More big news! A few days after launching clustering and an interactive guide to key escrow documents, Redfin expanded our search site to Las Vegas and Austin this morning, increasing the number of markets we cover from 12 to 14, and increasing the number of homes for sale on Redfin’s site by 5.1%.
Giving regular people in Las Vegas and Austin the full monty, with direct access to all the real estate information that had previously been limited to brokers, will make consumers in those markets a lot more self-sufficient.
Are there any other sites in Las Vegas or Austin that show all the data on all the homes for sale, without registering you as a sales lead? We’re not sure. This advantage is especially acute in Austin and Las Vegas: in both towns, Redfin can show consumers all the photos of all the past sales.
How Can Redfin Survive in the Desert?
Our expansion to Las Vegas and Austin has profound implications for Redfin’s business model too. These arid climates would once have been deadly for Redfin, because our revenues vary with home prices but our costs historically haven’t.
And boy do the revenues vary. In Las Vegas, the median home price is around $130,000; in Austin it’s $230,000. In our first expansion market, San Francisco, the median price is now $460,000. We figure if we can make it in Las Vegas, we can make it almost anywhere.
To adapt to this environment, we rely more on partner agents at other brokerages and less on our own real estate agents. As the business builds, we’ll also hire more of our own agents, tying our local costs to local home prices and local average salaries.
In the meantime, we carefully interview, select and train each partner – 14 new ones in all — surveying all their clients from the last 18 months and posting the results to our website. As with our own agents, the pay to our partners increases with customer satisfaction. And as with customers of our own agents, customers of our partners get a refund, albeit 15% of the commission instead of 50%.
Even though Redfin’s revenues are lower on each partner transaction, the profit margins are higher, and the values behind the service are the same. The tools our partners use to work with Redfin allow us to monitor customer satisfaction throughout the transaction, and the agent’s Redfin profile gives the consumer complete transparency on the agent’s performance.
The Partner Business Makes the Direct Business Better
Does this mean that Redfin’s business will become more partner-oriented as we expand? It does. But it doesn’t mean we’ll give up the direct business, which will always generate the lion’s share of Redfin’s revenue.
What makes our partner business successful is our direct business. We know what to look for in a good partner agent only because we are brokers and agents ourselves. The tools we are building for ourselves — to arrange home tours, collaborate on the escrow process, prepare comparative market analyses, promote listings and electronically sign documents – are part of what will set our partners’ service apart.
And our partners make our brokerage better, too, taking on clients we can’t profitably serve, helping us out when we’re busy and providing local service when the market’s too big for us to cover. Real estate is such an up-and-down, hyper-local business, it’s hard to make it work 100% on your own. No brokerage is an island.
Redfin will probably never launch a new market the way we used to, hiring one guy to drive all over town. And we’ll probably never go into a market where we don’t plan on offering direct and partner service. Instead, the two business models will work together.
In Austin for now, Redfin’s search site covers all of Bastrop, Hays, Travis, and Williamson counties, with agents helping people buy and sell homes in Georgetown, Round Rock, Cedar Park, Austin, Lakeway, and Dripping Springs.
In Las Vegas, Redfin’s search site covers both Clark and Nye counties. Agents are available to represent Redfin users in the North Las Vegas Valley communities of Aliante, Eldorado and Iron Mountain Ranch, as well as the Las Vegas Strip and the southern communities of Spring Valley, Henderson and Boulder City.
Please tell your friends in Austin and Vegas all about Redfin’s arrival in town!