Today Redfin announced that they will offer a higher level of buyers service called Redfin Select to a limited number of clients, and for those clients they will be reducing the commission rebate offered.

I hate to see Redfin move their business model away from the edge.  The edge is cool, daring, and exciting.  They sought to revolution the real estate industry. Their first vision had panache; "no buyers agents", schedule your own showings, drive yourself, and because you are not using a buyer's agent you save a bunch of money.  

Redfin Launches Industry's First Online Home-Buying Service:    February 6th 2006

"Unlike traditional agents, Redfin Direct agents do not offer private home tours, or advice on which property to buy. To see properties, Redfin Direct customers visit open houses, or for a private tour, contact the listing agent or the seller."

Then they started to offer tours... 

Redfin Launches Free Home Tours and Pre-Inspections: October 3rd 2006

"The first home tour with a Redfin agent, up to three hours per household, is free. Future tours are $125 per home or $250 for a three-hour tour."

Then they offered more tours... 

Redfin Offers Home Buyers More Property Tours: January 31st 2007

"The first two tours would be free, and the third and fourth tours would cost $250 at closing, with any subsequent tours costing $250 in advance... Redfin exhaustively surveys every client who attempts to use our service, and the most common request has been more home tours"

Now they are offering 'unlimited' tours and less of a rebate: April 8th 2008

"With Select, we take you on tour twice a week, every week, until you find a home. When you do, we give you a 50% commission refund, which is usually worth $7,500 on a $500,000 home."

 
I guess at this point I wonder if Redfin is still a game changer or are they just carving out a niche as an efficiently managed real estate brokerage? Was today's quiet announcement Redfin's way of waving the white flag on being the Expedia of real estate?

Disintermediation has become a heated topic among real estate agents in the past few years. For some/many, disintermediation is synonymous with the apocalypse experienced by the travel industry. Seemingly almost overnight, travel agents across the nation and the globe saw their livelihood dwindle to embers in a field that had seemed so certain.

Within our society, fear has swept across the board and become second nature for even college graduates uncertain about the security of job stability. Fathers, mothers, sisters, and brothers have been displaced by outsourcing, corporate reorganization, and the pace of the information age. Understandably, agents are scared that technology will make fossils of them. Accustomed to protecting listing information as a method of protecting job security, such action is seen by Realtors® as akin to a tech company protecting proprietary information.

Great deception exists in this position, however. A successful agent today is not marked by how well they “guard” their listings. Even the ability to get listings successfully proves this point. A Realtor’s® value lies in their great wealth of information and expertise regarding market area, negotiating strategy, and the smooth ride they provide clients. Take the Realtor® away, and none of these can happen. ActiveRain has testified to the greater real estate community these specific points. Without the Realtor®, the transaction would not be smooth, buyers and sellers would struggle far more in the negotiations, and a great deal of the intimate market area knowledge would be lost.

Our next goal as an industry should be to testify to the irreplaceability of the Realtor® in the home sale transaction. The communication ability offered by the Internet should be used to ratify Realtor® worth in the mind of the buyer or seller. The sooner we as agents realize that our fight against disintermediation enforces the stereotype that we have nothing to offer, the sooner we can stop defending and instead turn our energies to promoting that kind of worthwhile expertise that only Realtors® bring to the table. By so doing, we will change the tide in the customer perception and bring integrity and pride back into the industry, ensuring the Realtor’s® role in the purchase and sale transaction.

(Note: I will be flying from New York to Seattle today, so I will not be  available to respond to comments.) 

(Second Note: Right after I left my hotel for the airport I realized that I should have titled the post differently. The old title was "The changing Realtor® value proposition) 

Wikipedia says that the real estate industry is "Still in progress (due to legal or structural obstacles)" of being disintermediated.  Is it right?  What would happen if 90% of the real estate agents retired in the next six months?  

Would housing prices go down?

Would the 'time on market' go up?

Would transaction costs (commissions) go down?

My first reaction is that housing prices would not decrease.  Time on market may actually decrease because with the lowering on transaction costs people would be less concerned about losing money if they needed to sell sooner than anticipated. Real estate investments will be considered more liquid.  

So that leaves me wondering, would service levels experienced by consumers go down? 

The average 'top agent' handles at least 10x as much business as the average mediocre agents do.  Does the service levels provided by the industries top agents meet or exceed the service levels provided by our mediocre agents?