After a controversial (well, only among old-school real estate agents) piece on CBS’s 60 Minutes Sunday night, we have been asked how we compare to the Seattle start-up online real estate brokerage, Redfin.com. At first glance, both CityBurb.com and Redfin.com look very similar, but upon further investigation there are some important differences.
Both brokerages were designed around the current public perception of the real estate industry. This perception is that the average real estate agent is overpaid and does very little work.
- Similar to many of the for-sale-by-owner and MLS-entry-only services, Redfin is embracing this perception and adding technology (really good technology) in order to be competitive. Their goal is to be a full-online real estate company similar to what online ticketing services like Exepdia and Travelocity have done in the travel industry.
- CityBurb takes a slightly different angle, because we believe that consumers value some agents and some of the services they offer, but not at the current 6% price structure. Although we believe that the real estate industry will only be a “high-touch” industry in certain markets (i.e. high-end second homes and big city condo projects), it will remain a “light-touch” industry where there will still be a need for some personal assistance, but much of the transaction can be automated. We don’t think someone could buy or sell a home purely online, without ever having met with an agent in person.
Both brokerages charge substantially less for listing a home for sale. The real estate industry charges an average of over 5% to sell a home, whereas Redfin and CityBurb charge around $3000.
- Redfin gives sellers MLS entry, lock boxes, yard signs and access to property fliers. They also advertise listings on different online classifieds. They do a CMA (comparative market analysis) for sellers; however, they never view the actual home. For everything else, Redfin gives you the resources to take care of your needs on your own.
- CityBurb provides all the same services that an old school agent would provide, including MLS entry, lock boxes, yard signs, virtual tours (soon to be video tours), professional photography of the home, showings to any interested buyers and distribution to other agencies’ websites. However, our major difference is that we provide our sellers with automated hyper-local updates about their market including all of the active and pending data for their neighborhoods. In a similar way, we give our sellers automated access to showing feedback. Both of these features allow our sellers to make informed decisions regarding the sale of their homes.
Both brokerages give money back to their buyers. Redfin gives their buyers 2/3 of their commission whereas CityBurb gives back 1/3 or approximately 1% of the price of the home.
- Redfin has a great search feature that allows buyers to find homes online. Once the buyer has found a few homes they like (five to six), a Redfin agent will open up those homes for the buyer to tour. If the buyer wants to write an offer, Redfin helps them. If the buyer wants to keep looking, Redfin charges them a fee for more showings.
- CityBurb encourages buyers to find a few homes online, drive by the homes to ensure the neighborhood is what they were expecting, then call a CityBurb agent to open up the homes they want to see (up to 5-8 homes). If a buyer wants to see inside of more than the initial 5-8 homes, they will no longer qualify for the 1% rebate. However, a CityBurb agent will continue to work with them to find their dream home free of charge.
Both brokerages are upsetting the traditional real estate brokerage business model. Redfin and CityBurb have publicly voiced opinions about classic real estate services and the need for change.
- Redfin doesn’t claim to be a discount brokerage like the limited service companies that simply “help” or “assist” you in selling your home. Redfin is taking a completely different approach, by raising a lot of money to create an advanced site designed to do much of the old school agents’ work. They don’t compare their services to the old school agents or the discount brokerages.
- CityBurb is trying to fill the niche parked between the traditional brokerage model and the for-sale-by-owner model. We also want to change the way real estate services are provided, but we don’t want to make other old school agents change their ways in order to deal with us. Our goal is to make sure our clients have a better experience and save money, while making sure other agents (either buyers’ or sellers’) can’t tell the difference between working with our agents and any other brokerage. This is why we require our sellers to offer 3% to buyers’ agents and why we open up houses for all of our buyers so that sellers’ agents don’t have to.
Overall, the grand design to change the real estate industry for good (forever and for better) are amongst the plans Redfin and CityBurb have in common. The differences are slight and few but they are enough that both could survive in the same market (not that we want to compete - CityBurb will only be expanding to areas that Redfin is not). Until the time when we cross markets, both Redfin and CityBurb will continue to educate and serve the consumer, not the industry.
Tags: Boise Real Estate, Industry, Startup by Alfie
1 Comment »
