Full disclosure: The Tim was employed by Redfin, and is currently a shareholder.
Read the series intro: Alternative Brokerages Flourishing Around Seattle
First up in our in-depth series on alternative brokerages around Seattle is the technology-powered real estate brokerage Redfin.
Redfin was started here in Seattle in 2004, and currently serves buyers and sellers in 22 states across the country. They were the first to build map-based real estate search, a feature that most home buyers now take for granted.
I sent the series Q&A to Redfin CEO Glenn Kelman. His answers are presented un-edited below.
What is the single most important advantage your brokerage offers vs. using a traditional agent?
Redfin Agent is paid to be on your side, earning a salary, benefits and a bonus based on customer satisfaction. To gauge customer satisfaction, Redfin surveys every customer, and publishes every result. In thousands of detailed, local reviews, you can see for yourself how carefully we work to find our clients the right home, not just any home. The point of this whole system is to make sure you can relax around us, and make better decisions so you can get a better place to live.
In 200 words or less, what factors make your brokerage different from a traditional brokerage? e.g. – Cost, services offered, agent compensation, etc.
Full Service: first, let’s explain what isn’t different. A Redfin Agent is a full-service agent, who gets to know you over coffee and walking through houses. Technology is an enhancement, not a replacement, for personal service. We’ll host you on as many home tours as you want, with no pressure. And we hire the best of the best: a Redfin Agent earns between the 80th and 90th percentile for all Seattle-area full-time agents.
Accountability: as we just discussed, a Redfin Agent is paid differently, based on comprehensive public reviews. As the CEO, I am ultimately the one accountable for the service we give every customer. My email address is glenn (at) redfin (dot) com.
Technology: we use technology at every step to make the process easier and more informed, with on-the-spot, iPhone-scheduled home tours; a Deal Room to guide consumers through the escrow process; a Scouting Report on the other agent’s negotiating history; a Listing Dashboard for your own listing. Technology helps us get buyers into homes faster, and drives more traffic to the listings we’re hired to sell.
Who is your typical client? e.g. – Do you focus more on buyers or sellers, certain types of homes, certain price ranges, certain geographies, etc.?
We started out working primarily with home-buyers from the technology industry, under 35, buying expensive properties, living in urban areas. That has almost completely changed, not only because we’ve broadened our demographic, but because our demographic has, over the years, broadened itself: our 35-year old customers are now in their 40s. We now get a substantial amount of business via referral, not just through our online tools, and these customers are more diverse, too.
Our business is now larger in the suburbs than the cities. Most important, our listing business is doubling every year, aided in part by a seller’s market, in part by the fact that a Redfin yard sign just tends to beget more yard signs.
What is your fee structure? How much do buyers pay, how much do sellers pay?
We sell homes for 1.5% of the final sales price, in less time for more money, mostly because we can promote our listings on our own website and mobile tools. A Redfin Agent visits your home to discuss pricing and staging, then we pay for professional photography and all other marketing costs.
The amount a buyer saves varies based on the list price of the home at the time of an offer. For a $500,000 home, it is roughly $5,000. A $200,000-listing offers no fee refund whatsoever, while a $1,000,000-listing refunds nearly half our fee.
For every home listed on our site, we show the precise amount a buyer would save using a Redfin Agent; this amount does not change regardless of the final home price. This means that for any given home, you’ll know with certainty how much you’ll save in fees.
Is there anything else you would like to share about your brokerage?
Redfin has now helped thousands of Seattle-area families buy or sell a home. We are a mission-driven business, founded and run to make real estate better for consumers. We are very grateful for the broad support of the Seattle community, among consumers and real estate professionals alike.