Oh, wait, that’s not the big news from Redfin.com. In fact, I reported the really big news last night:
Redfin will either make money or it won’t, and, in the long run, if it endures into a long run, it will become more like traditional real estate even as traditional real estate becomes more like Redfin.
So here’s what’s changed, as of 12:01 am EST: Redfin agents are going to squire buyers around for free four times as much as they have in the past. No news on who’s buying lunch.
Online real estate broker Redfin Corporation today rolled out a 75-day trial of a new home-tours policy that allows visitors to its site to arrange four Redfin-hosted home tours without paying any money up-front or making any commitment to Redfin. The first two tours would be free, and the third and fourth tours would cost $250 at closing, with any subsequent tours costing $250 in advance.
Sounds complicated, doesn’t it? My experience is that home-buyers are not the most assiduous readers of fine print.
There’s more:
The new tours last two hours, and require the buyer to provide a mortgage pre-approval letter documenting her ability to buy the homes she is scheduled to visit. Redfin deducts the $250 charges for the third and fourth tours from the commission refund, which has averaged roughly $10,000 at closing. Customers who do not complete a purchase with Redfin do not pay for their third and fourth tours. Previously, Redfin only provided one free three-hour home tour, charging $250 in advance for each additional tour.
I’m thinking there can be too much red tape even for the INTx gnomes who find Redfin appealing. What is clear is that pay-as-you-go has a less-than-ideal gnome appeal.
I can do four houses an hour with normal buyers. I normally do 12 houses in three hours, then make the buyers stop. After 12 houses, their eyes glaze over. If we limited ourselves to two hours, that would be eight houses. Four two-hour tours would be 32 houses. This is nothing at all like the original Redfin game plan — shoving the expense of showing homes onto the listing agent. What it sounds like, truly, is traditional real estate without the traditional compensation — but with a lot of corporate chicken guano.
But there’s even more news. Redfin is releasing a brand new version of its website software — hence the support for the Macintosh Safari web browser. As a part of this upgrade, Redfin will be updating the frequency of its MLS-based database updates in many markets. Even better:
The new version of Redfin’s site also provides significantly more information about each listing. Prior to this release, Redfin.com already offered for each listing comprehensive photos and amenity details, precise lot outlines, county tax records, school and community information, and market value estimates from Zillow.com. With this release, Redfin also now provides for each listing:
- a set of similar listings and recently sold properties,
- a complete history of any price changes since the listing became active,
- a second market value estimate from eppraisal.com,
- local Redfin blog and message board conversations, and
- photographic bird’s-eye views of the property.
Redfin also now identifies users’ favorite listings with a special icon on its map interface.
These are insanely great database marketing ideas being dragged around by an insanely stoopid (“Now Even Stoopider!”) business model.
If you find yourself thinking about all the things your MLS system, your IDX vendor and your broker aren’t doing for you, read a little further:
Beyond delivering data about individual listings, this release gives consumers a platform for analyzing prices in entire neighborhoods. Rather than using on-screen map boundaries to define the geographic parameters of a real estate search, Redfin.com users now can use neighborhood outlines as search boundaries, calculating median price, price per square foot and other metrics for that neighborhood.
And just to rub salt in your wounds:
For the first time, users can download data to a spreadsheet for an in-depth analysis. Home buyers can use the data to prepare a comparative market analysis to estimate the value of a home.
That’s just killer. That goes far beyond gnome appeal, since even the people who never will download the data will like knowing they can.
Here’s the funny part: The fine print, the red tape and all the rest of the corporate chicken guano Redfin.com inflicts upon its clients is probably costing it a lot of business. The stuff they do on the Web 2.0 side of the business is right there with the best of the breed. That technology in a more profitable form factor could be a formidable business. Suddenly I like — and fear — them as a buyout candidate…
Addendum: I said this in private to Redfin’s PR Goddess, Cynthia Pang, but this is not the kind of opinion that should be kept private. I’ve said more than my share of negative things about Redfin.com, but the things they’re getting right, they’re getting amazingly right. This is what I said to Cynthia:
The back-end is getting to be very impressive. If Redfin got bought by a Coldwell Banker or a Keller Williams, it could dominate the marketplace. Of the major players, only Windermere is even close to having the stuff Redfin has.
Elsewhere: Michael Arrington, Glenn Kelman, Kris Berg, Joel Burslem.
Technorati Tags: disintermediation, real estate, real estate marketing, Redfin.com, technology
Wayne Long says:
You are right – that system is way to complicated. I would hate to have to explain that to a potential client. They will become very wary of you when you give them complicated scenarios like that.
I don’t think Redfin will ever garner quality agents with their system. As I think you are saying their end effect will be to cause more traditional brokerages to adjust and meet them in the middle. At least that is my opinion.
January 31, 2008 — 4:33 pm
Thomas Johnson says:
“cause more traditional brokerages to adjust and meet them in the middle.”
What a tech tour de force! Perhaps Realogy (Parent of ERA, C21, Coldwell Banker, Sotheby’s and, coming soon, Better Homes and Gardens) lets this go a bit further into red ink, and buys out the whole kit and caboodle pennies on the dollar, cheaper than doing it in house, and applies it to its 25% market share of all the listings. This is what Prudential did with eRealty when its VC partners got impatient.
Well, in my dreams, anyway.
January 31, 2008 — 11:13 pm
Robin says:
Now that Glenn Kelman is a BHBcontributor I believe we will begin to see much more valuable insight into the progression of the Redfin business model and where it is headed
May 23, 2008 — 3:09 pm