Ask Glenn Kelman, the CEO of the online real estate brokerage firm Redfin, why his company decided to expand into the Triangle and hell point to Austin, Texas.
I think a large factor for us was our success in Austin, he said. It was a manageable size. It was an academic center. It was a very tech-savvy, young, progressive demographic. Its been one of our best launches ever, and we saw many similar traits in the Research Triangle.
Redfin describes itself as a company that has combined the best online and mobile real estate tools with a team of agents that aim to save clients money on fees and be as transparent as possible. To say that the Seattle-based company is targeting the young would be an understatement. About 85 percent of Redfins users are under 40, Kelman said, and most tend to be highly educated.
We just have a group of people who have grown up expecting to use the Internet to do everything, and so they wonder why has the Internet changed everything but not real estate, he said.
There are, of course, plenty of online resources for real estate buyers and sellers. But Kelman says that, unlike sites such as Zillow or Trulia, Redfin has a team of local agents to complement the information it provides online. Those agents have access to local resources, such as the Multiple Listing Services databases, which allows Redfin to provide as much as 20 percent more listings than competitors, Kelman said.
Redfin also says it has employees not contractors who are salaried and whose bonuses are determined by customer satisfaction ratings and not simply commissions.
We survey every customer, we publish every review, Kelman said. Theres a profile where you can see what the agent has done, where he has succeeded and failed, what customers have said about him.
The company also posts commentary from its agents online about home tours and if a client gives approval after a sale is complete details about offers made and the number of competing bidders on a property.
Such disclosures havent always been welcomed by other firms in markets where Redfin operates. One competing CEO said exposing details about buyer-seller negotiations was a theatrical side show [that] serves no constructive purpose.
Gains from efficiency
Redfin says its reliance on technology is the reason it can charge less to list a house on its website and can refund homebuyers up to half a buyers agent commission.
Thats just because we dont spend anytime looking for customers, Kelman said. Technologys just made us much more efficient.
The approach means you wont see Redfin plastering billboards and running television ads announcing its presence in the Triangle or in Charlotte, where it has also expanded. The company expects to gradually build traffic to its website, which will then funnel potential buyers and sellers to its agents.
You can promote your own customers listings the same way that Google promotes some search results as paid results, Kelman said. He said Redfin delivers about double the traffic to its own listings.
Redfin has hired Allen Wyde, a former agent with Coldwell Banker Howard Perry and Walston and Ammons Pittman GMAC, to head its team in the Triangle. Kelman said he expects that team to have eight to 10 agents within a year.
As for Redfins chances of becoming a dominant player in the Triangle, theres little doubt the companys online and mobile tools will appeal to those technologically inclined. And its hard to see the downside of customers having more information about a home they may be interested in.
But buyers and sellers are unlikely to base their decision about whom they want to hire based on an app. Those decisions are still driven by referrals, and the only way you get referrals is to build a successful track record of delivering for your clients.
The good agents have proven their worth in recent years, as the process of buying or selling a house has become a lot more complicated than it used to be.