A new real estate company is coming to Canada.
Redfin aims to shake up the industry with technology and lower fees.
The Seattle-based company invented map-based real estate searches, and has been using that platform to gain a significant foothold in home sales in 85 markets in the U.S.
This week, the company launched a Toronto service and it plans on opening a Vancouver office later this spring.
Redfin charges as little as one per cent for the sale of a home. Agents don’t work on a commission, but instead earn bonuses based on customer satisfaction.
So far, the model seems to have worked.
“The results speak for themselves. We have been able to generate $500 million in revenue giving customers a better deal. Technology makes it inexpensive to meet new clients, and inexpensive to serve clients,” said Redfin CEO Glenn Kelman.
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Redfin claims to have invented interactive map-based searches for real estate and continues to push the technology forward. Searching the site, a home seller can determine what their home might be worth, and buyers can see more than just the list price: they can see what houses in the area actually sold for.
“They have a very attractive setup. It’s easy to search, and frankly it’s easier than some of the Canadian platforms,” says Sauder School of Business professor Tom Davidoff.
But the UBC researcher believes there is a limit to how much a site like this can infiltrate the market.
Real estate agents Global News spoke to on background said there isn’t much worry in the industry.
Low-cost agents like One Per Cent Realty have been around for years, and it has only managed to skim off a small fraction of all the sales in Metro Vancouver.
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“People don’t trust the sale of their most valuable assets to just anyone. A good agent is worth paying a bit more commission, especially in the high end of the market,” according to Davidoff.
Redfin will have to open a brick and mortar location in B.C. as part of its obligations to meet the Real Estate Council’s regulations.
Real estate is already a market with heavy competition, but another operator only gives consumers more options when it comes to buying or selling a home.
“Consumers need to pay attention to the commission rates and understand why they are paying certain rates for certain services,” says the council’s executive officer Erin Seeley.
Redfin aims to hang out its shingle in one of the worst real estate downturns in decades, but is still promising big changes to the landscape.
The CEO says when house prices go down, sellers are more careful with their money, and that paying less commission is one way homeowners can keep more of it.
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