spent discussing industry reaction (or lack thereof) to the bill of rights publicity stunt. And if any, it will be even more interesting to hear Kelman explain the yawning of the REIC.”
RISMedia Publisher and CEO John Featherston, also supported traditional brokerage in his commentary on the segment.
“The expose by 60 Minutes on Redfin was a classic example of how a mainstream journalist who has no real understanding of the real estate industry, portrays the effectiveness and the efficiency of our industry,” Featherston said. “We are a popular target for the media. It is misinforming consumers about the reality of Realtor commissions to say that the 6% commission is ‘sacrosanct.’ It is known in our industry that on a national average, commissions have come down to 5.2 percent. This misleads consumers into thinking that all their Realtor does is list their property-or only does ‘four hours worth of work’ as the former traditional agent in the piece noted-and they walk away with thousands of dollars for doing nothing. This is a gross misrepresentation of the work Realtors do for their clients to increase the value of their homes and justify their commissions.”
Featherston noted that discount brokerages and new business models are important players in the industry and should have a place in the industry, but that the consumer shouldn’t confuse the value of a full service Realtor with what a discount brokerage offers.
NAR responded to the piece with a statement on its Web site, Realtor.org. The associations cited several errors in the segment and stated while it had prepared and offered spokespersons for the story, 60 Minutes decided not to interview anyone from the organization.
The statment read, in part: “The CBS show 60 Minutes gave the NATIONAL ASSOCIATION OF REALTORS® the empty chair treatment in a May 13 segment that examined the impact of online brokerages on the real estate industry. The show featured interviews with a representative from the now-defunct eRealty and the president and CEO of Redfin, but no one from NAR, even though NAR twice offered and prepared Association spokespersons for interviews with Leslie Stahl. It was CBS that made the decision it would rather interview our opponents and let them make unanswered — and inaccurate and unfair — accusations about REALTORS® and NAR policies.
“The one-sided journalism and egregious errors served no one well, especially the once-vaunted news magazine show. NAR staff spent nearly a year working with CBS, briefing producers on the issues involved. The producers attended the REALTORS® Conference in New Orleans and met with NAR’s legal counsel for half a day in Chicago. Yet, still the segment was full of major errors.”
To read the full statement and the list of factual errors NAR reports aired in the story, visit: http://www.realtor.org/about_nar/NARRespondsToSixtyMinutes.html.
Featherston, supported NAR’s statement, adding, “It’s typical of 60 Minutes to choose a spokesperson for the opposing view, who is ill-equipped to respond to the interviewer’s questions. The interviewer features the founder of Redfin, who of course is well prepared to promote his business. Then they feature the counterpoint from a local Realtor, who may be a seasoned professional when it comes to listing and selling homes, but who may not be completely prepared to respond to statements by Stahl like, ‘Redfin very proudly says that they returned in rebates $3 million last year to its buyers. You can’t boast of anything like that.”
(The agent, Deborah Arends, a RE/MAX agent for over 18 years, responded, “Absolutely not. I don’t know how to answer that one.”)
“What needs to be pointed out there,” Featherston continued, was, ‘No I don’t give money back, but I help my clients sell their homes for more money, thereby putting more money in their pockets than a discount broker. I’m helping maximize the value of their home. Of course Redfin is willing to give money back to the customer because they’re not owed the money in the first place. The Realtor’s marketing, negotiating skills, and reach into the market is the experience the seller is paying for and that will ultimately put more money in the seller’s pocket.”
Kelman had stated that while Redfin refunds two-thirds of its commission back to buyers, they make their money by enabling their agents to transact as many closings in one week as some traditional agents close in one year, through their model and technology.
But while Stahl commented on how easy Redfin makes searching for a house on its Web site, she reported, “there’s no way to independently check the number of deals his agents close in a week,” she added.
It appears this debate will continue for the foreseeable future.
To read the article that aired on 60 Minutes yesterday, visit: http://www.cbsnews.com/stories/2007/05/11/60minutes/main2790865_page2.shtml