Our Shot at the Mass Market

Redfin started life as a cult for what my mom still likes to call “your little web friends.” But our goal has always been to become a religion, appealing to grandmas and truck-drivers and everyone in between too.

Unlimited Tours, Agent Choice

To hit the mass market, we’re upgrading today our home-buying service to offer free unlimited tours, and a choice of real estate agent, and support from that agent all along the way. We’re changing our home-selling service to offer in-home consultation, open houses, a big marketing blitz and tours for any interested buyers.

Real Estate Agent Chooser

50% Commission Refund

And we’re raising prices. Tours are now free — we used to charge $250 per tour –  but we’re changing the commission refund for buyers from 66% to 50% (existing customers relax, you pay the old price).  The average refund should drop from $10,000+ to nearly $8,000. If people use Redfin to sell one house and buy another, the total savings will still in most cases be about $20,000.

These are big changes, which we first tested in April, researched in June, and discussed as recently as September.  You can get all the details from our press release, or check out the new search features.

Having made these changes, we can’t imagine why anyone would choose a traditional agent over Redfin. We now offer just about every personal service offered by a traditional agent with the possible exception that we won’t preview homes on our own.

More Personal Service, More Online Service

But our goal still isn’t to be just like a traditional agent. It’s to be much better. We’re offering more personal service, but we’re also offering more online service too. The whole website changed to let you evaluate an agent, choose an agent, request home tours, ask questions. Hopefully this combines the personal & the online into one seamless offering.

Still Different from Other Brokerages, at a Molecular Level

And hopefully, this means we can change the game not just for a handful of digerati, but for everybody. Because more than ever that’s what we are here to do, to give consumers the information and tools to be a partner in the process, not a sales target.

This change makes us more like a traditional broker in a good way — we’re narrowing a competitive gap — but it doesn’t mean we’re becoming like everybody else. The difference between Redfin and traditional brokers is obvious and simple and huge and it has nothing to do with offering more tours:

  • Free the data: we publish data other brokers won’t. This makes our customers smarter and more powerful. Our site traffic has grown more than 300% year-over-year.
  • Ditch the sales-force: our customers come to us via the Web. We don’t have a sales-force. This is how we afford a commission refund of 50%.
  • Back off: we have always been a customer-service organization — a fanatical customer-service organization — not a sales machine. We pay agents on customer satisfaction, not commissions, so customers won’t feel pressured into a high price range. Our customers get the time & space to make their own decisions, and advice they can trust. Our customer satisfaction rate is 97%; the industry average is 85%.
  • Get results not relationships: our agents’ job isn’t to buy you dinner. It’s to get our customers the best deal. We measure our agents’ performance — obsessively — and our agents perform better in negotiations. For two straight years in every market we’ve measured, we’ve negotiated a bigger discount off list price, by about $3,500.

There’s nothing in our DNA about refusing to help people see a home they want to buy, or telling them to hold their questions until they’ve submitted an offer. But even though these limitations are obvious and stupid, we clung to them for a long time.

What Took Us So Long?

I’ve sometimes thought the most conservative organization in the world is a startup, which spends so much energy nurturing its delicate sense of self against naysayers and self-doubt that it can hardly admit mistakes.

We thought that changing a consumer service designed mostly on the back of a napkin in 2006 meant having to admit we were wrong (it does). And I thought for a long time that offering personal service meant we weren’t an online service (it doesn’t).

So in focus group after focus group, customers said they wanted more tours, they wanted to be able to call their agent, that the difference between a 50% or 66% refund didn’t matter much to them. But we continued to make identity-based decisions about what we could and could not do. Many meetings ended by my saying, “that’s not who we are.”

Change is Good

Then, Fred Wilson talked about how startups are a “process of going down lots of dark alleys only to find that they are dead ends… and trying another and another until you find the one paved with gold.”

CEO Tony Hsieh said that Zappos isn’t an e-commerce company or a shoe company but “a customer-service company that happens to sell shoes.”

Redfin Director Marc Singer said that consumer companies have to change constantly, because they’re listening to consumers constantly.

We were never at a dead-end — revenues grew more than 40%, even this year — and we’ve always been customer-service fanatics, but we have resisted thinking these changes through to their logical conclusion.

A Software Company Becomes a Consumer Company

The conclusion I’ve come to is this: that more than just upgrading our service, Redfin grew up today. We’re still using technology to change the game, but technology is just a means to an end, not an end in itself. This means we’re not a technology company, or a real estate company, but a consumer company.

We know this is a good change for our customers. We believe it’s a good change for us too. We’ve got another big change coming in the spring. But for now, let’s see what you think of what we’ve done so far.

Thanks to all our supporters, and all the folks at Redfin past and present who helped to launch the new service.

Discussion

  • jason

    The first change of many… the model is broken!

    • http://sandiego-movers.co Ourmanoliver

      The model is not broken, the markets just change. We are not like previous generations. We have no patience for tradition and we have no value for rituals. It all about keeping it new,

  • Erika

    I think this is great. I would have used redfin to buy my home, but I toured so many places it would have put me in the poorhouse.
    This is a much needed change that I hope produces a ton of business for you!

  • http://CondoDomain.com A. Longo

    Gorgeous upgrade to the website. Site is super-crisp. Totally jealous!

    • http://www.newhomesteps.com New home building guru

      I'm jealous as well. The refin site always looks fantastic.

  • Christopher

    Way to go on this release, it looks great and it’s a big step up for customers. Good work.

  • Laker

    I think you should modify this a little.
    While i understand that having many tours cost you time and therefore money. For this option i see why having to reduce the refund.
    But, say if i never dealt with you before, and i found a house that i like either by my own or by having 1 or 2 tours with you, i think you should still refund the 66%. If I happen to tour more than that, i see and understand the logic to cut the refund.
    There are still some companies that refund more than 50% and even 66%…

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  • Tom

    really like this model – so much simpler! get 50% back is huge, especially if you are dealing with a knowledgeable agent (this will be the key)
    commission paid on satisfaction, now that’s really brilliant!
    keep up the good work.

  • Shark

    I was hoping pool/no pool would be an option.

  • Margie

    I liked the upgrade til I tried to view the Bird’s Eye View map facing different directions. None of them work. I loved this feature on the old format.

  • polusfx

    Glenn, the site upgrade has broken something in a really weird way. It turns out that the favorites page references google – but if you’ve blocked google analytics (via Ad Blocker Plus), the page fails to load.

    Complete unintuitive that google analytics causes the Redfin favorites page to fail….

  • http://www.redfin.com Sasha

    @polusfx:

    Send me an e-mail at sasha.aickin at redfin, and we’ll try to figure out what’s going on. Google Analytics is on every one of our pages, and has been for almost two years, so it’s a bit odd that it would stop working with this upgrade.

    Please include as many details as possible, including what browser you use, what the page looks like, and why you think that Ad Blocker Plus is to blame.

  • Rick Oliver

    Site looks great, guys, thank you! I think you should take it one step further and charge for access to expanded information. Take everything everyone likes about Propertyshark.com and blend that into your UI and charge a yearly/monthly fee. Matching the kind of information Realtors have through title companies. I find myself constantly switching back and forth between redfin and propertyshark and think that your formula would be spectacular for both. Then you can at least tap into some money that won’t flow to you through commissions.

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  • http://www.cashbackrealty.com Cash back real estate

    I wish the banks would become more innovative on how they sell their inventory.

  • http://www.desertnewhomes.com frank

    As a broker, I’ve really liked the way Redfin’s website works and their customer service philosophy, It’s how I’ve always treated my clients, but when I looked to join RedFin as an agent, it’s virtually impossible to earn a decent living. Maybe that is why they only have 1 agent for all of Orange County. Too bad.

  • http://www.davidlosh.com David Losh

    Was this where I left my comment about Tim at the Seattle Bubble?

    OK you got my email address, website, but my comment is missing.

    The Tim guy should be getting $200K, up front, for adding credibility here.

  • Steve Racine

    Isn’t this called “Jumping The Shark”? Nice spin though. I actually think it is a good move to grow the company.

  • Amanda

    Website is acting weird for me today. When I try to view the map, I see large black lines all over the place.

  • Janae

    Couldn’t get maps to search and load today. :-)

  • http://blog.redfin.com/blog/author/matt Matt

    @Amanda and Janae: We’re on it. Looks like a problem with our mapping partner. Hopefully we can get it resolved ASAP. Thanks for letting us know.

  • http://www.FixerFixer.com David Losh

    Of course this was the place, I think, this is avery confusing site that seems to have some problems, but hey it’s cheap, with the cash back and all.

    I’m very curious about the negative comments that seem to disappear from this site and the positive spin that reappears in it’s place.

    I also went over to the forums to find some attorneys offering to write up deals for even less money, will those solicitations stay?

    Let me say again, the Tim guy from the Seattle Bubble at http://www.seattlebubble.com has brought you credibility. You should pay him up front. Be fair.

  • http://www.crosslandteam.com/blog Steve

    From: The Borg, Star Trek: The Next Generation episode “The Best of Both Worlds” (1990)

    “Strength is irrelevant. Resistance is futile. We wish to improve ourselves. We will add your biological and technological distinctiveness to our own. Your culture will adapt to service ours.”

    Is this Redfin speaking to the Traditional Realtor model, or vice versa?

  • http://blog.redfin.com/ Glenn Kelman

    We have never taken down a comment that I know of David. And we are paying Tim in part up front, in part based on performance, though nowhere near the amount you suggested. Not that he isn’t worth it, but we can’t afford it.

    We suggest you post solicitations for attorneys on Craigslist, which is after all an open marketplace for such services, but we will not delete them from Redfin Forums. We think we offer more guidance throughout the process than simply writing a purchase & sale agreement, but some people don’t want that level of service.

    @Steve: touche! I love Star Trek quotes of any kind.

  • http://www.flutterby.net/ Dan Lyke

    We bought with Redfin and could not have been happier. We like the company enough that I continue to have this blog in my news feed, even though I never ever ever want to buy a house again.

    However, this seems like you’re edging closer to a traditional broker. I think if we’d seen this fee structure we’d have found a good real estate attorney and had them do our deal for a flat structure rather than going through Redfin. We’d have had less hand-holding, but there’s something about going back to unlimited visits that turns the feel of this into a discount broker vibe rather than another way of doing business.

  • http://tinyurl.com/5ld3xy XYFloyd

    hey man i love your site.. your friend michael told me you were looking for a new way to earn some extra income online.

    i own an awesome website where you can make money online..most our users are making like 20-50 bucks a day.. with minimal work.. its pretty simple to do.. its actually so easy to do you won’t believe ill actually pay you to do it.. and its 100% free to sign up and try.

    another positive about my site unlike all the other sites.. i will pay you out daily.. so you earn 5 bucks in the first 5 minutes you work on my site.. request a payout and i will pay you out right then.. i guarantee no other sites like mine will pay out daily multiple times..

    i’d be glad to help you.. if you sign up..
    http://tinyurl.com/5htokc

  • http://blog.redfin.com/ Glenn Kelman

    Hi Dan,
    I know what you mean about unlimited tours, and I won’t repeat what we argued above, but at the end of the day we just couldn’t understand how being pro-consumer or even online-focused precluded us from offering tours. We aren’t trying to offer the same service but at a lower price as a discounter would; we’re trying to offer a fundamentally better service at a lower price. What makes us better is how we share information throughout the process, increasingly through the use of online tools. What makes us less expensive is primarily that we don’t have a salesforce. We obtain clients exclusively through our website.

  • nathan

    Did you study ziprealty’s model to figure out your latest evolution? Maybe you should to figure out your next move because you’re repeating history. Not that ziprealty has it right, but what you’re doing is not unique and has been tried.

  • http://blog.redfin.com/ Glenn Kelman

    Nathan, we respect Zip for having built a $100M real estate business. But we think the difference between Zip and Redfin isn’t whether we offer tours or not, but in how we treat our clients. Zip employs a sales-force to solicit everyone who uses their site to become a client. It draws people to its site through advertising. Its agents are paid in part on commission. Zip may in some ways be more efficient but it isn’t different from other brokers in terms of how it treats it clients.

    Redfin aspires to be different because our agents aren’t sales-people, and do not spend any time soliciting clients. Clients get the space to come to us when they’re ready. Aside from an NPR sponsorship in Boston that didn’t work out, we do not run ads of any kind. We spend our money on R&D, not on sales & marketing. We seek to aggressively publish data on our site that anyone can freely access, so clients can become more empowered and self-sufficient. Our agents earn a bonus that varies depending on how happy the client is, not how much he pays.

  • nathan

    Hello Glenn,

    Got it. Those are material differences between how Redfin and ziprealty end up working with clients. However, in the end, it’s the clients who choose to work with a ziprealty agent, a cb agent or a redfin agent and not the other way around. The clients are choosing based on their comfort level with the person at the other end of the phone, email, text, blog, etc…That’s not unique to ziprealty, redfin or any other company…

    Clients typically are most satisfied when they get the best representation from their agent which is a combination of real estate expertise, negotitation skills, responsiveness and listening to their needs. If you can demonstrate that redfin’s agents are on average superior to the rest of the industry in these areas then you’re onto something. Otherwise, your model is a different spin on lead generation and conversion and that’s not neccessarily better than what’s out there.

    Nathan

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  • mccamman

    Your San Diego agent has NOT returned my email requests. You are about to lose me as a potential customer.
    Stephen McCamman
    San Diego, Ca.

  • http://blog.redfin.com/ Glenn Kelman

    Hi Stephen, we’ll get right on it. I just sent you a note with my telephone number so you can contact me directly.
    Regards, Glenn

    Glenn Kelman, Redfin CEO

  • Chuck

    Service; you got it. Honesty, transparency, and lots of good information. That is what I feel I have been getting with Redfin and Trevor. We started working with him about a month ago and I have been really pleased. He has shared information I NEVER EVER got from real estate agents from the past 3 houses I bought.
    I don’t mind that the fee is 50% and I will gladly pay it. My chief complaint with past houses I purchased is that my so-called “buyer’s agents” were’t much of a buyer’s agent because they didn’t do anything to help me get the lowest price (yet fair and resonable) for the house. Yet I still paid those agents a 3% commission. And for what? Filling out a buy-sell aggreement; big deal.
    When I buy a house, I want to know what the real, fair market value is on it. I don’t care about the so-called comps the seller’s agent put together to justify the asking price (give me a break). With Redfin I feel like I have access to real information (not just data) and that my agent (Trevor) is working with me to find the right house at the right price. I don’t mind paying for something if I feel like I’m actually getting something. I feel that with Redfin and Trevor I get the excellent customer service Glenn mentions. Those of you that are whining that Redfin’s changes somehow make them the same as everything else out there, well…I am not sure what it is you are looking for. To me they are very, very different to anything I’ve seen or experienced; honest, transparent, and forthcoming with loads of information.

  • raul

    i agree with the comment regarding the faulty “birdseye” view… a very important feature, so, FIX IT QUICK.

  • http://www.movinghelp.com Kevin

    Good post on a company that is willing to keep the tranformational process going. Companies need to be more like organisms and less like traditional organizations.

    • http://www.americarealtyonline.com CommissionRebate

      I agree…I think a 50% commission rebate is great deal for customers.

  • http://flatraterealestate.com Craig Davidenko

    Glenn, I would like to talk to you about your approach of branding and marketing. The best domain name is a name that explain what you do. I feel that with the right name and approach Redfin can redefine real estate for EVERYONE! Please feel free to e-mail me. I have thoughts of contacting a BLUECHIP real estate company about this platform but would like to talk to you first!

  • jim young

    Have eagerly followed your company and would suggest you integrate an old guys’ thinking into your etherial web based world. The preponderance of the active clients in any market, particularily given the dismal economic malaise that appears to be pandemic, are in a word… mature.

    You might consider a devolutionary drft slightly to the center.

    While the certitude you bring to the table is admirable, unless results are forthcoming being right doesn’t mean a great deal.

    My position is: well done is better than well said. A bit adamantine perhaps but sound if profit is the motive.

    I can help.

    Jim Young

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  • http://www.FixerFixer.com David Losh

    thanks for the link back. yes glen you can afford it. pay the guy.

    yes i did leave out the part about the glen guy trying to insinuate a relationship with expedia, along with my personal belief that it was an exuberant remark. in my opinion any one who promotes the idea expedia is good for the consumer is a spokes person. i just shortened that rant into calling glen a spokes person.

    i came here by way of http://www.seattlebubble.com you owe the tim guy a whole bunch of money for getting people here.
    if it weren’t for him i would have never looked.

    Oh yea, as an aside, you most certainly did delete my original comment. Lies no matter how loudly they are shouted will never be a truth.

    Pay the Tim guy.

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  • http://de.gameswatch.com/shot-online/ Shot Online

    Cool Post – I like :)
    Thx

  • http://www.intelligentbuyer.com Buyer Rebate

    Great attitude. I think all of these changes were much needed. The unlimited tours makes sense, even the raising of prices to 50% makes sense given the recession induced reduction in home prices. Its great to see you guys succeeding.

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