Redfin, the Seattle-based real estate company that just announced the world’s first online real estate brokerage profits, may be shattering the traditional real estate business model. In hindsight it seems obvious, but for some reason it took this long for a comprehensive web-based service to be built that offers all the power of a high-commission real estate agent to individuals in the home, free to try. It’s the first successful application of an internet era D.I.Y model that allows people to take the helm of their own professional real estate affairs.
Redfin’s progressive new approach to real estate, offering a customer-focused team of real estate agents, as well as an array of online tools, aims to make buying or selling your own home easier. Given the discouraging state of real estate today, Redfin’s recent success is an audacious rebuke to naysayers of their populist approach.
“The question with Redfin has always been whether Redfin can make money while delivering fantastic service and saving consumers thousands in commissions,” said Redfin CEO Glenn Kelman. “Well, in the worst real estate market in modern history, with our agents spending most of their time on work-intensive sales of distressed properties, we’ve built a stronger business than ever… For a company that many predicted would never make money, in an industry as battered as ours, Redfin’s first monthly profit is a big milestone.”
The formula they have hit on is not an easy one to finesse; countless online companies world-wide are in a fit trying to nail down a revenue model for their web market, and many are banging their heads against a wall wondering if there is a formula waiting to come out. But if it’s out there, it will be found by someone, and it seems the real estate market has been ailing for such a model, one that even may help inspire confidence in the buyer’s market, and cut out extra business costs to the consumer.
Redfin.com is the only major search site to feature listings direct from broker databases as well as for-sale-by-owner and foreclosure properties from across the Internet. It offers clients free unlimited home tours and one-on-one agent guidance during the home search, and allows clients to review their agents on the site. The agents are paid customer-satisfaction bonuses, not commissions, and the company surveys every client, publishing the surveys as well as details on the agent’s negotiating performance and deal history. It’s an unprecedented level of customer-focused service in the industry, and it has provided Redfin with a ballooning market share and a 300+% year-over-year growth in unique visitors, making them the fastest-growing major real estate website in the U.S.
It’s also nice that the folks at Redfin are interested in helping their fellow businesses, having organized The Naked Truth, a Seattle even offering pragmatic advice for startups, where industry participants are committed to share actual metrics from their businesses as a benchmark to other entrepreneurs evaluating different revenue models. Ultra-transparency and customer-focused revenue models? It’s hard not to like this company. If I ever buy a house, I’m looking forward to the search interface.