I have taken a fictional model based on Redfin’s set-up and added service and marketing to the equation, then looked at the volume it would take for one team to be profitable, and the numbers are realistically achievable.

The trick is to capture the consumers trust that service is not sacrificed — if a company like Redfin can compete on the service end by doing far more volume than the average agent, in a team effort bolstered by technology, and can do it at a significantly lower cost, then when the market turns consumers ought to flock to such an offering.

However, price speaks for itself but service has to be proven and marketed. Once consumers see they can get comparable or better service at a lower price, it’s a nobrainer — then it’s a matter of creating great, efficient teams that can produce huge amounts of volume. Build it right and they will come. The opportunity for Redfin is to position itself not as a discount model, but rather a superior service model at a lower price.

Hard to do, but not impossible.

As a non-Redfin’er agent/broker, I can vouch that at least in the DC area, the Redfin agents are in NO WAY NEWBIES.

Just last week, one of their agents submitted on a listing that I had. He was responsive. Knew how to negotiate, and he used technology to produce the cleanest of the 5 contracts that I got that day.

I wish people would focus their energy on sucky agents and weekend warriors, instead of immediately equating “discount” with “inexperience.”

As for the extra tours, I would imagine that they might consider hiring newer employees to do some high volume TWL “Taxi-ing With License.” Just as you might go to several Open Houses without your agent, sometimes the goal is to crank out 20-40 homes, and for that you don’t need an experienced agent.

Also this notion of having a high # of agents is hogwash. Many of the local big companies will try to fill out their company photo to huff and puff and look big. In reality only 5-10% of them actually do a sale a month.

Frank
Broker FranklyRealty.com (Va/DC)

Anyhow, I did some math on your Redfin Select program. On a $500,000 house the difference is about $2500. So the customer would still be better with the alacarte service if they were going to do 12 or fewer tours right?

While the $250 sounds reasonable, I still suspect that buyers will STILL want to save that $250. I’m happy to hear that Redfin is cracking down on buyers that lie to listing agents (saying they have no agent) to get a “free viewing.” Kudos to you on that.

Frank
Broker FranklyRealty.com (Virginia/DC)

ps. Also is that $250 paid at closing (deducted) or must they pay up front? Ie if they never buy a home, are they still on the hook for the $250. If not, might be a good way to get a free ride to work a couple times a week.