US online real estate broker redfin.com have revealed some news that will have traditional brokerages just a little bit worried: last month the company earned its first monthly profits.
Writing on the company blog CEO Glenn Kelmann said:
“The business has been growing by leaps and bounds, in part because the real estate market has had a small rally this summer, but in part because we’ve started to figure out how to prosper in down markets too. What has made the difference for Redfin hasn’t been any one breakthrough that we could have pinned our hopes on, but a combination of small adjustments:
1. Giving consumers a choice of agent, and unlimited home tours.
2. Publishing agent reviews, which increased demand 36% in a single month.
3. Simplifying the agent choices we offer consumers, which increased demand a further 16% in a single month.
4. Generating referral revenues from customers in outlying areas that we can’t afford to serve ourselves.
5. Figuring out Google optimization, which drove a 300% increase in traffic year over year, though that growth is now slowing.”
In his candid post, Kelmann also said:
“The difference now is that even if Redfin goes back down, we’ll always know that we can go back up. And knowing that is a huge salve for what’s most unbearable about startup life: the aching possibility that it can never work, that the game is so stacked against you it doesn’t even matter what moves you make. Well, Redfin has plenty of problems, and we could still easily fail, but we know now how we can win, too.”
Both TechCrunch and The Washington Post reported the news, saying that Redfin’s 2007 revenues were $5 million while the 2006 revenues were $1 million.
Redfin says that not only were they profitable in June, but they achieved 97% customer satisfaction. A press release says:
“With 300+% year-over-year growth in unique visitors, Redfin has been the fastest-growing major real estate website in the U.S., but the company’s revenues have, until recently, grown more slowly, at 41% year-over-year.”
Redfin’s model is to represent buyers and sellers in home real estate transactions for far less than standard industry commissions. The company pays its agents customer-satisfaction bonuses, not commissions, and surveys every client, publishing each survey as well as details on the agent’s negotiating performance and deal history.
The journey to this milestone hasn’t always been easy for Redfin. TechCrunch reports that the company has been plagued by “threats, stalkings and other disturbing behavior towards their employees and some customers from, apparently, angry real estate professionals”. In addition, the company was also forced to layoff 20% of their staff last October.
redfin.com joined the Hitwise top 20 real estate website in May this year at number 20.
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Redfin managed to break into the list of Top 20 real estate Web sites maintained by Hitwise in May 09 .Possible factors in Redfin’s move from red to black may include recent cost-cutting measures and increased charges for services.
Redfin announced the layoff of 20 percent of its workforce in October, including “senior agent” employees who represented clients in negotiations.
The company also reduced its refund offer to buyer clients from 66 percent of the brokerage’s commission in a transaction side to 50 percent, but began offering free home tours to prospective buyers with no commitment to use Redfin as a broker
Amul Raj Desai
International Business Development Manager
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