Redfin's Business Model Better for Consumers

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Inman Connect New York | January 29 - February 1, 2019

So the company claims. If you use its services you will save over $15K says Glenn Kelman on the Redfin Blog, quoting results of a new analysis of their business model:

  • Redfin home-buyers over the past twelve months paid on average 1.015% below homes’ asking price, while customers of other brokerages paid .087% below asking price.
  • This difference in negotiating results saved Redfin customers nearly 1% of the home’s final price, for an average savings of $5,048.
  • In addition, Redfin refunded each of these customers an average of $10,520 in commissions.

I’ll let others debate whether or not these numbers mean anything. But their release means one thing for sure – Mike Arrington will probably write some slobberingly stupid headline. (yup, he did.)

Personally though, reading through Redfin’s release I couldn’t help but think it was a smart marketing angle for them to play up.One that I think is particularly savvy in the midst of today’s economic climate.

Let’s face it, who doesn’t want to save a buck… But rather than position Redfin as a bottom feader (we’ll do less, for less) these kinds of “studies” position them instead as the smart choice (we do more, for less). And that’s a message that I think resonates well with real estate buyers these days.

Interesting too, especially when you contrast it with Coldwell Banker’s Founders campaign (see Coldwell and Banker Back At Helm) which tries so hard to be fun, hip and cool to Gen Xers and Gen Yers, but I think is dreadfully mistimed and unfortunately way out of touch.

Rather, Redfin is appealing to the common-sense, want-to-save-a-buck DIYers out there who’re looking for a deal.

Who do you think there are more of out there shopping for homes right now?

While I think he’s totally off base when he implies it’s more effective to “use [a computer] in lieu of a buyers broker or agent when buying a house” — if he’s talking about their marketing messages, Arrington’s headline might make sense.