As a condo buyer in 2008, Shayan Hamidi was frustrated: His realtor at the time turned out to be urging him to pay $50,000 over the unit’s true value. The real-estate industry, as he saw it, was shackled by a system in which agents’ interests just weren’t aligned with customers: Agents who franchise from real estate companies are, in effect, self-employed businesspeople who have to spend a great deal of their time prospecting for themselves, while customers suffer an excess of pressure and a dearth of information.
“What people really want is a safe and simple and affordable process,” says Hamidi. And as a serial entrepreneur, he was in a position to do something about it.
Mr. Hamidi teamed up with two other technologists and one realtor to found TheRedPin.com, a brokerage with a business model that they hope will turn the market on its ear: a customer-service oriented, web-friendly firm where agents aren’t commissioned, but rather salaried and given bonuses for customer satisfaction.
TheRedPin got its start in 2010 as an information-only service: With an eye to giving buyers an edge in Toronto’s booming new and pre-construction condo market, the firm reached out to developers, becoming a comprehensive online source for information like projects and floorplans, packaged into a slick interface. Developers, in turn, used TheRedPin to generate sales leads. But some things were out of the new company’s control: Developers didn’t always answer consumer queries quickly enough to please visitors.
“That was a wake-up call for us,” says Mr. Hamidi, now the company’s CEO. “For us, the key point was improving customer service.”
So the firm took a bold step, and became a fully licensed brokerage that combined its online underpinnings with a no-commission business model. Customers who register at TheRedPin can search the firm’s database, which combines live MLS listings with third-party neighbourhood information like data on 7,000 schools and 100,000 local businesses and its inventory of new-build condo offerings–a listing that’s 60 per cent bigger than the size of MLS.
Then, when a customer is ready to take the next step, they can call concierge-like customer-service representatives or ‘Angels’ (think Apple Store ‘Geniuses’) who guide clients through the process and match them with an agent. Mr. Hamidi says that about 70 per cent of agents’ pay comes from customer satisfaction bonuses; the rest is salaried. Customers, meanwhile, are entitled to a 25 per cent rebate on brokers’ fees.
The company has grown to 31 staffers, up from six over the past year, and recently completed a $3-million round of Series A funding; they haven’t released sales figures yet.
Mr. Hamidi says that the firm’s mission is to bring change to an business that’s avoided it so far–using the web to unlock information and a new business model to put customer service first.
“We think the industry has to go through the same evolution that all the other industries have gone through.”