It looks as if Redfin will be entering the New Orleans real-estate market. So, why does anyone care? New Orleans is the second most flown into city in the United States and has a huge tourism economy. People come from all over to go to the famous French Quarter and tour New Orleans. Numerous new brokerages open up (and many close) every year. Well, when Redfin was started back in 2006, they used real-estate technology and a really slick website; but most of all, they used consumer rebates to make their mark. As of now, they don’t have an office, but does that even matter?
Who is Redfin?
Redfin came into the nation real-estate spotlight when they started showing up in major real-estate search results (not an easy task) by utilizing some solid SEO and giving sellers a portion of the buyer side (agent) commission back to the seller.
So what started happening in the markets that Redfin was in? Well . . . that’s an interesting question. What started happening was that buyers would use Redfin’s slick real-estate website to search for properties, but when they found one that they were interested in seeing, they would call a “regular commissioned” real-estate agent to show the property. When the time came time to write the contract, they would use Redfin and get their rebate. Needless to say, this didn’t go over very well with many agents and brokers. Understanding this, they have still managed to pop up in over 70 major U.S. cities.
Currently, Redfin brags that when you buy a home using a Redfin agent, you as the buyer will get back approximately 1.5 percent of the sales price on their property — half of the trade’s standard 3 percent commission. The sale takes place, Redfin gets the full commission as listed in the MLS, then gives approximately 1/2 of that back to the buyer of the home.
Can Redfin Do That?
The challenge in Louisiana is that rebates back to a buyer (or any other non-LREC licensed individual) is not legal. That means that they will have to compete on a level playing field. My guess is that they will be putting a tremendous amount of pressure on the Louisiana Real Estate Commission to allow rebates—as that is core to their business model. You never know, they’ve made changes to their model in the past and that may be perfectly okay with the current way Louisiana does business.
Actual Redfin agents are paid on salary and can potentially earn bonuses that are based on customer satisfaction surveys. They also work hard to utilize agents who are licensed with other brokerages and pay them a referral fee on the sale. Rumor has it that to become “affiliated” with Redfin as a referral agent, you must give them the contact information for your clients from the past 12 months for them to survey. That likely won’t go over too well with the New Orleans Real-Estate Agents I know.
Are the Big Brokerages Ready?
The most exciting thing for me personally will be watching the SERPS for the major real-estate searches for New Orleans and the surrounding areas. Historically, New Orleans real estate on the web has been dominated by a handful of large brokerages (who will remain nameless :-). Only in the last few years have Zillow and other third parties moved in some top positions. Now they will have another brokerage competing for the top web positions. It’s gonna get juicy!
What’s Going to Happen?
- Will Redfin buy the naming rights to the Superdome?
- Will Redfin get any local agents to act as referral agents?
- Will Redfin get rebates passed at the LREC level?
- Will Redfin become the top ranking New Orleans Real Estate Website?
I don’t know . . . but it will be fun to watch! I’ll follow up as things develop—especially because their logo fits the colors on my site!
