The 4 1/2% SOLUTION: The Answer to Red Fin’s Battle With the Real Estate Industry

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Red Fin and the stir over a Super Bowl AdMost of you have seen the brilliant Red Fin 30 second tv ad which first appeared during the Super Bowl, entitled, “The World Has Changed.” The ad begins with a young girl zipping through her ipad and progresses to show someone running on an artificial leg, followed by the statement that “the world has changed.” The conclusion implies their “non commission” Realtors can help you buy/sell real estate at much lower transaction fees than traditional real estate agents and brokers.

The traditional brokerage response to Red Fin’s Claim That They Charge too Much – During the last two weeks, I have witnessed and heard several large real estate brokerages react strongly to the Red Fin ad, claiming that their expertise, marketing skills, and negotiating ability more than offset the “savings” stated by Red Fin.

This battle will continue for the next few years. So what should the consumer do? Who do you trust?

STOP ARGUING —- YOU’RE BOTH RIGHT – Red Fin is striking at the heart of a real estate soft spot which has seen the status quo ripped open by the likes of deregulation, Zillow,, and now Red Fin (Red Fin has changed the game by directly entering in the transaction side of the business). The truth is that it is ludicrous for Realtors to expect an established “standard” 6% real estate commission rate for all agents over all markets, regardless of transaction difficulty, level of expertise (which is a far different animal than “years of experience”), ability of the agent, and true value added to a transaction.

However, the Red Fin model and practice falls far short of satisfying the needs of most buyers and sellers. As Zillow’s Spencer Rascoff correctly points out, the real estate transaction is more complex than other sales, and most buyers and sellers need professional intermediation to navigate through to settlement and avoid financial/ legal potholes along the way.

So the Conclusion is Simple – Red Fin is correct: buyers and sellers deserve less expensive representation. The traditional model is also correct: The real estate transaction is too important a transaction to be left to the unguided vagaries of pure internet hook-ups.

So the answer is to work with a professional who not only provides “full service” as do the traditional large broker representatives, but service and promotion beyond the norm. And a professional whose ego is not wrapped into the arbitrary “I only work for 6%” mentality, a relic from the days before modern-day efficiencies allowed the astute professional to do so much more for so much less cost, and in less time. Why shouldn’t a buyer or seller expect his representative to possess 21st century knowledge and efficiency, and pass that efficiency on to the customer?

The “no brainer” – I have worked for traditional real estate firms for the last 11 years, and have witnessed the increasing discord and hostility toward on-line entrants to our previously-cozy industry. I have been wondering: isn’t there some firm out there, just one, who recognizes the changing dynamics of technology and its impact on real estate, yet still grasps the need for hands-on knowledge and expertise between customer and real estate professional?

And then I met a strong professional at Samson Properties, the fastest growing agency in Northern Virginia with now 850 agents. He said to me, “Can you imagine the amount of business you could do and the number of satisfied customers you would have if you continue to give the same level of service you do today, increase that level as technology improves, and only charge them the very fair rate of 4 ½ %?” Yes, can you imagine?

So on February 25, 2015, I joined Samson Properties. Red Fin is right—you will get lower transaction costs. The traditional brokers are also right – you will get better service and sleep better at night. It is called, “The 4 ½% Solution.” Please contact me for details.

For more on this topic, this recently published article in Inman News by James Hussaini details the changing real estate brokerage landscape beautifully:


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About RayWedellRealEstate

Real estate professional with Coldwell Banker. Chartered Financial Analyst, CFA
This entry was posted in Ray Wedell realtor, ray Wedell Samson Properties, Real estate commissions are negotiable,, Red Fin, Red Fin TV Ads, Samson Properties, Spencer Rascoff, The no brainer solution in real estate, Zillow and tagged , , , , , , , , , , . Bookmark the permalink.

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