Redfin launches referral network
Company reaches new market areas through 'partner' agents
By Inman News, Wednesday, February 11, 2009.High-tech real estate company Redfin today announced the launch of a referral network that seeks to grow the company's reach to new markets without adding more feet on the ground.
The referral network includes 35 non-Redfin agents for consumers to peruse and choose from at the company's Redfin.com site -- the agents work at 12 brokerage companies. The size of the referral network exceeds Redfin's own staff of 20 agents.
Agents in the referral network are labeled as "Partner" agents at the site, and Redfin has conducted individual interviews and provides client reviews and past transaction details for all of the agents in the network
Redfin will earn a 30 percent referral fee for deals closed by partner agents, and will refund half of this fee income to consumers who use the partner agents.
Redfin will hand over the full 30 percent fee to consumers who aren't satisfied with the performance of the partner agent they worked with, said Redfin CEO Glenn Kelman, and Redfin-referred clients can step away from their relationship with partner agents at any time.
Agents must have a minimum of 15 closed real estate transactions and three customer references to participate -- the average agent in the initial referral pool has completed more than 130 transactions, Redfin reported.
While the initial group of referral network agents work in market areas where Redfin does not currently have a presence, Kelman said it is possible that Redfin agents and referral network agents will at some point work in the same market areas.
"Our goal is to have a free market ... (to) see different agents at different price points," Kelman said.
"We couldn't become a truly national site until now," he added, because it was too costly for the company to open offices and hire agents in every U.S. market.
"There were a whole bunch of markets that weren't really economic for us to enter," and he said the referral network will allow Redfin to offer its online audience the opportunity to work with agents everywhere.
The referral network expands Redfin's reach to parts of California's Riverside and San Bernardino counties, Ventura, Solano, Sonoma, Napa and Santa Cruz counties; Washington's Kitsap County; and South Cook County in Illinois.
The company plans to build its referral network in the next three months out to California's Palm Desert area and to Monterey County; expand into Will County, Wash., and in parts of Pierce County, Snohomish County and King County in Washington; and also in Will County, Ill.
In October, Redfin announced a layoff of about 20 percent of its employees. The following month, Redfin announced a new service offering and cost structure.
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Submitted by Jeffrey Bastress on February 11, 2009 - 4:49am.
It is a paradox that a company that promotes themselves as an online high tech brokerage and has brick and mortar offices and high paid personnel. Redfin seems to understand the focus on consumers and their expectations....but falls short in being profitable as they cling to the traditional mindset of "needing" an actual office and personnel to manage them.
I think the smart change would become a 100% virtual office and retain real estate professionals as redfin agents that meet the criteria they are now holding out for their new referral agents, who are already mobile and working from their homes.
Anything other than this is a move toward becoming more "traditional" themselves and losing their focus on the consumer.
It seems clear their decisions are made on what they feel their strong suit is, which is buyer lead generation, and not real estate brokerage.
I predict they will be very disappointed with their referral results, as this has been tried many times with dismal results of tracking the referrals and collecting the fees from agents that do not work for your company. All my trials of this method they propose fell quite short, as it was clear that referrals to agents in the network from other companies closed 15-20% of the referrals sent them with a hard time tracking and collecting, while those sent to agents within the company closed 60-70% of the referrals and no problem tracking and collecting on our end.
So I am gald to see they are taking this approach, as I am no longer worried about them taking any of my business off my company's plate....not that I was losing sleep as it was.
But it is to bad, as I was applauding redfin from afar and watching close as an innovator of new ideas, in case anything they did try...worked.
I now know the path they are going down and what their plan now is. It is to allure good agents into their network promising leads and technology. Then when in, redfin will wake up one day and tell all the network agents that are now sold on their leads and services that they are to "joint them or leave them" as the network is now a true online real estate brokerage as they shed their tie to bricks and mortar.
Mark my words...and see. It is a smart and clever way to recruit with out them knowing they are being recruited. Not bad. Go Redfin!
Jeffrey Bastress
Startpoint Realty
jeffrey@startpoint.com
www.HomesByJeffrey.com
blog: www.RealtyRag.com
Submitted by Larry Whited Sr. on February 11, 2009 - 5:22am.
Virtual is the future. Everything else is smoke and mirrors. www.maxUnet.com
Larry A. Whited, Sr., CRB, CRS, GRI
President & Founder
www.WebMLS.net & www.maxUnet.com
P.O. Box 757
West Chester Ohio 45071
Cell - (513) 543-2727 Fax - (513) 297-7497
Submitted by Anthony Longo on February 11, 2009 - 6:20am.
I think its a good move for Redfin. We choose the same path for econmic reasons about 6 months ago with our opening of 2nd market Dallas, TX. We are now live in 16 markets with "Partners" on the ground.
Its a nice way to enter the market as well with an established partnership. We bring a niche Internet based brand, online structure and a bunch of leads and our partners do what they do best - work with clients and help them buy a new home. Its a great marriage.
PS - As many of you saw on my Facebook profile a few days ago, we are looking for our final partners in our last 10 cities. If your a condo specialist in your own city...please do let us know.
Anthony Longo
Founder & CEO, CondoDomain.com
Submitted by Joseph Bridges on February 11, 2009 - 6:28am.
This should be interesting and depending on how they train their agents to convert leads and what kind of support they give them to convert the referral leads that they are given.
It is a rare exception to have an agent who converts really well and doesn't generate their own leads.
Partnerships are good as long as both groups are contributing to the final result so it will be interesting to see how this works out.
Anthony my brother is a condo expert in his area so I will check out your facebook profile.
Visit the blog at: http://www.InternetRealEstateSuccess.com
Real Estate Resources at: http://www.OnlineRealEstateSuccess.com
Submitted by Ben Kakimoto on February 11, 2009 - 10:46am.
Interesting, Redfin's coming full circle. They originally started out as a referrer.
Submitted by Greg Rippel on February 11, 2009 - 2:19pm.
I had big plans to build a referral nerwork with a few area-focused domain names of mine. However, it's not as easy as one might believe as J. Bastress pointed out. There's only a site or two that are making it work, HomeGain being one of them. I've closed 68 transactions from HomeGain leads since joining.
Regarding the domains I was going to use to generate a referral business... www.TheTopProducer.com and www.RealEstateTycoon.com I may just put them up for sale.
Submitted by Eric Cunliffe on February 11, 2009 - 2:39pm.
Well, well, well. Glen you may be able to snow CBS and the 60 Minutes yahoos (maybe they'll do another piece on the "new" model)but you can't fool the industry.
Despite all the hype and rhetoric the "new" model is not working and resorting to a referral fee model will not take the industry to the promised "next phase" of the business; it will just keep the company afloat a little longer.
Most of the larger brokers in the country have managed to launch their own sites with impressive usage of technology and sales expertise that provide what the customers are looking for - unbiased information, no-strings-attached help and good service.
These brokers have realized, to steal a phrase: "that it's the customer, stupid". Promising full referral fee to the customer if they are unhappy reminds me of the company selling lots here in NC who promise that they'll refund the difference in value if the lots they are selling appraise lower in two years than the buyer pays now. Are they getting takers for this deal? What's in the fine print? Will they be around? Who decides conditions under which they get the refund?
In my experience customers are not looking for money back for bad service. They are looking for reputable experienced agents and companies that have a history of providing good customer service and therefore good value for their money if they are sellers or a successful, hassle-free transaction if they are buyers.
Submitted by Cleve Shirley on February 11, 2009 - 5:34pm.
Tony is on the right track with CondoDomain and I suspect Redfin will utilize similar management systems. I believe how the referring partner manages the leads on their end is the key to this type of referral relationship working, as most referred leads will fall into the abyss if they aren't 30-60 days out. Equally important, of course, is the integrity and ability of the receiving broker...
This is a good move for Redfin to get into markets that otherwise don't make sense for them.