Archive for the ‘Expansion’ Category
January 28, 2011
Redfin opened for business in Denver today, the sixth market we’ve launched in the past twelve months, and our 16th overall. We hired the perfect person to run the business, a dog-rescuing, snowshoeing outdoors fanatic: Michelle Ackerman. She’s someone who totally personifies our values, of putting the customer first, and always telling the complete truth about the property, the market, the process.
It’s good to be in Denver. Imagining the Boulder mountain hippies who live to ski and camp, the tech pioneers who are trying to build a startup culture in a new place, I’ve always felt a deep affinity for the Denver area. I had a great night of the soul in the Denver airport because I missed the day’s last flight out while listening to a silly song at the gate. But we had to put Denver off to hunt bigger game: Washington DC, Los Angeles, Boston, San Diego, New York, Chicago.
This initial ring of megapolises took longer than we thought because we had to learn how to ramp traffic quickly for free, how to be smart about the neighborhoods where we could initially offer local service and where we had to rely on partners, how to get our costs down in markets where homes are more affordable.
We learned a lot, then, finally, we expanded a lot. That process is almost done: we’ll open a few more markets, then take a break in expansion for a year or two, to figure out the next set of optimizations needed before we launch another tier of markets.
Most of our growth in the meantime will come from gains in market-share: in every market, every year, our market-share has grown. As we get big enough to offer more local service in more neighborhoods within each market, we hope that share in each one reaches a tipping point. We’ll also offer new services to our customers.
But if you have to stop expanding somewhere, Denver would be a good stopping place. I still remember that when a friend lost a family member, her college roommate sang her a John Denver lullaby over the phone. And I’ve never forgotten Benjamin Kunkel’s description of Colorado, which I wrote down back when I still read literary magazines like Granta:
The first of the beautiful ordinary things I remember are the creek gabbling away in its bed and the smell of rained-on sage bringing out an unexpected sweetness from the land: thoughts of water in a dry place. But the thinness & dryness of the air on clear days — as of something brittle that would never break — was also thrilling…
Denver increases our listing database by about 4%, so now we cover about a third of the United States.
Please tell your friends about Redfin’s expansion to Denver. In the absence of any advertising, the Redfin cult is the only thing we have to start with. And thanks to the data & expansion team who carried our torch in covered wagons to a new little house on the prairie. You guys are awesome.
October 28, 2010
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.
Coverage Areas
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!
March 25, 2010
Big news Redfinnians! Today we launched a big upgrade to our service for home-sellers, began touring short sales, and opened Phoenix. It’s a lot to cover, so let’s dive right in!
The Listing Service Now Includes an In-Home Consultation, More Online Tools
Lets talk about the listing service first since that affects every market. The big problem we’ve had listing homes before is that we didn’t have enough agents to cover the territory, making it hard to see the house before we put it on the market. Since organizing agents into local teams last November and adding partners to cover the outlying areas, that’s all changed.
We can now visit every property, to see which rooms need to be spruced up before the house hits the market, and to price the place based on first-hand experience. Every agent has a list of local, reliable stagers, gardeners and handymen to get the place sparkling from top to toe. To underscore the personal responsibility each Redfin agent is taking for selling a listing, every yard sign will have that agent’s name on it, starting next week.
There’s no up-front fee on our listings, which I always thought was baloney anyway, and our pricing has changed just to match our buy-side offering: we charge 1.5% of the home price, with a $5,500 minimum. Before we charged $5,000 or $7,000, depending on the level of service. As always, our agents’ bonus depends on customer satisfaction, so the agent’s incentive will always be to make you happy, not just to sell the property at any price.
We still include professional photography with our service, which we think makes the biggest difference in online appeal, and we list the property all over the web, even on the sites that don’t have a direct MLS feed, including Craigslist, Trulia, Zillow and Realtor.com. We also re-designed our flyers to look really spiffy, and we’re printing them for the customer rather than sending you an electronic file to print yourself. And then we’re getting the word out through our network of field agents, who work with thousands of home-buyers every month.
As you’d expect from Redfin, we offer the best online tools for tracking website traffic to your listing and comparing it to the traffic to other listings in the neighborhood. We also are deploying an email survey system for asking other agents who show the property what their clients think about the property and the price, so you can fix problems fast.
And we’re not done with listings! We’ve got plenty of online tools in the works for home-sellers, so let us know in the comments if there’s something in particular you’d like to see. Already plenty of thanks is due to Marcelo Calbucci, a Seattle entrepreneur who gave us detailed feedback on why he chose a traditional agent in lieu of Redfin to sell his home last year. Thanks Marcelo. To learn more about our service for home-sellers, visit our site.
Short-Sale Tours
And at long last, Redfin is supporting tours for short sale properties. Short sales are properties selling for less than the owner owes the bank. Because one or usually two banks has to approve the sale, a short sale may take months to close or the banks may never approve it, preferring instead just to re-possess the house after the foreclosure auction.
For a long time, Redfin didn’t help our customers with short sales at all. But as the number of short sales proliferated, and as I overheard our front desk take more and more calls from customers wanting at least to see a few short-sale properties on their neighborhood tour, we decided we had to help.
So we’ve hired more field agents to handle the load, and we’re ready to tour short sales in Seattle, Portland, the Bay Area, Sacramento, LA, Atlanta and Phoenix. In the rest of our markets, we still have to hire more field agents but that shouldn’t take more than a month or so; we’ll keep you posted.
If our customers decide to write an offer on a short-sale property, we’ll still have to refer the deal to a partner, just because our agents in most markets still need to go through a bit more training on the ins and outs of working with different banks. The refund on a short-sale offer is the same as it is for all partners, 15%, and the partners go through the same vetting, surveying, interviewing process we put all partners through.
Thanks to Adam Doppelt and other customers for getting on our case to do the right thing with short sales. One note: in Phoenix, our own agents are handling short sales directly as well as our partners. There’s too many of ‘em down there for us to ignore.
Redfin Launches in the Valley of the Sun
Which brings us to Phoenix, the grave-yard of real estate brokers…
Yes, the market is in rough shape. Yes, competition in Phoenix is fierce. But we can take it. Redfin’s site will be, by far, the best real estate search site in Phoenix, if for no other reason than that we have data no one else does: beyond the comprehensive listing data we show about a home’s price history and days on market, Redfin is the first to display photos and details of homes that recently sold. In a market changing as fast as Phoenix, consumers will love getting near real-time updates on what’s selling and for how much, so we expect our traffic to take off there.
Hopefully, our agents can keep up. Marcus Fleming is running our local customer-service operation. Like Jeff Bale in Portland, Mark Reitman in Chicago, James Marks in Atlanta and Michael Daly in New York, Marcus combines the nitty-gritty customer-service experience of running a retail store — that will give you battle scars, believe me — with years running a real estate brokerage.
Marcus has already hired a few Redfin agents to help him cover the Valley of the Sun, but we’ve stopped trying to offer local expertise for the entire metropolitan area. Instead we rely on partners working for other brokerages to cover the areas we can’t reach ourselves. To make sure we never send a Redfin customer to a dingbat, Redfin’s Chelsea Mitchell and Shari Fox put every partner through the wringer, requiring each partner to have closed 15 transactions, and then surveying a year’s worth of past customers. As always, we publish the results of those surveys to our website.
The result: our partners include some of the best real estate agents in Phoenix, including the great Greg Swann of Bloodhound Blog, and his partner Cathleen Collins. I feel especially honored to have Greg join our program, not only because he is such a delightful blogger to follow, but because we have learned so much from him over the years. Every time I go to Phoenix, I talk to Greg, and every time I talk to Greg, I learn more about real estate.
Phew! That’s it! Another big launch is in the books. Thanks to all the Redfin folks who worked so hard to get this baby out the door.
February 24, 2010
Spread the word! Redfin’s finally expanding to Portland, and offering search for most of Western Oregon, which will increase the number of listings on our site by another 8%. We also finally got ‘round to offering x-out, which keeps track of all the properties you don’t want to click on again…
As John Cook recently speculated, Redfin has big plan growth plans. Portland is Redfin’s 11th market overall, and its opening follows closely on the December launch of Atlanta. Jeff Bale, Portland market manager, joins a long line of starry-eyed pied pipers — he is a youth minister — who at one point deep in their past managed a restaurant or small business. What a perfect combo!
So what stopped us from getting to Oregon earlier? Oregon Revised Statute 696.290, which states:
A real estate licensee shall not offer, promise, allow, give, pay or rebate, directly or indirectly, any part or share of the licensee’s commission or compensation arising or accruing from any real estate transaction
Translation: our commission refund is illegal in Oregon, and in eight other states. If a Redfin customer pays $500,000 for a house in Vancouver, Washington, we usually get $15,000 of that as a fee for our service, and give half of that, $7,500, to our customer. A mile across the river in Portland, we can’t give the customer any money directly.
All we can do in Portland is apply the refund to closing costs, lender permitting. This is usually worth a few thousand bucks. And then we donate the rest to one of four charities chosen by the customer:
Because of the Oregon law, the donation has to be in our name.
The first question people ask is what plausible consumer benefit such Oregon’s anti-rebate law could have. I’d always assumed the law was an artifact of early-20th-century Tammany Hall-style politics, or maybe even 1970’s Serpico-style corruption.
But the Oregon law was amended without comment as recently as 2005. Even better, Tennessee enacted a brand-new anti-rebate law in 2007, giving a Tennessee Association of Realtors spokesperson an opportunity to provide a modern rationale: “Unfortunately, rebates, in too many cases, take the form of cash incentives that could be used to lure consumers into risky real estate transactions.”
What? The money used to “lure” a buyer into a risky transaction comes from the buyer himself. A buyer can’t lure himself into a risky transaction, and certainly not more than a commission-based agent could.
Wait! There’s more: “In some cases,” the spokesperson continues, “you could see a rebate used as part of a down payment, which could amount to mortgage fraud.” It’s also possible to kill someone with a butter knife, but nobody is outlawing flatware. Fraud would only be possible if Redfin inflated the loan amount so as to pay a buyer under the table, prior to closing. In tens of thousands of transactions, Redfin and other brokerages notify the lender of a refund, and don’t allow that money to be used as a down payment. It isn’t fraud to charge a lower price.
Some states have stopped the silliness. In Kentucky, West Virginia, South Dakota and Montana, where real estate commissions created anti-rebate rules, the Department of Justice spent the past five years suing or threatening to sue so as to overturn these rules. But in the remaining nine anti-rebate states, the legislature has given anti-rebate rules the force of law, and the DoJ is powerless.
So that means it’s up you, the Oregon voter. Already in the frozen swamps of New Jersey last January, the legislature ignored the objections of the New Jersey Association of Realtors to pass a law overturning anti-rebate restrictions, which Governor Corzine signed before leaving office.
And then in 2007, Oregon Senator Jackie Winters sponsored an amendment to the anti-rebate law; she argued that since most of the original law was focused on preventing finder’s fees from going to out-of-state real estate agents, the language outlawing rebates to consumers should be dropped. The text of the amendment in its entirety was:
Nothing in subsection (1) of this section is intended to prevent an Oregon real estate broker or principal real estate broker from rebating or paying a share of the broker’s or principal broker’s commission resulting from a real estate transaction to a principal of the transaction.
Something so simple could never pass. The amendment died in the Business and Transportation committee, chaired by Rick Metsger. Nobody in Senator Metsger’s office is sure what happened to the amendment. To get it back on the calendar when the legislature meets again in the winter of 2011 – 2012, email your Oregon state senator with one simple message: repeal the anti-rebate law for real estate commissions.
(One final post-script: when we contacted Senator Winters office to ask why the 2007 amendment died, the staffer who answered the phone late on Tuesday night spoke with genuine warmth about Senator Metsger, even though the two senators are from different parties. It gives you hope that, even when they make mistakes, politicians can work things out.)
Credit for photo of Jackie Winters : Celine… on Flickr
December 17, 2009
The world’s best real estate brokerage came to Atlanta today, increasing the number of active listings available on Redfin’s site by a whopping 30%. But better than the Atlanta website is the team behind it, starting with the guy we hired to run our Atlanta business, James Marks.
From the moment James explained to us that he once ran a big customer-service team at Best Buy — and made sure every single car-radio installer set the clock — he had the job. James has been an Atlanta broker for six years. He has a gentle southern accent, a deep service ethic and the kind of humility you don’t see every day but what’s most striking about him is that he could probably destroy, seduce or charm any wild animal in a hand-to-hand encounter. He’s very resourceful and determined.
James will be offering our direct service in the Alpharetta, Buckhead, East Cobb, Intown, Perimeter, Suwanee and Woodstock areas. We’ll work with partners to serve West Cobb, Gwinnett, Peachtree City and Lake Lanier areas.
Redfin Invests in Local Teams
More important for our customers nationwide, we’re rolling out local real estate teams for every market we serve. This is a major service upgrade designed to give you the intimacy and personal service of a small team while still ensuring you always have someone to help you, seven days a week.
An agent runs each team, assisted by a coordinator for scheduling tours and handling the closing paperwork. Two or three field agents help you get into homes all over town on short notice. You work with the same folks throughout the process and one person — the agent — is responsible for your happiness. There’s technology behind the scenes to route service requests and phone calls to the right person on different days and at different times, but that’s only so it’s all simple for you.
It’s a big shift for us. The way it used to work, the agent was your main advocate, but you had to call into a Seattle call-center to schedule home tours. This allowed us to offer service every day of the week morning, noon and night. But it turns out local expertise was also really important to our customers.
So why didn’t we hire local teams before? Well, one reason is that we just didn’t have enough business. When you start out getting two or three offers per week for customers across Seattle, you don’t have enough business to hire a bunch of local teams. Getting local is easy for traditional brokers, because their agents are contractors, but Redfin hires employees.
Which brings us to the essential conundrum of an online brokerage. The online part scales very well, as you naturally want to bring the world’s greatest real estate search site to every market you can, as fast as you can. And the brokerage doesn’t scale so well, as it’s expensive to hire a team for every neighborhood, particularly when you’re finicky about quality and consistency.
But everything that works against you when you’re first starting out starts to tip the other way as you grow. Redfin serves Palo Alto or Newton or Santa Monica much better than we used to, just because our business has gotten big enough to support local teams that know those areas.
Of course, we still struggle when we open a new market, but even that’s gotten better, first of all because traffic in every new market grows faster than it did in the prior market. And second because we’ve stopped trying to take on an entire market on our own. Rather than covering all of Atlanta just with James’s team, we work with partner agents to handle the outlying areas so James can stay close to home.
We think teams is another big step toward becoming a mass-market service that blends the best of the traditional world with new technology, and a commitment to serving customers rather than chasing commissions.
What About All the Other Features?
As with every release, Redfin also included the usual grab-bag of goodies, starting with email alerts on recent past sales:
Whenever a property you’ve marked as a favorite sells, we’ll let you know by email. To get the photos, prices and other details for all the homes that sold in your neighborhood, just click “Email Me New Listings” in the box that appears top left:
Now visit My Redfin, click on Saved Searches, then click the “Email Options” link to ask to be notified when “Listings Are Sold.”
You can make the same adjustments for any listing alert.
We also began collecting reviews on the local lenders that our agents recommend, relying on Rob McGarty to publish them to our site. Over time, we’ll automate this, but for now you can trust to publish every review, good or bad, for every deal, just as we do with all of our agents:
We also link to other lender marketplaces, so you can keep our recommended lenders honest on price. We don’t make any money from our recommended lenders because we haven’t figured out an ethical way to do this. When and if we do, we’ll let you know.
And that’s the new website! Happy holidays, and thanks to the entire team that worked so hard to deliver this release. It’s gorgeous! As always, we’re excited to hear what you think.
