"Regular folks resent what agents charge. Soon the industry will be seen as bad as Big Oil or the tobacco companies," said Glenn Kelman, Redfin's chief executive. He has made few friends in the industry for his take-no-prisoners style and a business model that relies on other brokerages' listing agents to show homes to Redfin's clients.
Having made a bundle on a software business during the dot-com boom, Kelman saw the real estate industry as ripe for the kind of technological changes that transformed the travel and securities brokerage industries. Redfin entered the Bay Area market last summer, after debuting in Seattle a year ago. It has transacted 242 deals but has yet to turn a profit.
Yet the rise of new models like Redfin suggests that "the agent's role is greatly diminished because they are not doing as much of the legwork as before," said Greg Sterling of online consulting and research firm Sterling Market Intelligence. "Now, the consumer is picking up much of the slack."
Tom Phillips and his wife were working with a full-service agent when they were in the market for a house in San Diego last summer. But it dawned on him after two weekends trailing her around town, viewing homes in neighborhoods he had little interest in, that he could do a better job on his own.
"I was following her Jaguar around and got to thinking, 'How many payments on her car will I be helping her make?' " Phillips said.
He then called BuySide Realty Inc., a Chicago-based online brokerage that entered the California market last year, and got a $15,000 rebate when he bought a house.
Many industry innovators are counting on independent, tech-savvy customers who prefer being hands-on. And thanks to so-called mash-up technology developed by Google and others, many of these brokerages' websites provide not only a given market's listings but also the means to plot them on an interactive map, along with comparative market data and historical price trends.
"The mapping technology changed the game for consumer search," said Michael Davin, executive vice president of Cata List Homes, a Hermosa Beach-based realty firm that charges sellers a 3% commission. CataList recently began giving rebates to buyers.
Although the dominant players have ceded some ground to the newer firms, they are quickly regaining their footing and have adopted an if-you-can't-beat-'em-join-'em mentality, confident that their name recognition and market positions will carry the day.
"These start-up companies that are doing innovative things are great," said Thomas Kunz, chief executive of Century 21 Real Estate, the nationwide brokerage based in Parsippany, N.J.
"But you don't have to be the innovator in every one of these areas because the one piece they don't have is the people on the street and the brand name."
And in a slow market, Kunz contends, consumers are more inclined to request a higher level of service.
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annette.haddad@latimes.com
