GenY & Why Redfin Works

by in Marketing, Real Estate, Redfin - · 29 Comments  

kelman pimpin GenY & Why Redfin Works

Glenn Kelman, big pimpin’
photo credit:redfinpics

Who Is Generation Y?

According to Dr. Timothy Clark over on Phil Gerbyshak’s Make It Great! Blog:

If you were born between 1980 and 1995, you’re a member of generation Y. At 70 million strong, you’re part of the largest demographic cohort since the Baby Boomers. You are the incumbents to leadership in our society.

I have some insight into what Generation Y is all about because I am a member of GenY and here is my confession… Generation Y is a group of spoiled brats who have parents that coddled them that lends to the GenY sense of entitlement (well, all parents but mine apparently… “you’re not bleeding from your skull, you’re fine- go play”). Any business that can capitalize on my generation’s sense of “I should have it because I’m special and people like me” mentality will surely succeed.

Why Will Redfin Work?

I’ve said before and I’ll say it again- I like Redfin, they are smart. Although Glenn Kelman is “revolutionizing” the real estate industry, he is party of a different generation. Boo! But wait, isn’t every single person who designs clothes, designates what the cool handbag is this season, publishes our trendy magazines and designs our Internet software platforms (Zuckerberg aside)? Yes, but who cares? They tell buyers and sellers that they are already smart and they don’t need a person to tell them they are stupid by advising them of what they can already find on their own via the web (which of course is what GenY feels like when they are advised on anything).

Generation Y Doesn’t Know Better

In college, I thought you had to pay a Realtor up front. I’ll admit it. I think many people are stupid like that. I thought that you had to have a really nice car to even meet up with a Realtor and that I had to have a printed file of my life’s financial history before they would even answer the phone and I could never afford a Realtor. I’ll get into why I had that perception in another article, but I assure you I wasn’t alone- my friends thought the same way.

Redfin taps into this ignorance and says, you don’t have to deal with that, you can do the search yourself in your undies without those mean people in your grill. The Redfin philosophy reinforces the belief of GenY that they (we) are entitled to information, even if it is someone’s livelihood- I should get it for free because I’m me. This is the same challenge kids are having as they enter the workforce- why am I not the boss, I deserve it?!?

Redfin Makes “News”

With the recent Redfin press release, several blogs have picked up on particular points of interest that add to my argument that Redfin is actually designed to appeal to GenY by using hip vernacular like “Redfin’s goal is to delight our audience of hard-core real estate fanatics by offering Freakish Depth on major real estate markets.” Kris Berg noted why this will work, “they, of course, endeavor to make money acting as agents while pretending to be something else – Freakishly hip innovators.” Why is that the successful nature of Redfin? GenY wants to be pumped up, we want to be in the sorority even if it means hazing (or paying out of pocket to see a house I’m not going to buy).

Dalton pontificates that “in some ways, though, the more Redfin moves toward the more traditional model, the lone differentiating factor becomes the rebate. Cool software is a plus but won’t necessarily drive the business since buyers are shopping for homes, not agents (pr in this case brokerages.)” This adds to why Redfin will work- taking something old and make it shiny and new (even if it’s not) is appealing to the generation of innovation. Call it innovative and the perception becomes that it is innovative.

Redfin Just Does It Well

This is nothing against Redfin, kudos to them. Kelman may be GenX, but his designers are GenY, many of his agents are, his clients are and his blog commenters are- smart cookie. Redfin is not the only company that is appealing to Generation Y, they just do it better than most. The timer has already been set for the bomb to go off in every sector of the business world- we’re not talking about commissions here or which “business model” is best, we’re talking about the future of business and how the entire landscape will look in this generation of empowerment… the viral message is already spreading.

The takeaway is this- Generation Y is an indulgent, self-important, ego-centric group with a sense of entitlement and it is extremely unfortunate and I am ashamed. Granted, I’m on the cusp of the GenY group, I still am a card-carrying member (although I feel that the group really begins at 1977, not 1980). As an insider, I can tell you that GenY falls for wants jazzy words and being made to feel special, so all you really have to do to cater to GenY is tell them they’re special, that you’re stupid and they’re not, and give them shiny buttons on your website and offer them $100 at closing as a rebate. Real estate isn’t in trouble, ALL business is. Call me pessimistic, but I AM an insider.

UPDATE: comments are closed on this article but don’t dismay- the follow up article is open for your thoughts!

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Lani Rosales

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AGBeat Chief Operating Officer: Lani, named one of Real Estate's 100 Most Influential, as well as 12 Most Influential Women in Real Estate, is a business writer hailing from the great state of Texas in the city of Austin. As a digital native, Lani is immersed not only in advanced technologies and new media, but is also a stats nerd often burried in piles of reports. Lani is a proven leader, thoughtful speaker, and vested partner at AGBeat.

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Bob in San Diego

>nothing in this is about credit or lack there of, nor a commission and whether service is given by a Realtor. Sure it is. On all three counts. As Jeff points out, his experience is different. Mine is too. You say they get their info from peers and not adult professionals. That's a sweeping generalization. My experience is that they simply don't buy the status quo because it is the status quo, they don't believe in a label of self-appointed professionalism, and they don't expect anything more from Redfin than anyone else. They believe the industry, for the most part, over promises and under delivers - but delivers no less than Redfin. Redfin is cool because they tell you they don't do much and they aren't "greedy". >you’ll understand that it is an entire generation of this same mentality- “I know everything.” Another sweeping and generality that isn't likely to endear them to the "adult professionals". It's a generation that seeks and thrives on knowledge like no generation before it. They don't agree with the "they don't care what I know, until they know how much I care". They want proof you have a clue. They don't want to see agents add cost to the transaction without adding value. >If this buyer had chosen to have someone else “serve him” well, as you are now- would you think of him as so intelligent? I doubt it. If you knew me, you wouldn't doubt it. I can handle the cheap shots too.

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Benn Rosales

Bob, nothing in this is about credit or lack there of, nor a commission and whether service is given by a Realtor. This post is about the buyer psychology we're dealing with all over the country, and I talk to lenders, Realtors, title companies, bankers, lawyers, and others who constantly speak of something different with this generation of consumer- and you know what, this author identifies it in herself and gives you an insight into her thinking. Lani is educated, is demanding, and is guilty of the traits she points out in the post. "Husband is the stereotypical cynic who hates the concept of Realtors because he thinks most are stupid" This quote is exactly what she's talking about, and if you put aside a need to set yourself above your competition, you'll understand that it is an entire generation of this same mentality- "I know everything." If this buyer had chosen to have someone else "serve him" well, as you are now- would you think of him as so intelligent? I doubt it. You, Bob, just know how to sell yourself, service, and you answered his questions and probably schooled in what he didn't know- not that he would admit that. This article can be a blueprint into how you succeed in this social generation- they're getting their information from peers and not from adult professionals until they realize they don't know enough- at that point, they're full of bits of information and are in desperate need for it to be weaved together. If a redfin phone agent can serve this need, they will be just fine in the long run- this has yet to really be discovered.

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Bob in San Diego

Redfin has no market share here, but that aside, I don't think people give Gen Y enough credit. I have a young couple with several degrees between the two of them. Husband is the stereotypical cynic who hates the concept of Realtors because he thinks most are stupid (he and I are a lot alike). The Redfin concept appealed to him until this week. What he wanted wasn't Redfin, but representation where he felt he was actually being served. We'll open escrow Monday. The thing with Redfin is that they don't actually believe what they say. Drop the commissions and Redfin is toast. 2/3 of not much leaves little for Redfin.

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Jay Thompson

Sorry, I can't read a damn word of this. I can't get past that jacket Glenn is wearing.

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Lani Anglin

Well worth more than 2 cents, Mariana- thanks for stepping in! The different parenting generations is a really really good point. If I had to assign "blame" on the lackings of GenY it could possibly be on the children's entertainment media- Barney, etc. who overindulge the "specialness" of each child leading to the sense of entitlement and their misunderstanding that "luck" doesn't hit everyone with a computer (or voice- just watch the lack of talent on American Idol and the utter surprise these kids exhibit when they aren't simply handed the golden crown). Don't get me wrong- *our* kids are showered in "you're specials" and "you're uniques" and "you can do anythings" but there are also a lot of "work your way ups" and "be fairs" and "try your hardests."

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Mariana

LANI! I love generational cr@p like this! Here is a plug for an article I wrote about my generation (X): http://activerain.com/blogsview/20703/The-Secret-Life-of Anyway - Here is the thing about GENY'ers ... Their parents are both Boomers and X'ers. My mother has a Gen Y son and I have a Gen Y son. Let me quote myself from over a year ago .. "What is really interesting is that these kids are being raised differently - Boomers raise kids differently than X'ers do. Boomers have more money- and so do their kids. ((My husband has a 15 year old sister - ...raised TOTALLY different...)) - but the Boomer's kids and the X'ers kids go to school together and are growing up in the same age, and are all very tech-savvy. So, there will be some great similarities, AND some great differences. (I'm not going to start speculating, here...)" I happen to LIKE Redfin, and I am NOT a Y. I do not nec. agree with their business model but I like them because they are different. And maybe that is the only reason why I like them. I like Redfin because it is business models like REDFIN that make other business models stand up and validate themselves ... step up their game ... or fade away. Kind of like a chemical reactive agent ... I really do not know if my comment here even applies to what you wrote, Lani, but oh well. It is my 2 cents.

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Chris Lengquist

Closing comment: She's a bright kid. She'll figure it out. But in the mean time it reminds us all of why we'd love to have our younger bodies but only if we can take our older brains back with us.

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Lani Anglin

I like your optimism. Like I said, GenY is one of the most innovative, generous generations in history. That said, even the greatest GenY has a defect, a sense of grandeur that has not been earned. That sense of entitlement can be a good thing sometimes, especially in investing... it means we're more equipped to take risks and to have big dreams. It should be great for investment brokers!

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Dale Chumbley

With regard to Chris Lengquist's comment above. She makes me think of an old Ramones song that is slightly older than her friends daughter. Beat on the brat, beat on the brat... Thanks for the chuckle! ;?)

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Jeff Brown

Lani -- I'm with Todd on this one, and for more reasons than he stated. My experience with GenY is entirely different. I've mostly met smart young men & women who've taken the bull by the horns and gone after life in high gear. From what I've observed they appear to know what they want in life at a younger age than I or my parents did. Most young people learn in real life their sense of entitlement doesn't get them far. Soon enough expertise rears its ugly head. I've been encouraged the last couple years talking with GenY's. Most of them have a better idea of the direction of their lives than their parents did. Better yet, they seem unworried about choosing the wrong career -- they can switch jobs a lot easier than Mom or Dad could have. In San Diego they're buying the cheaper 1 & 2 bedroom condos, a move their parents would have considered beneath them. No sense of entitlement there. Finally, the military is in large part populated by GenY which is for me the most encouraging factor yet. What you've seen isn't unique as we all know what you're talking about. That said, being GenY yourself you make my point daily. :) My take on GenY is they're gonna surprise us big time. I know my firm is counting on it. :)

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Lani Anglin

It's the Barney complex. It's not something a bat will fix but reality will.

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Chris Lengquist

I'm only going to comment on the GenY thing. My best friend's daughter, a spoiled rich kid and now a college drop out, was telling me with much indignation that her part time job had hired her full time but that they were only paying her $29,500 with full benefits!!!!! Okay. She's 20 years old. No college education. And yet she knew the right person to land a $29,500 job right off the bat and is bitching like crazy about it. Ah, do you know there are people out in the work force that have been there for DECADES that don't make 10% over that. Don't like it? Tough. Get your education or be happy. But she really, really, really, really thinks that she's different and should be treated as such. I love her. But I want to hit her with a baseball bat. Would that be wrong? :)

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Lani Anglin

I don't give my generation enough credit? GenY is an amazingly generous and innovative generation- almost everyone I know that is in my generation volunteers, gives money and is forward thinking, but many of us have not had to work very hard. We said, "I want a Nintendo" and instead of our parents saying "let's talk about how you can get that, maybe you could offer to mow the Jones' lawn?" they say "put it on the list." GenY should be called the Barney generation- I love you, you love me, you're special even if you're a mindless idiot, don't worry about working hard, you're special. GenY is a great generation and will change the face of this planet, but we've got some coddling baggage to grow out of. GenY is a bunch of teens allowed to remain teens and that will be the challenge in the business world going forward- the sense of entitlement and the egocentric crap.

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Kris Berg

It's going to boil down to a matter of simple dollars and sense. I understand your point, and I understand their target market, but until that target market can consistently afford million dollar homes, the model can't possibly be profitable, at least in its present form. Plus, you don't give your generation enough credit.

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Lani Anglin

Perhaps I should re-pontificate: (1) they have clients (I previously opined are mostly GenYers) (2) they have marketing (3) their marketing is working on their clients, regardless of VC money or profit margins. 1 + 2 = 3 Regardless of where their overhead comes from, they still have clients which seems like a success in my book.

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Jonathan Dalton

> SOMETHING* is paying the bills at Redfin It's called venture capital. Eight figures worth.

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Todd Carpenter

I think the average numbers for Redfin need to be more like $500,000. Just look at the markets they are in, and it seems obvious. I'm not proclaiming them dead, I just don't think they are targeting GenY buyers. Also, to me, lableing a GenY, or GenX person to have one trait or another seems a bit like useing one of those place mat Chinese calenders to analise a person. Since I was born in 1971, I'm a boar: >>People born in the Year of the Boar are honest and tolerant and make good friends, but tend to expect the same from everyone else, and more often than not they end up disappointed. They thrive in the arts as entertainers.<< In truth - I care very little for the "arts", and am a complete cynic of almost everyone I meet. I'm usually pleasantly surprised that someone is a better person than I first anticipated. I don't know. Your broad stroke probably fits. Lots of young people seem to have a sense of entitlement, but maybe that's just me own perception. I try to judge people one on one. It would be interesting to see what the average age of a Redfinn client is. My bet is just north of 40.

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Lani Anglin

Do you think they really need to spread to other cities? If not, then their "business model" (gag) is fine. Here in Austin, it wouldn't work- median price $186k but why not LA, Seattle, NY? *SOMETHING* is paying the bills at Redfin and I would opine that it's courting GenY and the techies. Nothin' new there.

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Jonathan Dalton

I pontificated? And it's not 200K+ house. Look at the markets where Redfin's currently located .... San Diego, Seattle, Boston ... only way you see a 2 is by looking at the price on a mirror. There's not enough margin to make it work in the vast majority of locales, not with salaried agents. Given Redfin's market share in those areas, either there are few Gen Y buyers or they ain't using the 'Fin.

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Lani Anglin

Todd, that's a great point- not all GenYers can afford a 200k and up house. I think there is evidence that their approach works though... they've got a decent client base (that I would assume/opine is probably largely GenY). Do you think it helps the public to understand what GenY is made up of and how it will change the face of business in the future? I don't agree, but do you believe Redfin's days are numbered (since you noted a flaw in their business plan)?

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Todd Carpenter

You're analysis, that Redfin is going after GenY may be correct, but if so, I'll disagree that it will work. Redfin's business model depends on selling homes that GenY buyers simply can't afford.

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Dale Chumbley

Lani, Great post. Well put. I agree about the Gen Y beginning earlier. My sister was born in '76 and I'd put her firmly in the GenY group. I myself am a proud, card carrying GenXer! Take care, Dale

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