Interesting Internal Stats from Redfin
TechCrunch has a post up about a conference that took place in Seattle this evening called The Naked Truth 2009 hosted by Redfin. Four technology startups presented on the topic of revenue models. All examples are interesting; however, the Redfin numbers are of particular interest to me as a real estate professional and certified technology junkie.
The numbers that stand out to me are the following (Updated - A commenter pointed out that I had misinterpreted the meaning of direct and referral. A direct client is one that uses a Redfin agent and a referral client is referred to an outside agent.):
- $38,170 revenue per 100,000 unique visitors (this is massive for an internet company)
- Redfin makes $7,520 per client (20% gross margin) which use a Redfin agent
- Redfin makes $1,110 per client (50% gross margin) which Redfin refers to an outside agent
Clearly, Redfin has been getting qualified buyers (and sellers) coming to their site. Their business model is much more labor intensive than a true “internet” company. It seems the model is set up to have higher margins than a traditional brokerag company so growth should not significantly impact Redfin’s ability to scale.
Here is a post put up by Michael Arrington about Redfin. The residential transaction process is quite homogeneous and the Redfin model seems to be catching on with comsumers. This would be much harder to accomplish in the commercial market as each transaction can be vastly different and the people with the expertise required to succesfully close each transaction will not sign on for $5,000 – $7,000 per deal.
You have you statistics wrong. A direct customer uses a redfin employee as their agent. A referral is referred to a partner agent. They do very little work on partner referrals, so their margin is higher. Those revenues have nothing to do with which website they came from.
Thanks for pointing that out. I have have updated the post accordingly.