There goes the neighborhood. A Redfin sign is on my street! July 21, 2007
Redfin got another $12 million in spending money from its venture capital masters this week. A lot of noise, speculation and jokes have been made in the old RE.net blogosphere about the old Redfiners this week.
Frankly, Redfin getting more spending money doesn’t really matter in the long run. Granted, I think we’d all like a couple million to grow our respective businesses, but hey, what can you do? They did a better job schmoozing a VC than we did. As the ever insightful, FoREM pointed out, Redfin is pursuing the classic “go big or go home” strategy. Many startups intentionally lose money during the first couple years of their existence in order to fund fast growth. I remember folks saying the same thing about Amazon.com 7-10 years ago, and despite the river of red ink that company had, they are still around and selling a lot of Harry Potter 7 books from what I hear. So, I don’t think it’s an unreasonable business tactic, especially since it’s not my money paying for it.
Having a cool website, offering discounted service, appearing on 60 Minutes and being constant blog fodder is a great way to get and stay in the public eye. However, in the end, it all boils down to how well they sell & buy homes for their clients. Ultimately, the level of service they provide and the value their clients felt they received will determine the ultimate success of the company.
From where I sit, it looks like folks in the neighborhood are giving Redfin a shot to earn their business. For example, Redfin is listing this fine home a block away from me and just listed my neighbor’s house down the street from me. Unfortunately, it also appears they recently lost a listing down the street, a couple blocks away from me to Coldwell Banker Bain “super agent” Christine Kipp. (Personally, I think the owner is asking for too much, but that’s just my unprofessional & untrained opinion).
The fact is, Redfin is growing locally (or getting lucky depending on your point of view) and has enough cash to annoy a lot of people for a few more years at least. I think the real test will be if their customers like them enough to give them repeat business and referrals. In terms of technology, I think it’s going to be a real battle between Redfin & John L Scott, so a great web site won’t be enough for them to get ahead locally. In the rest of the country (where the cool web site contest is less competitive), Redfin’s web site might be a big competitive advantage.
So, how well is Redfin serving their clients? Well, I really have no data and no idea (other than seeing more Redfin signs in the neighborhood than I used to). I do know they are trying to keep their customers happy and they do offer a 100% Customer Satisfaction. A few months ago, I didn’t see any signs. Today, I see two or three. In a few months, perhaps I’ll see more? Anyway, time will tell if the red in Redfin is from the sea of red ink or the blood of ineffective traditional realtors. So, if you’re worried about the red finned shark, just become a better piranha. It’s a big ocean, and there’s plenty of bait & anchovies for everybody.
PS – I got my new monitor this weekend. Thanks again everybody, for your monitor insights in your remarks to my last Redfin post.
Check out these related posts:
- Geekier than Geek Estate & Sweeter than Sweet Digs
- John Cook Interviews Redfin CEO: Redfin is “crazy-good”
- Redfin — The Anti-Google
Article Tags>> customers | developers | Redfin
- Posted in : General Real Estate
- Author : Robbie
Comments»
Interesting to hear that they obtained another round of funding. I would think that with the real estate market taking a breather that their VC would be holding back and looking to validate the profitability of the company.
-4MySales
Yeah, getting more funding in a down market is somewhat unexpected. However, I think Redfin probably appeals to buyers more than sellers, so perhaps a down turn plays to their strength?
Another theory, perhaps the VCs are betting that all this investment during a down market, will be doubly rewarded when the market eventually comes back. If you believe that, the best time to invest in your business is when most of your competitors aren’t investing in theirs.
Hi Robbie,
Thanks for the update. I live in Edmonds and have noticed a Redfin sign here and there as well. I keep wondering if Redfin’s disruptive 2.0 business model might also be the reason why I keep seeing for sale signs all over Edmonds that are anything other than the traditional market share companies (Windermere, JLS, CBBain and RE/Max, though these signs are seen as well.) It looks like smaller brokerages are diving in after Redfin’s wake.
Jillayne,
I think that agents who want to compete in today’s marketplace find themselves leaving companies who restrict their abiity to do so. If an agent wants to offer more choices in between Redfin and some traditional more standard fee, and their compoany won’t let them… More people hanging their own shingle for that reason than ever before, is my guess.
More options has to equal more companies, if the big companies won’t permit those expanded options, at the discretion of the agent.
I used Redfin to buy my house; they were great! I felt they exceeded my expectations in the level of service and professionalism they provided. I applaud their continuing efforts to grow. I hope they’re still in business in another 5 years or so when we’re ready to trade up our house for a bigger one.
I think it’s the individual you work with, much like selecting a Mortgage Professional. I spent a ton of time educating a couple of first time home buyers. I knew they were going to to use Redfin to buy their home, I did not know they were just using me for my experience and recommendations…they wound up using Redfin Mortgage, too.
I don’t have numbers, but anicdotally speaking it seems the “second tier majors”, (like Centruy 21, Re/Max, etc) aren’t getting the business they used to around the east side. The independents and the discounters (Skyline, Plateau, Redfin, Zip, MLS4Owners etc…) seem to be getting a bigger piece of the pie.
I have heard great things about Redfin, and after buying 3 homes am very underwhelmed by the service, or lack thereof, from traditional agents.
I will be listing our current home with Redfin if we do decide to sell our primary residence because I just don’t see the value that traditional realtors provide to sellers ( I know how to stage, I know how to present the house well, I am under no illusion on what I could get for it and actually will list it $20k under what I think will move it).
Finance Girl,
Not diagreeing. Just have a small question. Would you call Redfin “a discount” service, and if not, why not? Why would you not first try the cheaper MLS4U type service? I think it is three or four times cheaper. Just wondering.
Why would a consumer not give a new market entrant a chance to prove themselves? Just because they are not “in the club” does not mean they can’t provide good service and customer satisfaction.
If I were a residential real estate agent, I would see the entry of Redfin and its proliferation of sale signs as good competition. If someone (RE Agent) is as good as they advertise themselves to be, new competition shouldn’t matter. Disruptive technologies and ideas always have a way of shaking things up. I for one am thankful someone has rattled the cages of the local RE cartel.
Seems people are trying to talk down on Redfin, rather than talk themselves up. Just my opinion (I have no affiliation with Redfin, nor do I own my own home)
To address comment 7 from Robbie, I happen to work for the RE/MAX office that is currently #1 in the Puget Sound region and we’re still getting just as many listings (if not more) than ever. We have been continuing to stay in the top 1-2 spots of the NWMLS and from what I’ve heard we are now the #1 RE/MAX office in the United States right now because the Seattle area continues to have a stronger real estate economy than other cities and states right now.
I liken the higher recognition of Redfin to that of people when they buy a new car. You didn’t notice so many other similar cars on the road till you bought one. With as much media coverage as Redfin is getting, and they are picking up some market share - I don’t dispute that - of course you’ll notice the signs more often.
I should note this is just my impressions of my local neighborhood (Issaquah Highlands) real estate market, not the greater Eastside area in general. I see a lot more RE/Max signs on my commute to work (along Lake Sammamish passing by Microsoft) than I do at home.
You’re also right that Redfin still has the “new car smell” going for it.
[...] I want to see (actually, I don’t) the prospectus of the initial start-up and the projected ROI for the venture money people. Attack an industry for the way it pays its agents then turn around and make billions from the same industry? Or is it only hundred millions? Mere millions, perhaps? It certainly is not thousands or hundreds, to be sure and this is precisely my point. They ain’t doin’ it for nothin’ (or the prospect of nothin’). And while most Parson types are indeed, holier than thou and definitely holier than me (Jimmy Swaggart, Ted Haggard, and poor Jim Bakker notwithstanding), they still have human needs and the required earthly tethers of food, shelter, clothing, and American Express. But is Redfin simply ‘working for food?‘ For mere shelter? For Rewards Points? Or maybe it just ticks me off when someone else feels complelled to count my money. [...]