Redfin Turns Profitable, Real Estate Industry Shudders

My experiences with commercial agents has been relegated to the broker that we have been using for over a 10 year period.

I agree though, a redfin type service will also evolve and take shape for commercial properties. However, from the commercial side of things, a lot more due diligence needs to be done (depending on the property type) as opposed to buying a home. And often times many 'good' commercial properties never make it to a listing service like loopnet etc.

Without any control, it seems like the rates will get quite high.

That said, he MAY have a point about changing the wording on the legal document. Most states have had strict laws about real estate professionals changing the wording on contracts since the '50s or '60s, believe it or not. In most states, brokers and salespersons are only allowed to fill in blanks on printed form contracts that are 'customarily used' (usually defined as drafted or pre-approved by the local bar association) and to insert or delete items only at the direction of the principal in the course of negotiations. While the last part sounds like it allows what you want, it is very easy for the broker to get sued for doing these insertions and deletions, because almost anything they say when this is happening can be construed to be the "unauthorized practice of law." And when I say "get sued" I don't necessarily mean by you. It was complaints and lawsuits from bar associations that led to these restrictive laws...the attorneys didn't want more competitors for basic services, just like they have sued internet companies that are selling legal documents such as wills. Anyway, many brokers are advised to completely avoid changing the wording on contracts. E&O insurers sometimes even write stricter guidelines brokers have to follow in these matters in order to get covered under insurance policies. And the broker's company may also have its own policies.

BTW, depending on where you're located, there ARE companies that are more on the Redfin end of the spectrum and that have Loopnet-ish sites.

One of the issues with having a commercial or business broker acting like Redfin is that there are different laws about compensation for commercial real estate than there are for residential real estate. (Commercial agents and brokers have more rights regarding how long, how much, and under what circumstances they are to be paid, for example. This is, for the most part, to protect brokers since these deals are much more complicated and they can potentially invest months of their time and hundreds of thousands of dollars marketing a property or doing due diligence, only to have the deal fall through at the last minute.) In any case, there is more legislation you would have to get around to do a commercial Redfin. I know of a few companies that have tried, but they all went out of business because of expenses or legal issues.

BTW, most consumers don't realize it, but there are roughly a dozen states that have made it illegal for brokers to offer rebates to consumers AT ALL, whether residential or commercial. Sometimes it isn't the real estate companies themselves that are stifling competition and innovation.

[This is basically a throwaway, but I bring it up because of the guy posting everywhere at TechCrunch.] Flat fee MLS is a way to save money if you're 100% sure you know what you're doing in selling your own home. For roughly $299-499, you can get your property listed on the local MLS. If you offer a commission to buyer agents, as they require, you will have accomplished almost everything a LAZY agent would have done for you. (If you're greedy, and refuse to pay a cooperating broker fee to buyer agents, you will not be able to list on most MLSs per their rules, and you will have lost roughly 80% of the buyer's market. Why should an MLS association or buyer agent provide their time and resources to help you sell your home for no compensation? Do YOU work for free?) One issue with flat fee MLS companies is that many, but not all, (knowingly) violate their state's 'minimum service guarantee' laws, because it is often difficult for them to do what they're actually supposed to do for that small amount of money. Not all states have these laws, but most do. If you go the Flat Fee MLS listing route, you should just know what you're getting for the money. Some companies are horrible and they blow smoke up your butt without alerting you to the downsides and dangers of this approach. They could improve, for example, by giving you a list of things that you are legally forbidden from saying when you're showing your home, and a list of things you MUST disclose. A second issue with this is that you probably DON'T know what you're doing in selling your own home, even though you think you do. Which goes to issue three...