Redfin has the mission to reinvent the real estate market so that it is more favorable to the consumer. That mission can clearly be seen in the Redfin business model. Instead of selling advertising space to real estate brokers or taking affiliate money for referrals, this company looks to help customers save money and reward agents who provide outstanding customer service.
The business model is working better than many could have ever imagined. Redfin has served over 30,000 customers to date so that their real estate needs could be met. This has resulted in over $20 billion in home sales, with customers saving over $200 million in total on those sales. It’s easy to see why Redfin likes to call themselves an advocate for the modern real estate customer.
At its core, Redfin is a commission-based business. When an agent works with Redfin, they will earn a 4% sales commission on the property sold. For a $100,000 property, that would be $4,000. Out of that total commission, Redfin gets 1.5% of the 4%. In other words, the total sales commission is $4,000 and Redfin makes $1,500.
What Is At the Core of the Redfin Business Model?
Redfin provides customers who are interested in real estate information, plain and simple. It all starts with their map-based coverage of the available real estate in any covered zip code. Consumers can plug in the location where they are shopping for a home and see all of the available options. From there, they can select a listing to receive a more detailed account of what a potential property can provide.
Redfin provides more than just a simple MLS listing that anyone could pick up from public listings. Users receive an image of the property and access to Google street view if it is available. If there are 360 degree virtual tours of a property, those will be uploaded as well. If a consumer is interested in the property, then they can contact Redfin directly to speak with an agent. They can schedule appointments almost immediately to view all of their top choices in any given market, saving everyone time.
Unlike other real estate websites, Redfin is more than just a public information resource that refers you to a local real estate agent. If you’re interested in a listing that you have found on the site, then you’ll actually work with a Redfin real estate agent to purchase the property. This gives the organization more control over the experience and final outcome so that buyers and sellers walk away from a sale feeling satisfied.
Redfin Also Puts an Emphasis In Strong Markets
What has caused the Redfin business model to be so successful is that they have emphasized sales along the US coast where home markets have been traditionally strong. Sales for Redfin have been especially successful in cities like Seattle, Boston, and Washington DC. Instead of expanding rapidly with every sale, however, Redfin has taken a slow, methodical approach. They enter cities where sales are strong and home prices are high. When they’re ready to expand, they go into the best market possible that meets their criteria.
Redfin also has the size and strength to adapt technology into the real estate market without charging enormous sales fees. This is what makes the business model different from other competitive sites. Real estate agents that are not adapting to the tech needs of their customers are limiting their sales opportunities. There is also a lot of pressure from buyers and sellers to keep their sales fees down as low as possible.
Redfin Partners With the Best of the Best
The best real estate agents in every market are looking to Redfin as a platform that acts almost like a second brokerage for them. Instead of trying to develop their own tools to find success, the best agents in every market are approaching Redfin to see how they can work together to find success. Redfin helps agents by rewarding them for excellent services while still keeping the price structure fair. Customers win because they’re able to pocket more money from the sales experience. This means the Redfin business model is a win/win for everyone.
Redfin is expecting to cover 70% of the United States at minimum by the end of 2015. They are expanding rapidly because they have figured out how to make money in each market for everyone. That’s why this business model is different: they are directly involved with the sales process and they have brought modern technology into the experience.