Our Shot at the Mass Market

Engineering at Redfin

Our Shot at the Mass Market

Redfin started life as a cult for what my mom still likes to call “your little web friends.” But our goal has always been to become a religion, appealing to grandmas and truck-drivers and everyone in between too.

Unlimited Tours, Agent Choice

To hit the mass market, we’re upgrading today our home-buying service to offer free unlimited tours, and a choice of real estate agent, and support from that agent all along the way. We’re changing our home-selling service to offer in-home consultation, open houses, a big marketing blitz and tours for any interested buyers.

Real Estate Agent Chooser

50% Commission Refund

And we’re raising prices. Tours are now free — we used to charge $250 per tour —  but we’re changing the commission refund for buyers from 66% to 50% (existing customers relax, you pay the old price).  The average refund should drop from $10,000+ to nearly $8,000. If people use Redfin to sell one house and buy another, the total savings will still in most cases be about $20,000.

These are big changes, which we first tested in April, researched in June, and discussed as recently as September.  You can get all the details from our press release, or check out the new search features.

Having made these changes, we can’t imagine why anyone would choose a traditional agent over Redfin. We now offer just about every personal service offered by a traditional agent with the possible exception that we won’t preview homes on our own.

More Personal Service, More Online Service

But our goal still isn’t to be just like a traditional agent. It’s to be much better. We’re offering more personal service, but we’re also offering more online service too. The whole website changed to let you evaluate an agent, choose an agent, request home tours, ask questions. Hopefully this combines the personal & the online into one seamless offering.

Still Different from Other Brokerages, at a Molecular Level

And hopefully, this means we can change the game not just for a handful of digerati, but for everybody. Because more than ever that’s what we are here to do, to give consumers the information and tools to be a partner in the process, not a sales target.

This change makes us more like a traditional broker in a good way — we’re narrowing a competitive gap — but it doesn’t mean we’re becoming like everybody else. The difference between Redfin and traditional brokers is obvious and simple and huge and it has nothing to do with offering more tours:

  • Free the data: we publish data other brokers won’t. This makes our customers smarter and more powerful. Our site traffic has grown more than 300% year-over-year.
  • Ditch the sales-force: our customers come to us via the Web. We don’t have a sales-force. This is how we afford a commission refund of 50%.
  • Back off: we have always been a customer-service organization — a fanatical customer-service organization — not a sales machine. We pay agents on customer satisfaction, not commissions, so customers won’t feel pressured into a high price range. Our customers get the time & space to make their own decisions, and advice they can trust. Our customer satisfaction rate is 97%; the industry average is 85%.
  • Get results not relationships: our agents’ job isn’t to buy you dinner. It’s to get our customers the best deal. We measure our agents’ performance — obsessively — and our agents perform better in negotiations. For two straight years in every market we’ve measured, we’ve negotiated a bigger discount off list price, by about $3,500.

There’s nothing in our DNA about refusing to help people see a home they want to buy, or telling them to hold their questions until they’ve submitted an offer. But even though these limitations are obvious and stupid, we clung to them for a long time.

What Took Us So Long?

I’ve sometimes thought the most conservative organization in the world is a startup, which spends so much energy nurturing its delicate sense of self against naysayers and self-doubt that it can hardly admit mistakes.

We thought that changing a consumer service designed mostly on the back of a napkin in 2006 meant having to admit we were wrong (it does). And I thought for a long time that offering personal service meant we weren’t an online service (it doesn’t).

So in focus group after focus group, customers said they wanted more tours, they wanted to be able to call their agent, that the difference between a 50% or 66% refund didn’t matter much to them. But we continued to make identity-based decisions about what we could and could not do. Many meetings ended by my saying, “that’s not who we are.”

Change is Good

Then, Fred Wilson talked about how startups are a “process of going down lots of dark alleys only to find that they are dead ends… and trying another and another until you find the one paved with gold.”

CEO Tony Hsieh said that Zappos isn’t an e-commerce company or a shoe company but “a customer-service company that happens to sell shoes.”

Redfin Director Marc Singer said that consumer companies have to change constantly, because they’re listening to consumers constantly.

We were never at a dead-end — revenues grew more than 40%, even this year — and we’ve always been customer-service fanatics, but we have resisted thinking these changes through to their logical conclusion.

A Software Company Becomes a Consumer Company

The conclusion I’ve come to is this: that more than just upgrading our service, Redfin grew up today. We’re still using technology to change the game, but technology is just a means to an end, not an end in itself. This means we’re not a technology company, or a real estate company, but a consumer company.

We know this is a good change for our customers. We believe it’s a good change for us too. We’ve got another big change coming in the spring. But for now, let’s see what you think of what we’ve done so far.

Thanks to all our supporters, and all the folks at Redfin past and present who helped to launch the new service.

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