Tag Archives: redfin

Redfin’s Glenn Kelman at Inman: 16 Markets by end of 2010

Redfin CEO Glenn Kelman told Inman Real Estate Connect attendees in San Francisco yesterday that his “customer first” brokerage is likely to be in 16 markets by yearend 2010. The site is currently in 12 markets and employs 100 agents.

Redfin’s apparent progress is seen by some as evidence that the advantage goes to brokerages that minimize their risk (namely, keeping agents around that underperform). With Redfin, agents are on salary and don’t do prospecting. Instead, they focus on customer service, and are paid, in part, based on satisfaction levels.

“We’ve been doubling every year,” and have had a good run for the last 12-16 months, despite the bad economy, said Kelman. The last two months, however, have been flat as tax incentives have expired. Kelman further noted that the Bay Area is Redfin’s most profitable market, although Washington D.C. and Los Angeles are the company’s largest revenue producers.

Redfin got in the national press recently because one of the 10 Russian spies had been employed as an agent. Kelman noted that the Boston-based agent was “a very dedicated person. It didn’t gibe with the person selling homes for us.”

Inman SF Connect: Redfin’s Glenn Kelman

One of the big new ideas of the consumer resolutions during the past few years has been Redfin, a real estate service that provides consumers with comprehensive home buying tools and pays real estate professionals flat fees with bonuses based on the quality of their service as judged by consumers.

The company, which is in seven markets, recently suffered a round of layoffs. There have been predictions among the real estate cognoscenti that the service would have to evolve to be more like a ZipRealty discount brokerage than a customer centric portal. And that would be bad in many ways, since discount brokerages not only provide less revenue for agents, but also have been the most seriously damnged part of the real estate ecosystem.

Founder and CEO Glenn Kelman, speaking at Inman SF Connect today, however, says the customer-centric discount model cannot change. “You have to stand for something real,” he says, noting that Redfin’s usage has grown by 200-300 percent in the past year, and sales are up 40 percent. He says the service is even in the black, but that’s probably temporary, since that reflects the summer buying season.

Kelman says that the embracement of several Web trends, especially Web-based user ratings for agents have been responsible for much of the growth and apparent stability in the business. “Nine months ago, we didn’t even have a picture of an agent on the site,” he noted. Now the site has pictures and solicits reviews, providing “full transparency” on good agents and bad agents.The site’s conversions “increased 160 percent” the day it added that feature, he said.

The Inman conference, of course, attracts a high percentage of agents. It isn’t necessarily a friendly forum for the Redfin experience, which has great customer tools but potentially undercuts agent revenue. One speaker said that her experience with Redfin has, in fact, been a bad one, with house buyers pretending not to be represented by RedFin so that the transaction process would go through like a full service sale.

Kelman apologized for the bad perception of the service, saying that it is “totally lame” if clients are not being upfront. “Sometimes they are scared that the home buyer or seller “is not going to like them,” he said. But looking at the bigger picture, “the industry is screwed up. There are too many agents, and not enough closing. Brokerages don’t have a brand that means anything. We came here to change the business.”

The focus on better customer service also results in better business for many agents,” he said. Agents associated with Redfin earn revenue from six to eight transactions a month, compared to the industry average of six transactions per year – although that number is based on just 23 agents currently exployed

He also says the company’s social media tools have been highly popular and effective. “Half come to the site via a home tour; 15 percent from asking people a question; 13 percent come from people saying they want to make an offer.

Real Estate Woes (Finally) Hit Zillow, RedFin

It is counter-intuitive that Web 2.0 real estate sites would continue to grow their audience and ad dollars while the industry “scrapes along the bottom” for years to come. The sites, though, still say they are growing.

“Fear, value-shopping, and curiosity are driving people in record volumes to our site,” noted Zillow CEO Rich Barton on the company blog. “The fact that we have never spent any money on advertising gives me tremendous confidence in our consumer-centric product vision and in the long-term leverage in our business model (free, open access funded by targeted, relevant advertising).”

The past few weeks, however, have finally let some of the air out of the tires –a delayed pattern also observed with automotive third party sites and dealers. The result: RedFin, a discount brokerage operating in eight markets, laid off 25 of 95 employees at the top of the month. And now, Zillow has laid off 35 of its 160 workers.

RedFin CEO Glenn Kelman said, on his company blog, that the company was doing fine until just after Labor Day. “We’ve fought like starving animals, and with some success: while industry-wide transaction volumes dropped 33 percent, we grew revenues by nearly 50 percent. Traffic grew more than 300 percent.”

Once the economic meltdown hit Wall Street, however, the “deals started to fall apart. As the stock market wiped out prospective down-payments, tours and offers dropped 30 percent,” said Kelman. “Transactions that were done came undone.” Kelman added, however, that he had no plans to close any of his offices.

Zillow’s Barton, for his part, said the company’s revenues are way up, but still fall short of profitability. He says he had “no choice but to securely batten down the hatches as we sail into a major economic storm.” He might eventually hire more ad salespeople, however. Meanwhile, Zillow rival Trulia, which has been running mean and lean, told Greg Swann of Bloodhound Realty that it has no layoff plans, and is looking to expand.