Ardell’s comment, which I didn’t notice until now, reminded me that this policy is probably no longer being actively enforced, not for any malicious reasons, but because after the early days the situation just wasn’t really coming up. I’ll check to make sure we are sensitive to cases where it seems obvious that a buyer had been working with another agent.

One of our customer satisfaction survey questions is about whether a customer had been recently working with a particular agent prior to working with us, so we have a pretty good sense that our customers aren’t taking traditional agents for a ride before buying through us.

If there’s a deal where that’s not the case, we’d like to know about it.

From discussion here and on ARDELL’s blog I’m reminded of one of my favorite Machiavelli quotes (from The Prince). Perhaps you’ll find inspiration in it as well:

“there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new”

Did you ever get a response to your questions? I’m just curious. I’m thinking about selling my home but I don’t know who to list it with.

Does anyone have any advice for me?

Did you ever get a response to your questions? I’m just curious. I’m thinking about selling my home but I don’t know who to list it with.

Does anyone have any advice for me?

Redfin has access to information about the number of listings in San Francisco, but we choose not to share that information with the public. We have been remarkably candid about our business thus far — more candid than any other privately held business in the industry — and just have to draw the line somewhere.

But you are right, Redfin loses money. We are glad that we lost less money than we had planned to lose, but we still lost money in 2006. It will be a long, hard fight to build a profitable business.

We launched Redfin Direct in February, originally with one agent. Now we employ more agents, but most of those started in the fall, when our revenues had really started to grow.

If you were to take our revenues for the last three months and assume we can continue to perform just at that level for a year, annual revenues would be much, much higher than the number you calculate.

The real issue is whether we can continue to grow. Our real estate operation is profitable, but our business loses money overall because of the engineers we have to pay. Our plan is to have the real estate operation expand until it can pay for the engineers. It will take another year and more, but all the people who work here are painfully aware of the risks — most startups fail. Nothing ventured, nothing gained.

Happy holidays to all of you!

Glenn

You don’t have access to things like how many listings Redfin has in San Francisco? That seems unlikely.

Also you stated: “We have approximately 350 pending or closed transactions, with commission refunds/savings worth over $3 million.”

What time period does this cover? Let’s assume it’s since Redfin officially launched (almost a year ago, correct?).

If customers have saved 3 million and customers get 67% of the revenue than by extrapolation, total commission revenue is $4,477,612 of which Redfin gets 33% or $1,477,611.

Stated alternatively Redfin has gross revenue of $1,477,611. That’s not a whole heck of a lot considering the number of employee’s Redfin has, the overhead the technology expenses, the marketing budget (see google ads).

One traditional agent operating with an assistant taking in this much in commission would be a “success.” Not sure the same can be sade of a fairly large organization (there are at least 20 folks working over there full-time aren’t there?)

We do not report revenues segmented by market or deal type but most of our revenues come from buyers not sellers.

We have done more deals in Seattle, but make more money from each deal in San Francisco. The San Francisco business is now growing faster than the Seattle business.

Scott’s comments about the number of homes most people need to see may be true of the industry generally, but the California Association of Realtors last year published a report showing that Internet-savvy buyers see far fewer homes than traditional buyers.

And our customers are taking advantage of open houses and the free tour. They also don’t seem to have a problem paying for additional tours, which in the grand scheme of things don’t cost them that much.

I could say more but too much has been said already… thanks for the comments folks.

You write:

“We would not have been as successful as we are if we tolerated discrimination against our clients.”

Care to quantify that success? How many listings does Redfin have in San Francisco, for example?

Redfin particularly concerns me on two fronts. First, their presumptuous attitude that I should do their work for them, and they get to walk away as the “discount hero” while not providing full service, buyer representation in the home selection process, or knowledge about the specific property and other properties that may be better matches for the buyer. They force upstanding listing agents into a situation where we either have to knuckle under and say “yes, we’ll do your work for you only because we want the best for our sellers and not because you are compensating us for doing your work for you”, or else we have to say “your client, you do the work that you should do” but then have to look bad to our sellers since they very understandably don’t care where and how the buyers get there. Redfin in effect discounts the entire industry, not just their side of the deal. They give a cut back to buyers thus reducing the buyer’s agent side commission, and they reduce the per-hour income for the listing agents by unilaterally forcing more work upon them.

Second, their “solutions” to the complaints lodged against them lack a sense of reality and are definitely more PR fluff than anything. For instance, their new offer for free home tours is of little real value. That offer is limited to a tour of up to three hours. Few buyers actually decide upon their home in one rushed tour of several homes. The majority of buyers take weeks or even months to decide upon a home, and on average (per NAR) they look at 10 homes. In my experience those 10 homes can frequently be spread across different days of 1 or 2 homes per day as new ones come on the market or as buyers learn more and hone in on their priorities by close work with me as their agent. And of course that’s just the average, with many people needing to look at more than 10 homes, and I provide that service for as long as they need. I predict that once the first 3 hour tour gets used up by Redfin buyers, those buyers will then revert to the same behaviors as before instead of letting tangible costs start racking up when Redfin starts directly charging them afterwards. This is a disservice to the buyers either way: if they actually use the Redfin additional cost tours later they will likely feel rushed and not look at as many homes as they should, or else feel rushed in the ones they are looking at. If they use the uncompensated services of others instead, then they are back to the underlying ethical problems of the Redfin model.

Frankly, Redfin should share some of that additional “discount” with their extended team who helped make their business happen: the non-Redfin listing agents or the improperly used non-Redfin buyer’s agents.