This new report from Redfin has taken off, and by just looking at the comments I think Traditional Agents (TA’s from now on) are jumping into the ring.

First off, here is an interesting comment from Glenn over on Freakonomics:

Our cost structure and our business model are radically different. Redfin has virtually no customer acquisition costs except from development of our website; traditional agents spend 67% to 90% of their time looking for new clients.

We can afford to pay our agents double or triple the industry average, so we get the cream of the crop, and those agents can focus exclusively on closing deals; customer find the home they want to buy on their own.

I just cannot believe this statement…if this is true, why would any agent in the market today want to be a TA?
The average income is around $60,000 for a TA, so if I break out my calc, I see that a Redfin agents makes around $120K and $180K respectively (someone, please check this.). This is good income for many agents.

but…

Top agents make well over $180K a year, so I find it very hard to believe that the cream of the crop is leaving the TA model for the Redfin model. Of course, if you look at the trade off…no more lead generation and no more showing homes, it might be worth it.

The hardest part about becoming a top agent is the lead generation. Anyone can master the contracts, but getting leads is make or break in real estate. So a top agent will struggle for years to create a base of loyal clients, then throw that special skill away so they can churn out contracts?

One thing TA’s can learn from Redfin, is how to create huge buzz. The wave Glenn created is not going to break for a looooong time.

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