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The Lessons Of Redfin, Part II: Targeting A Demographic Niche

Kevin Boer, Broker Owner, 3 Oceans Real Estate, Inc. ()

December 16th, 2007 · 6 Comments

Lost in the ongoing discussion about Redfin’s recent appearance on the Today Show is the blatant Redfin geek-baiting of their “Redfin Scientist” marketing push.

Many Realtors have looked at this document with it’s “No, duh!” recommendations (stay engaged, don’t overprice your property, do advertise it on the web) and thought, “I don’t need any ’scientist’ or ‘research paper’ to tell me that!  It’s just obvious!!!”

It may be obvious or it may not be obvious, but here’s the stroke of genius on Redfin’s part:  one of their core target demographics — Gen  X and Y geeks living in high-priced markets — tend to not take our assertions as fact until they see the underlying data-driven proof.

As a Gen X geek myself, I completely relate.  When the old-timers in the business say, “This doesn’t feel like a normal Fall market”, I don’t take it on faith.  I download a data set from the MLS, crunch some numbers, and come to my own conclusion.  Far more often than not, the old-timers’ intuition is spot on…but I’m not comfortable with their assertions until I see them backed up with data.

If I had a nickel for every time a Realtor told a prospective client at a listing appointment “Don’t overprice your home” but provided no hard data to back up that assertion, I’d have retired a long time ago.  Many folks are comfortable with assertions, but “geeks” (which I define as data-driven technology lovers) for the most part want the numbers.

Redfin recognizes this and gives it to them.

Traditional real estate advertising targets a geographic niche, typically a town or neighborhood.  One of Redfin’s primary niches — perhaps their largest one — is a demographic niche:  the geek market, or, more precisely, geeks in high-priced markets.  And guess what?  Seattle and the Bay Area, their two primary markets are not only expensive but are also full of geeks!  I have no inside information about their sales numbers, but I wouldn’t be a bit surprised if 25% of their Seattle business consists of Google and Microsoft employees.

The lesson in all this?  Know thy customer.  If you’re Redfin and your customer is a geek, give him the numbers.  State the obvious, state the not-so-obvious…but back it up with numbers.  Future studies I’d like to see coming out of Redfin’s scientists (or heck, maybe I’ll do them myself) include:

  • Staging your home is a positive ROI investment.  Really?  Show me the numbers.  I suspect it’s true, but I’d love to see a study that compares the sales price of, say, $800K homes with and without staging.  Do the homeowners that invest $5,000 in staging really sell their home for at least $5000 more than the ones who don’t?
  • Taking more and better pictures of your home makes your home sell quicker and for more money.  I’ve seen the numbers that prove a listing with more and better pictures gets a lot more online views, but do those views translate into more open house visitors and eventually into a higher price?
  • Selling your home with a full-service broker will net you more than going with a discount broker.  Again, a common assertion.  Show me the data!  If, for instance, the average full-service commission in an area is 5.5% and the average discount commission in an area is 3.5%, are full-service brokers typically able to get a 2% or greater premium on the sales price?

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Tags: * Export · Glenn Kelman · Industry · Redfin

6 responses so far ↓

  • 1 Greg Swann // Dec 16, 2007 at 8:39 am

    > I have no inside information about their sales numbers, but I wouldn’t be a bit surprised if 25% of their Seattle business consists of Google and Microsoft employees.

    Bah! Another undefended assertion. ;)

    Redfin provides no data on staging or photos because they don’t do those things. As with all their PR, the latest charade consists of a defense of the things they do, with no mention of the — often much more important — things they don’t do.

  • 2 Redfin: the obvious maybe not so obvious?... // Dec 17, 2007 at 4:49 am

    [...] We’ve all been talking about Redfin’s debut on the Today Show… Their statements of the “painfully obvious!”…Kevin Boer (Broker/Owner of 3 Oceans Real Estate, Inc.) and author of 3 Oceans Real Estate Blog, raises some interesting points… [...]

  • 3 Lenore Wilkas // Dec 17, 2007 at 5:32 pm

    In my own little market analysis around my area, 8 of 10 people don’t have a clue who or what Refin is. Why are we all so up tight about this company? Smoke and mirrors perhaps?

  • 4 derherold // Dec 18, 2007 at 11:51 am

    In my opinion your posts are the most interesting I´ve read concerning *Redfin*.

    I´m a german real estate broker and, of course, the usual Redfin-bashing ist `nice´ but useless. *Redfin* (or similar companies in other coutries ) is a challenge of our business und we´ll not succeed with “J´ accuse”-style.

  • 5 Robert Luna // Dec 18, 2007 at 3:12 pm

    Redfin…Redfin…Redfin…love them or hate them it is up to you and irrelevant; however what is relevant is the expectations of generation x and y. Great job on this post Kevin the real point here is “give them what they want” to say they want fact supported by data and transparency is an understatement. Above and beyond that they want it NOW if Redfin is doing just that then good job Redfin.

  • 6 Melissa Casciato // Dec 18, 2007 at 4:20 pm

    This post hits the nail on the head, so to speak. I am a Gen X Realtor, and all I want are stats as well. It doesn’t matter if it’s real estate, my dentist, my banker, or my financial planner. I don’t take anyone’s word for anything if they do not back up their opinions or statements with statistical facts. While I’ve seen some other posts bashing Redfin, I find your post to be informative and to the point. Whether or not we like Redfin or not, your point should be a wake up call to the rest of us in the real estate community. If we continue to get better at what we’re already good at and specifically focus on our target audience, we can exponentially increase our results. If Redfin has found their niche and is increasing their business as a result of providing a specific service, then it’s a lesson to be learned.

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