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 https://dc.urbanturf.com/articles/blog/the_urbanturf_interview_with_the_founder_of_redfin/2269.
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