The UrbanTurf Interview with the Founder of Redfin

• July 15, 2010
• 5 Comments

by Joe Marhamati

UrbanTurf recently sat down with Redfin founder Glenn Kelman and the online brokerage’s DC manager Karen Krupsaw to talk about Redfin and get their thoughts on the future of traditional real estate agencies and how technology has changed the home buying process.

For those that don’t know, Redfin is an online real estate brokerage that has become popular because it gives buyers back a portion of the commission fees normally paid to real estate agents. Redfin currently operates in Atlanta, Boston, Chicago, Los Angeles, Orange County, Portland, Phoenix, Sacramento, San Diego, San Francisco Bay, Seattle and DC.

1) Glenn, in a recent interview, you described Redfin as the “E*TRADE of real estate.” What did you mean by that?

Redfin is a real estate tool that like E*TRADE offers users a wealth of data, which allows them to make informed decisions. The traditional model in any kind of investment is that you hire someone else to do the legwork, sift through the information, and help you make a final call. But with all the information available today and the unique software tools available to integrate them, our model has been very successful.

2) In what cities are you finding the Redfin model most successful?

Redfin tends to do well in cities with young, well educated, techy populations. DC, in particular, has seen widespread usage. With an increasingly tech savvy group of young professionals looking at buying their first home, many are impressed with Redfin’s interface, and customer focused approach. As more and more people find out about Redfin and what we offer, the chance to expand to other cities where there is a strong demand for such a service will only grow. I’m thinking specifically of Las Vegas, Philadelphia, and parts of New Jersey.

3) Aside from Redfin, what facets of the internet do you believe have most revolutionized home buying?

The internet has created something of a revolution in home buying. Channels of information that were previously hidden are now publically available. From data about crime to public home records, home values and past sale prices, and even MLS listings themselves, there’s virtually nothing that real estate agents know that home buyers cannot easily access. This has led to a paradigm shift, where savvy buyers can often narrow down their options more precisely themselves.

4) What was your greatest challenge in making Redfin a successful competitor with large, heavily marketed real estate agencies?

Redfin has never had the mindset of facing off against traditional real estate agencies. We believe that they’re here to stay and will continue to have their niche for the foreseeable future. We’re focused on tailoring our services to our clients, and most importantly, centering our business model on customer satisfaction. Our agents are not paid commissions, but rather are paid according to the feedback they get from our customers. They could make a great sale, but if the feedback is subpar or worse they’ll get paid commensurately. This means that we have a very different business model from traditional real estate agencies, but also that there is strong demand for what we offer, and even without any significant advertising budget we are growing and becoming increasingly competitive in the marketplace.

5) Apart from the cost savings, what do you see as the greatest advantage to using Redfin?

The customer-centered approach without a doubt. Redfin’s philosophy is that if our customers are happy then they’re going to recommend us, so everything we do is tailored to the home buyer. Our compensation structure facilitates positive customer experiences and leads to a home buying process that is not fraught with pressure and unresponsiveness, but open communication and an understanding that this is one of the biggest decisions in the life of the average person.

6) With users doing most of the upfront work of finding the places that interest them, and most of Redfin’s legwork requiring no physical space to purchase or rent, how does the bottom line of Redfin compare to traditional real estate agencies?

Redfin is doing well financially. Our profits are continuing to grow and expansion is inevitable. However, our bottom line is not all that matters right now. Neither is rapid expansion. We believe that the key to long-term success for Redfin is producing positive results for our customers, and concentrating our efforts on reinvesting in tools and features that benefit their decision-making process.

7) What is the first piece of advice you’d give to a buyer in the market for his/her first home?

Don’t jump into a home purchase without being sure. Young people often hear that they’re throwing their money away if they rent, which can drive them to purchase a home when they’re not ready, or to find themselves in a property that isn’t right for them. Taking the time to make an informed decision about the biggest purchase of your life is important, and integral to feeling completely comfortable with your new home.

This article originally published at http://dc.urbanturf.com/articles/blog/the_urbanturf_interview_with_the_founder_of_redfin/2269

5 Comments

1. david losh said at 9:47 pm on Friday July 16, 2010:

   Glenn, Glenn, Glenn,

   This link was on the Seattle Bubble site at http://www.SeattleBubble.com

   You owe the Tim guy about $250K the way I figure it, and if he continues with you, you’ll owe him much more.

   Let’s be clear, because E*Trade is a bit of a stretch. redfin was created to sell debt instruments in the form of mortgages. The business model is more of a Wal Mart of Real Estate. By shifting the liability onto the buyer beware your team is free to do more deals.

   I was touched by the, be sure before you buy, and return to the redfin site often to know you are doing the right thing. After all, you can always trust a sales person to set you straight.

   The real deal is that Real Estate is a 24/7 business. It takes experience to know what the value of property is. There are a very few people who actually live the business.

   If you want to make a good purchase on a property search out a local Real Estate professional. You will usually find them in the field working. Find them, use them for guidance, and leave the E*Trading to Charles Scwabb.

1. s said at 10:19 am on Sunday July 18, 2010:

   RE pro’s like car salesmen, had a stranglehold in information and we buyers resent them.
   sites like redfin arm buyers with information. there will always be a need for the personal interaction and guidance that RE pros can give, but they need to adapt or become rare.

1. Tom A. said at 11:07 am on Tuesday July 20, 2010:

   The redfin site seems to have disappeared.  not good for a mostly internet-based company!

1. ash said at 8:32 pm on Thursday July 22, 2010:

   In regards to David Losh’s obviously biased commentary: David, David, David—-it would be nice if you disclosed that you were a real estate agent, although it is not difficult to surmise given your skewed commentary. Redfin=Wal-Mart?? What a laughable analogy. Surely you can do better than that? The power should belong to the consumer—not you and your overinflated ilk. Real estate agents should not get 6% total of any transaction—it is far too much for what amounts to high school level work. It does not take serious education to become a real estate agent.  You are frightened and rightfully so. You reek of fear of the Redfin model. Just like travel agents, the restructuring of your industry is inevitable. The time is coming, regardless of your obfuscations. You may succeed, but the the bulk of agents will suffer their proper demise—-which is appropriate. Paying obscene sums for literally only days of work requiring no true skill is wrong. Get your cash while you can. It will evaporate as consumers gain their rightful place in the real estate hierarchy.

1. david losh said at 8:59 pm on Monday August 16, 2010:

   In this era of transparency, and that the internet is all powerful, you should have Googled me to know I am not currently a Real Estate agent because the Real Estate market is dead.
   This has nothing to do with the Wal Mart Real Estate business model of a redfin, it has to do with macro economics.
   I can debate you point by point on travel agents, seeing how the consumer now pays more, and gets much less, in service now that the air lines are in charge of ticket sales.
   Before commenting you should research.
   Glenn, pay Tim what you owe him so he can get back to the good work he does.
   Thanks

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