Introducing Redfin Direct (And Redfin's Blog)…

Welcome to Redfin’s blog, a forum to discuss Redfin, Web start-ups and real estate!

As you’ve probably heard, this week we’re launching Redfin Direct, an online service for buying a home and getting a commission refund, usually equal to two percent of the home’s selling price.

Redfin Direct has been up since Wednesday, January 25. We’re also continuing to connect people seeking traditional service with a partner agent through Redfin Connect. Demand for our partner agents increased 35% the week that Direct became available, suggesting that as Redfin grows, both choices will be popular.

But Redfin Direct is what everyone is talking about. It took us months to pull together. The hardest parts were getting everything legal and easy to understand, and figuring out what people wanted.

We ran two focus groups, and surveyed people online with Zoomerang.com (a very useful tool for start-ups). The survey sample sizes are rinky-dink, nearly 100 respondents total, but the results are still interesting: 83% of our customers were unaffiliated with an agent; 58% percent were “very interested” in an online offer-making service.

What was most surprising is that survey respondents didn’t feel like they needed much help finding a property to buy, which is how traditional agents spend most of their time once they get a client. What customers valued most was the support to figure out a fair price and make a winning offer.

So that’s what we focused on. We used to worry that Direct customers needed a private tour from their own agent, but now we mostly want to make sure they win the home and close without a hitch. This realization meant we had to change up our plans last November, and focus on hiring and training Direct agents who could offer great support from offer to close.

Friday night, I called the first customer whose offer went through, and understood why real estate agents like their job so much. The customer was elated. And so were we. This is what the Internet is supposed to do.

  • http://truenorthrealty.blogspot.com/ shorline

    Welcome. Very innovative! What markets are you picking in the NEast?

  • Anonymous

    Snoqualmie Ridge is the most beautiful neighborhood and a great value for the Eastside. You can find a house for only 488,000 or 1,000,000. Easy commute but seems a millon miles away from the rat race.

  • Anonymous

    It seems like you are encouraging buyers to use real estate professionals for their information, and then ask that they go directly back to you for assistance on their transaction. Dangling the carrot of commission in their face, you sit and collect as well. The integrity of real estate is in jeopardy!

  • Anonymous

    That sounds like a comment from a Agent who is very afraid of losing their job. They are doing nothing of the sort. The selling agent does their job showing the home to potential buyers. If the buyer decides to buy, then Redfin helps them through the closing process. Buyer agents should be afraid, seller agents should not.

    • Kathryn

      Is Redfin going public anytime soon?

      • http://www.raincityguide.com Dustin

        Ardell’s been hosting a very interesting discussion on Redfin Direct over on Rain City Guide. Would someone from Redfin be willing to clear up a few questions that have popped up regarding your service?

  • http://www.realtownblogs.com/?u=Ardell Ardell DellaLoggia

    Well, you know I kinda like Redfin and wish it well. But sending a buyer out to find homes, with agents who don’t get to get paid at the end of the journey, may cause some fall out.

    There are parts of this country where no one can get an agent to show them a house without a Buyer Agency Agreement in place. I certainly hope it doesn’t come to that.

    But if people suspect that the consumer is treating them like a “tour guide” to then go and buy a house with an agent who doesn’t show houses…we could get there.

    It would be a shame. Why do you think the listing agent should leave his home to go show a property to your buyer. I don’t get that part.

  • Anonymous

    Ardell,

    I would assume that the reason the seller agent would show a home to a prospective buyer is to sell the house. Isn’t that the most important part of their job? I mean if the house doesn’t sell, then the there is no transaction.

    I guess maybe most people (like me) just don’t understand the exact responsibilities of each agent. This is because when asked, most agents say things like “peace of mind” and other vague things.

    In my mind, if I am going to sell my house, I want my agent to show my house to prospective buyers. I would think that this is the first part of their job (I guess after getting the proper value worked out). Why should the selling agent NOT do this??

  • http://realtownblogs.com/?u=Ardell Ardell DellaLoggia

    Sorry I did not see that question from anonymous from Feb. 19.

    If the seller’s agent shows and sells the property, then the seller’s agent is entitled to the buyer agent fee. If the agent charges less, which is often the case if the buyer doesn’t have someone else to show them the property, then the seller gets the discount, not the buyer.

  • Anonymous

    Ardell,

    Thank you. I had no idea that a seller’s agent didn’t normally show the property. That seems strange to me. Why is that?

  • http://www.SearchingSeattleBlog.com Ardell DellaLoggia

    If someone else shows the property, then they get paid by the seller’s agent. If the seller’s agent shows the property, then the seller’s agents keeps the entire fee. The question isn’t really does he ever show it, the question is why should he show it while someone else gets paid the fee for showing it that doesn’t show it.

    I never realized the general public and new companies didn’t know who the real estate business functions. Maybe how it functions will change.

  • Anonymous

    Well, I for one don’t know much about how it functions. In fact, I have yet to find an item by item list of what a Buyer’s Agent does and also what a Seller’s Agent does. It would be incredibly useful to know this. Not only to know if my agent is doing all he should, but also to show what places like Redfin are not doing that I might wish they did do.

  • Anonymous

    Well, I found a list:

    http://en.wikipedia.org/wiki/Real_estate_agent

    “Services provided to buyer

    * A real estate brokerage (agency) attempts to do the following for the for buyers of real estate:
    o Finding real estate in accordance with the buyers needs, specifications, and affordability
    o Taking buyers to and showing them properties available for them to buy
    o When deemed appropriate, prescreening the buyers to ensure they are financially qualified to buy the properties shown
    * Negotiates price on behalf of the buyers and prepares standard real estate purchase contract by filling in the blanks in the contract form. The buyer’s agent acts as a fiduciary for the buyer.

    For both buyers and/or sellers

    * If the same agent represents both the buyer and the seller, the agent is typically considered a dual agent. Special laws/rules often apply to dual agents, especially in negotiating price.
    * Additionally, some real estate agents coordinate various aspects of the closing

    Real estate agent typically do not provide title service such as title search or title insurance, do not conduct surveys or formal appraisals of the property such as those required by lenders, and do not act as lawyers for the parties, although they may “coordinate” these activities with the appropriate specialists.

    Regardless of whether a real estate agent assists sellers or buyers of real estate, negotiation and financing skills are important.

    Some real estate brokers may be associated with loan officers who may help to finance buyers to make their purchase.”

    I have a feeling that this list is too small. If I can find a house that I want by myself from Redfin or similar, it seems like the only thing that I would not be able to do is go to see the house myself. And that is only because the system is set up so seller’s agents don’t show the property.

    I understand that if there are 50 people that want to see the house, it would be too much of a pain in the butt to show all of them. But it seems crazy to me for my seller’s agent to get 3% of the selling price for opening the door to a house and making sure I don’t steal anything inside.

    On another note, why is it a percentage anyway? Does it take a lot more work to show a $1mil house compared to a $100k house? Why should the agent get thousands of more dollars for the same amount of work?

    I am not being a smart ass or anything like that. I really don’t understand how or why this stuff works and the more I look at it, the stranger it seems to me from the outside.

  • http://www.bloggingsystems.com Paul Chaney

    My colleague Richard Nacht and I are in the process of writing a book on real estate blogging entitled Realty Blogging: How Real Estate Agents Can Boost Sales with Blog Marketing for McGraw-Hill publishing.

    This is a “first ever” book of its kind, in that it deals not only with the subject of real estate blogging, but in that it is the first book to deal exclusively about using blogs in a specific industry vertical.

    We are looking for prominent real estate bloggers to interview for the book and would like to extend an invitation Redfin to participate. It would give you a prime opportunity to talk about your blog and why you chose to enter the real estate end of the blogosphere now.

    If you’re interested, please contact me at pchaney at bloggingsystems dot com. Thanks!

  • anonymous

    Redfin Direct model does not work in the long term, reason is simple. Most builders pay 3.0/1.5 commission to buyers agent, but they only pay 1.0/0.5 if the buyers agent does not accompany the buyer on their first visit. Same thing will happen to resales. Listing agents will get clever and add a registration policy.