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For our 200th Transmission (wow…that’s a lot), I thought I’d reach for a blast from the past and modernize the most read article ever on Geek Estate Blog, written all the way back in 2014. It started with a simple, non-debated (yes, that's sarcasm) sentiment:
Real estate agents are overpaid.
This was a refrain I heard for a decade by industry folk before I first broached this topic, and it's just as true now, nine years later. There are countless entrepreneurs with this conviction as well, many of whom actually tried to change the game … because that’s what entrepreneurs do. Historically, there have been two camps to lowering the costs of buying and selling real estate: discount brokerages and marketplaces connecting buyers and sellers directly.
A few of the highs and lows from the past 20 years include:
Founded in the early 2000’s by Glenn Cohen of Rumson (NJ), Foxtons started life as YHD.com (Your Home Direct), peddling the model of a real estate broker that charged only a 2% commission, cutting out the buyer agent and keeping the commission for themselves. Salaried agents. Though a new brokerage model was born, the mistakes added up and the 2007 market meltdown tipped Foxtons off the cliff. The longer story can be had for historical buffs.
Redfin, which was originally incorporated as Appliance Computing in 2002 and rebranded in 2004, is a success story. Redfin was founded with customer service as its core tenant. After launching Redfin Direct in February of 2006, it hit $1 million in buyer refunds by October. Of course, though, it has long shifted back toward a more traditional agent model. That said, the company is still heavily advertising its 1% selling proposition. A timeline (and a few screenshots) of the early years of Redfin are here.