Scarlet Letters and Dying by the Sword

At BloodhoundBlog Unchained last Thursday, Greg Swann hosted Redfin for a debate on whether all the venture capital that has been poured into real estate is driving out the little guy.

Greg maintained that small brokers could flourish without having to spend millions on a website, because what counts in real estate is the personal connection an agent forms with his customer. An audience member observed that he told all his clients to use Redfin for search and to use his services to buy a home.

Greg is probably right. Redfin’s 2008 traffic grew nearly three times faster than our revenues, so there isn’t a direct correlation between people loving our site and loving our service, despite our best efforts to blend the two.

Even if the relationship between traffic and clients isn’t one-to-one, we still believe an increasing number of consumers will begin their home search — and their agent search too — online, and that we can use technology to monitor the quality and increase the efficiency of the experience.

But why summarize the argument when we can replay it? Without my quite realizing it, Marlow Harris recorded the event, so you can hear how real estate folks talk to one another when no one else is around…

We talk about scarlet letters, dying by the sword, and stumbling into what became our one true love, customer service. My only regret is that I referred to Redfin as initially “too rinky-dink” to run ads. It is true, we were a few guys in an apartment with a few months of cash when Zillow and Trulia launched nationwide sites. And even though we released map-based search first, we had done so building our own map, for Seattle only.

From that rinky-dink start, and because every other business model just seemed unbearable, Redfin happened onto the biggest-possible problem: to change the entire game, by building a home-buying application that binds online and personal interactions into one seamless experience.

We’re still trying to figure our when consumers want to use our site and they when want to talk to a human being, how we can work with the industry and change it for the better too. Sometimes now that seems too hard. Mostly it seems like a lot of fun.

Discussion

  • http://redmondrea.blogspot.com Ben

    At the end of the day, building a great search engine and being the standard for RE websites means that you are building a great brand in RE.

    The fact that most tech-savvy people post Redfin links shows how many people are using the service. If the costs to your company are marginal to get this mindshare then it will do you well in the long term because more people will come to you first.

    I think that RE agents put too much focus on what they call ‘service’. I don’t want my agent to do the property search for me. Redfin give me that technology. I don’t have an agent right now but I am looking on Redfin every day for a house. So it is very likely that I will choose Redfin to be an agent when the time comes.

    I think that a big opportunity for Redfin is in being the listing agent. The 15 low res photos on the MLS are a joke. Let people upload 100 high res photos of their property for sale. The marginal cost to Redfin is very small but the difference in marketing is huge. This plays to the strengths of the company very well I think.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    I love the idea of being able to support a super-listing for our own clients, or perhaps for home-seller… Great idea Ben!

  • http://jimrenshaw.com Jim

    Glenn,
    I think you should change your pricing model. I’ve been in the real estate industry from as an affiliate business. Your web site is the best in the industry and it seem like great customer service is a passion. Go for the client that appreciate your technology breakthroughs and great customer service. They will be willing to pay for this. My experience with discount broker is that they are terrible don’t put yourself in that category you and your company are better than that.

  • hatman

    Great service IS NOT just suggesting homes for buyers to see – that’s a virtual given for all realtors and means nothing. Great service STARTS when there are problems – like my last escrow, when the lender changed the terms to fund the loan at the last minute. The contract was only for $160,000, so the effort I put in to smooth things out probably wasn’t even the best use of my time from a purely monetary standpoint, but it sure made my customer happy.

    I totally respect Redfin, and there is a place for them in the market, but finding the home you want is only the beginning.

  • Howge

    Glenn,
    I really appreciate your final comment about “balance.” There’s an industry change that’s occuring which I think people forget about because they’re so focused on the market conditions rather than industry shifts. Malcolm Gladwell’s newest book Outliers http://malcolmgladwell.com/outliers/index.html shares stories of success of those who were positioned for success (and failure).

    I think Redfin is going to be one of those success stories! Thanks for your honest approach.

  • http://www.revealrealestate.com Claudia Gonella

    We’re watching from afar (Central America) and your work has been an inspiration to us. We’re also trying to balance the hard data / softer internation balance (albeit at a smaller scale). Your openness around your model and strategy is a great contribution to real estate internet entrepreneurs, and not just in the US.

  • jezebel

    “Redfin’s 2008 traffic grew nearly three times faster than our revenues, so there isn’t a direct correlation between people loving our site and loving our service…”

    As I’ve noted before, visitors grew faster than revenue, in part, because of Redfin’s droping out of the bottom of the market: no service on short sales, increased minimum transactions, ever-increasing minimum fees, etc. Redfin cannot grow with the market by ignoring entry-level price points, especially since most turnarounds are led by first-time buyers.

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  • http://www.housesforsalelists.com NIck

    thanks for this post. I really appreciate it, and look forward to those best practices! Keep up the good work!