It's encouraging to see success with new ventures – especially in times like these. And, it looks like Redfin fits the bill.
In June, the company posted its first profit, with a 300% year-over-year increase in unique visitors. This is certainly impressive since Redfin is an online provider of real estate services. In fact, the consensus has been that eventually the company would eventually die.
Why the success? Redfin has taken a radical approach to the real estate market. That is, the company charges a flat fee for its services and even gives 50% back for commissions (that comes from the other side of the transaction). Redfin's services are a combination of online searching and virtual tours as well as the help from qualified agents. Interestingly enough, Redfin provides its agents bonuses for strong customer satisfaction ratings (which is at 97%).
This is a disruptive approach, which has been a big pain for the traditional real estate industry. Hey, who wants to give up 6% commissions?
No doubt, the real estate market will make a comeback (actually, there are some signs of improvement already). And when this happens, things will likely get even better for Redfin.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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