Discount buyer brokerage Redfin has altered its pricing structure in the Boston area, reducing the rebate it offer customers to 33 percent from 50 percent while increasing the services offered by their agents.
Over the past year, the brokerage has risen from 32nd in market share to 21st, according to data from MLS PIN, with 415 sides closed from May 2010 to May 2011, compared to 324 the previous year, the vast majority of them as buyer agents. But customer surveys have led the firm to believe it must offer a more full-service experience to increase its market share.
"We survey all our customers, not just the one who end up purchasing a property with us," including buyers who had used Redfin’s site or taken a tour with one of their agents but had gone on to transact through another brokerage, said Alex Coon, manager of the firm’s Boston office. "The overwhelming response was that, ‘Hey, the discount’s great, but we’d like to have more of a one-on-one relationship with our agents,’" said Coon.
Redfin employs a team model, with full- or part-time "field agents," who conduct tours, and lead agents who negotiate offers. Unlike traditional brokerages, all agents are salaried, with a bonus paid based on customer satisfaction rather than sales price.
Since a number of different agents handle tours, sometimes the agent conducting the negotiation hasn’t seen the house. One one-star review on the group’s Yelp page complained of this practice, saying the Redfin agent encouraged them to offer more than a property was worth, and that "going with Redfin could have cost me $72,000."
The review prompted a personal response from Redfin CEO Glenn Kelman, who wrote that an offer being dealt with by a different agent than the one who showed the house "is an occasional flaw with Redfin, or with any top-producing agent who is supported by a team, only exacerbated when team-members are out. We are changing to address that flaw," he wrote, saying the new policy would mean, "our agents will also be more local, which will help us understand local pricing better, too."
The group has doubled the size of its lead agent roster from 12 to 24 in order to provide better service, Coon said. They will still use field agents to show houses, but the first meeting between the client and Redfin will be with their lead agent, who will remain their point of contact throughout the transaction.
It remains to be seen if the new price structure will please the firm’s current customer base, many of whom were attracted to the discount model. (Customers who signed on with Redfin before the announcement will still be able to get the 50 percent discount). Several current customers left negative comments about the change on the blog post announcing it on the firm’s real estate blog, Boston Sweet Digs.
"We have tons of very happy clients with what we offer them now, but we have to continually adapt our model to grow," said Coon.
