Why I’m Bullish on Redfin
I’ve written about Redfin before, most recently regarding their IPO and the IDX SEO issue. (disclosure: I own a small number of shares).
I spent some time looking at their S-1, looking at their current product, and thinking through their future.
They face a hard road strife with many competitors to fend off (with more to come) — but I’m bullish. Teams are certainly the future of real estate. Zillow knows that (see here), and Redfin knows that. Redfin happens to operate as the largest “team” in the country.
In the S-1, Redfin leads with the following points:
#1 most visited brokerage site
Employee agents for better, more consistent service
Tech makes agents three times more productive, saving consumers thousands in fees
Redfin Mortgage & Title: new potential source of growth; long-term goal of an all digital closing
Seemingly, every product idea I believe can attract consumers away from Zillow/Realtor — such as a markeplace of public CMAs, pocket listings to consumers, & a completely anonymous q&a — could be best executed by Redfin. Why? They have existing consumer reach/audience, funding (especially post IPO), tech savviness, and, most importantly, their business model allows them to force agent activity/behavior under a unified direction & approach (and control quality) in a way that virtually no other brokerage can match. It doesn’t hurt that they play the long game, either.
Their other major strategic consumer advantage is they control the experience end to end; meaning a consistent experience for buyers and sellers. It’s the open vs closed discussion again (which I mentioned in my Alexa/Echo article). There’s no way Zillow or Realtor/Move can compete on that front given their business model of sending buyers to a scattered mix of paying agents. Can Zillow begin to force agent behavior among Premiere Agents, in order to deliver a consistent buyer/seller experience? I’m not convinced.
What do you think about Redfin’s future? Bull or bear?
PS: If someone wants to write a guest post with the bear perspective — shoot me a email (drew at geekestatelabs dot com).
Eileen Romito
Posted at 11:25h, 25 OctoberBull. I agree with everything you said above.
Joe Houghton
Posted at 15:50h, 06 NovemberI’m Bearish on Redfin and possibly biased because I selfishly don’t want them to succeed. I feel like they are just another discount broker where the agents who can’t really cut it as full time productive and profitable agents go to get experience and the “easy buck” I think many of the consumers that hire a redfin agent are generally misguided and certainly get what they pay for.
Drew Meyers
Posted at 16:06h, 06 NovemberPerhaps, I don’t have any personal experience buying/selling with or without redfin I can share.
Do you really feel they are “misguided”? Or do they know what they’re doing/getting, and making that decision consciously? I honestly believe far too many agents/brokers have a general belief consumers are morons and don’t know what they’re doing when they make decisions.
Joe Houghton
Posted at 16:57h, 06 NovemberMy feeling is that in general (in Minnesota at least) home buyers and home sellers are stepping over dollars to pick up pennies. What I don’t think they understand is that an agent who is more or less an employee of redfin and working on more of a salary/hourly based compensation plan has less motivation to negotiate and pull out all of the stops for their clients than an agent that is 100% in the game and only cares about the client experience and the online reviews and word of mouth referalls the client is going to give them.
Joe Houghton
Posted at 16:59h, 06 NovemberMy feeling is that truly great customer service is hard to provide when businesses try to scale. For some people, Redfin is probably the way to go. In MN however, I don’t think it is a wise decision for most consumers.
Drew Meyers
Posted at 17:05h, 06 NovemberSo you’ll pull out all the stops to make $150?
https://www.youtube.com/watch?v=pbFkw_roJqI (fast forward 45 seconds)
Joe Houghton
Posted at 18:39h, 06 NovemberI’m saying a redfin agent making a $150 likely will not pull out all the stops