TEXT OF INTERVIEW
Tess Vigeland: So here’s how the home-buying process has worked since dinosaurs roamed the earth: Throw the family in the car, schlep around to a few open houses. Getting serious? Get a realtor. But these days there’s another option: Go online.
Companies like Zillow, Trulia and Redfin have transformed the real-estate business over the last decade. So while we’re here in Seattle, we decided to drop in on Redfin’s headquarters for a chat with Scott Nagel. He’s their vice president of real-estate operations. We talked in a conference room overlooking the city’s waterfront, and I asked Nagel for a little Redfin history.
Scott Nagel: Redfin started back in September of 2004, when three guys got together and they were looking at real estate, and noticed that you can find homes, but you can’t really tell where they’re at on the Internet right at that point. And they had the idea that “Wow, it would make a lot of sense to put homes on a map and be able to search for them that way.” Redfin in its current state really started in February 2006, where they had the website and decided “Hey, we should pair that with the brokerage that’s a little bit new and different than anything else that’s out there.”
Vigeland: You know, when you think of going online and buying stuff — books, clothes, even cars — certainly makes sense. But boy, when you think about buying a $200,000 home, $500,000 home, beyond that, it’s hard to conceive that that would be a good idea.
Nagel: Well, you know, if it truly was just an online experience, I’d agree with you. But I think the key difference, we have the online component, where people can find a home and see the pictures, but we pair that with an expert agent that comes into play right when you need it. They put their expertise, and their negotiating experience to work as soon as you’ve decided on what home you want to buy or anytime earlier when you have questions. So it’s not that we won’t work with you and help you guide your search, but that a lot of our clients are fully capable of doing that on their own, but realize, “OK, we found the one, now help me get it.”
Vigeland: Now, this was not something that made the real-estate industry terribly happy. They live on commissions, and they live on showing people homes and knowing neighborhoods and knowing markets. Talk to us a little bit about that reaction and how you responded to it.
Nagel: There was definitely, I think, some concern, some fear on the part of the traditional real-estate market. One of the things that I haven’t mentioned before, when we represent a buyer and the deal closes, we’ll take half of the commissions that we receive, and we’ll give that back to the buyer. So on a $500,000 home, 3 percent commission, we’d get $15,000. About 10 days after the close, we’ll send the buyer a check for $7,500. That had traditional agents very concerned.
Vigeland: But then, part of the real-estate process and having worked with an agent myself, is that I may not know what I’m looking for. So if I’m coming to your site, and I’m dropping in five or six homes into my cart, part of the role of the agent is to say “Well, this isn’t quite what you’re looking for, but I have this one over here.” I mean, honestly, sometimes the agent will almost be a counselor, as you go through the process. And I think that’s something that the real-estate industry would say could be missing through merely using technology for something as important as, well, the biggest purchase of your life.
Nagel: You know, there are some people that are not a good fit for us. If you’re not comfortable with technology, we’ll see right upfront, if you don’t know how to use the Internet, don’t have an e-mail address, don’t know how to fax, we should not be working together. But we do think that we’re the best agent for a large percentage of the people out there that have a decent idea of where they want to live and what they’re looking for. They can put their tour together, send it in, and we’ll pick it up first thing in the morning, and we’ll work from there.
Vigeland: Now, how many markets are you in at this point?
Nagel: Right now, we’re in 12 markets.
Vigeland: So, right now, you’re up and down the West coast, I know.
Nagel: We’re up and down the West coast, we’re in Chicago, Boston, Long Island, Washington, D.C., Atlanta, Phoenix.
Vigeland: Major metro areas.
Nagel: Exactly. Our goal right now is to get into the top 25 major metropolitan areas in the country. Our model doesn’t work in some place in the Midwest, Nebraska, South Dakota, where the home prices are low and the rebate doesn’t work quite as well in those types of situations.
Vigeland: Now why not? A percentage is a percentage, isn’t it?
Nagel: It is a percentage, but if you have a $100,000 home a 3 percent commission is $3,000. You know, splitting that, $1,500 isn’t enough — doesn’t work for us, doesn’t work for the client.
Vigeland: What is it with new avenues of real estate and Seattle. I mean, this is the home of Zillow, it’s the home of you. It’s just interesting, because Seattle’s not necessarily a hot bed of real estate anything.
Nagel: No, it is interesting. And I think it’s more just the environment and the technology and the entrepreneurial nature of Seattle, more than anything to do with real estate. And so I think there’s just a lot of creative people here. And when they’re done with one thing, everyone sits down and goes, “OK, what are we doing next?” And you know, and it’s usually something where they’re probably in the process of looking for a home and went, “Wait a minute, this isn’t right. This is broken. We can make this better.”
Vigeland: Scott Nagel is the vice president of real-estate operations here at Redfin in Seattle, where we’re looking out on beautiful Puget Sound. Thanks so much for chatting with us.
Nagel: I’d love to show you around. Do you have a few minutes?
Vigeland: Yeah, let’s do it.
Nagel: OK, great. So we’re heading down now to where the engineers are. They’re the ones, like I mentioned that put the website together, that are constantly working on new releases, new features, more data on the website.
Vigeland: And by the way, I should mention that this looks like a very late 90s dot-com office. It looks very fun.
Nagel: It is.
Vigeland: Bright colors.
Nagel: Yes, this used to be the offices of the Cranium company, the ones that put out the fun board game that has a lot of different colors. So you’ll see a lot of purple, a lot of blue, a lot of yellow. Yeah, the new power generation lounge is interesting. It’s a Prince motif — purple furniture, the Prince symbol — and all for reasons that no one’s sure of.
Employee: Love Sacs!
Nagel: Yeah, so giant bean bags, called “Love Sacs” spread around. We’ll just have people flop on them and talk or when kids visit the office, they are a huge success.
Vigeland: What are we setting up for here?
Nagel: So now, every Monday, Tuesday and Thursday, we bring lunch in for everybody.
Vigeland: Nice! It looks and smells like lunch is here.
Nagel: Yeah, it brings everybody together. And you get that cross pollination of real estate — “Man, I wish we had this!”
Vigeland: Engineers and agents living together.
Nagel: In peace and harmony. It’s fantastic, it’s a beautiful story.
Vigeland: Thanks for the tour, Scott.
Nagel: Hey, you’re welcome. It was a pleasure.
Vigeland: Appreciate it.
Nagel: And thanks again for coming to see us.
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