How much does it cost to build an online real estate brokerage app like Redfin? What are the must have features and functionalities in a real estate listing app? Which technology is best suited for developing a real estate app like Redfin?
Recognized for the expertise in building apps for real estate and construction industry like PlanetRent (property management app), docuTools (compliance management app), we often come across aforesaid interrogations from our prospects.
Redfin is a technology-powered real estate brokerage platform for buying and selling of residential property. The company operates in over 80 markets and offer local agents to simplify buy/sell experience for consumers.
Redfin is one of the most popular real estate websites in the United States, with approximately 6 million unique monthly visitors. | Source: Statista
Redfin’s revenue has increased 28% year-over-year to $140.3 million during the third quarter of 2018.
Impressive, isn’t? But reaching this heights of success, and that too, in a highly conservative market like real estate wouldn’t been easy. Let’s dissect this online real estate brokerage for its business model, revenue streams, and technology to know how it works.
Redfin: Success Timeline
Founder (s): David Eraker, Michael Dougherty, David Selinger
CEO: Glenn Kelman
Competitors: Trulia, Yahoo Homes!, Realtor, ZillowAvailability: Web, Mobile (Android, iOS)
Funding Status: IPO
What makes Redfin Sell?
The real estate industry is open for tech-driven disruption. A wide variety of services and companies, including property and lease management (Cozy, Planet Rent), short term rentals (Airbnb, Pillow), commercial real estate (Costar), brokerage forms (Redfin)are making way to disrupt the highly conservative real estate industry, through technology.
Alongside technology aid in buying and selling residential property, what makes Redfin sell are some of its consumer-centric strategies, such as:
Sellers can enlist their properties on Redfin for only 1% or 1.5% listing fee.
Buyers pay a closing cost. Buyers who work with a Redfin Agent get a refund at closing, which can be applied to closing costs.
When sellers list their properties on Redfin, they get signage (a yard sign, pus directional signs around neighbourhood), flyers, photography, 3D scans etc. for better marketing and visibility of available property.
How Redfin Works: Business Model
Redfin is a hybrid real estate platform, i.e. it utilizes human and technology expertise for buying and selling deals. The platform works similar to the traditional brokerage system, while ensuring that both buyers and sellers pay least commission for a transaction (when done through Redfin agents).
Redfin’s strategy is to pair its own agents and proprietary technology to deliver services and offer suggestions to the customer for faster and cost-effective suggestions. It has access to Multiple Listing Services (MLS) and therefore have more updated data than online platforms that rely on manual home listing only.
Redfin connects both buyers and sellers with local agents, who provide listing recommendations based on the needs and local market. The agents prepare a comparative market analysis (CMA) for properties in the neighbourhood area to pricing guide. Buyers can schedule a meeting with the agents to take a tour of the properties that fits their requirements.
How Redfin makes Money: Revenue Streams
Redfin makes money through two sources:
1. Commission from listings done by seller on Redfin website
2. Commission from buyer and seller’s agent
The home seller pays agent fees for both their agent and the buyer’s agent at closing. The total commission is typically 5%–6%, with half paid to the seller’s agent and half to the buyer’s agent.
Redfin advertises a 1% -2% seller commission (they call it a “listing fee”), but unlike REX, Redfin seller’s are also responsible for paying the buy side agent commission, because the houses are listed in the MLS. This means that most Redfin sellers end up paying 3.5%-5% in commissions.
Planning to build an app like Redfin?
Redfin’s success can be accounted to smart use of technology and human strategy to connect buyers and sellers, through local agents. If building an application like Redfin is on your mind, register yourself for our Discover and Frame Workshop that will guide you with right features, technology, revenue sources, development cost etc. to get started with your idea.