Entry by Lester Langdon

Redfin raises buyer fees 16%, announces new service plan

  4 Comments

Technology-based real estate brokerage Redfin says it's reducing the commission refunds it offers to buyers, raising fees by an average of 16 percent, in order to provide customers with "a one-on-one relationship" to their agents.

Redfin had previously offered buyers refunds equal to 50 percent of the commission split the brokerage received from the seller, subject to a $6,000 minimum fee. Now, Redfin will employ a fixed-dollar refund for each listing based on a sliding scale that's tied to the listing price, CEO Glenn Kelman announced on the company's blog. 

more ...... http://blog.redfin.com/blog/2012/02/introducing_redfin_30_redfin_becomes_a_no-brainer_introducing_redfin_30_redfin_becomes_a_no-brainer.html

4 Comments

This is HUGE because REDFIN is only offering a 30% rebate for their Buyers versus a 50% rebate.  Their listings are still a flat fee of 1.5%.  REDFIN says in the blog they want their clients to have a Traditional Relationship with their brokers…  WHAT?!!  What REDFIN fails to disclose is many of the Brokers performing the NEW Traditional Relationship Tasks are Brokers from Traditional real estate companies via a partnership agreement…  I feel REDFIN will be reducing the number of actual in-house brokers they employ therefore lowering their overhead.

Part of how Sound Point competes with REDFIN is by providing unsurpassed customer service and we are willing to match REDFIN’s pricing.  Oh, the beauty of being a small boutique real estate company and not a large box store set in out of date business models.  I feel this is REDFIN’s way of saying their previous model (2.0) did not work…  Their reaction is a bit extreme by hiring outside Traditional Brokers to provide the customer service and industry knowledge/experience their in-house brokers could not provide.

REDFIN is still missing the important variable of Client Choice in their new 3.0 business model equation.  Can clients have choices and receive outstanding customer service at the same time?  I say yes!!

This is why I love ACRE and the progressive thinkers within its’ ranks…

And we love having YOU Keith!

Redfin announced a plan today to cut rebates to home buyers substantially, a move that made me wonder if the Seattle real estate company was looking to juice revenues in anticipation of a possible IPO filing. After all, Zillow’s stock performance in recent months has been nothing short of astounding, with a market value topping $900 million.

And while Zillow and Redfin operate very different businesses, I can’t help but imagine that there’s an ongoing rivalry between the two companies which are located just a few blocks apart in downtown Seattle.

But Kelman tells GeekWire that there’s no plan to file paperwork in the short-term, saying he doesn’t think it would occur anytime this year. “We have some things we have to work out before we go public,” said Kelman.

http://www.geekwire.com/2012/redfin-ceo-glenn-kelman-rebate-cuts-signal-imminent-ipo-filing

Note from ACRE Lester Langdon - their previous business model did not work because brokers working contingent must get a startup engagement fee if their are giving discounts and rebates.  Clients gettings discounts and rebates have the same fall out rate as regular price clients. 75% of clients fall out and do not close. Discounts and rebates are not an incentive to close a transaction.  Only cash start up fees are "Skin in the game" which creates a fear of loss.

Interesting, thanks for sharing.

This page contains a single entry by Lester Langdon published on February 17, 2012 11:17 PM.

UPDATE on the TRANSITION - The Live ACRE Mastermind Workshop was the previous entry in this blog.

Drive: The surprising truth about what motivates us is the next entry in this blog.

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