Bestseller by Gerald Posner (1994)
We want to close our blog book on Redfin with this post. So here goes. If you want to challenge their model, you have to challenge their USP. Redfin’s USP for buyers is the 2% rebate. That’s what you’re up against at the core.
If any real estate agent or broker wants to convince a buyer that they are better off economically using you instead of Redfin, you have to overcome this core benefit. Here’s one way to do it:
First, you need to gather some sales data—- you have to zillow Redfin. Determine what percentage off the listing price, on average, the buyer saves by using Redfin. Don’t forget to include the 2% rebate. Now, calculate the average percentage savings off the listing price you have saved buyers through your skills. Now compare the results. Do your buyers net a greater savings than Redfin’s? Then, by god, go ahead and shout it from the rooftops. Put your marketing machine to work to show the data which makes the case that you are a better money play. The data hopefully reveals that an agent, having seen a home, can get a higher savings than one who hasn’t, even with a 2% disadvantage, especially in a buyers market.
If you look carefully, you will notice that Redfin promotes their buyer savings by stating it as a number, not as a percentage. What they don’t reveal is what total % off the listing price, on average, they save the buyer. If they save the buyer, on average, 2% negotiated off the list price + a 2% rebate, the net total savings is a little less than 4%. If you on average save buyers x % off the listing price, and that percentage is greater than Redfin’s, then the buyer is better off with you, rebate notwithstanding.
Sharpen your pencils and get to work.
That’s how you fight fire. Case closed.
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