A Toronto startup is using technology to reinvent how homes are bought and sold
Shayan Hamidi and Rokham Fard (BSc 2007 NEW) freely admit they had no idea what kind of a fight they were picking when, as two 20-something computer science grads with ambitions to launch some kind of business, they decided to invent a fresher and more transparent way to buy and sell homes.
It started innocently enough: Hamidi (BSc 2006 St. Michael’s) had had a nasty experience trying to sell his parents’ home and buy condos for them and himself. He ended up with a part-time broker who tried to up-sell a pre-built apartment by $70,000, possibly to boost her commission. As Hamidi and Fard unpacked the experience, they realized there was no centralized database of solid information about Greater Toronto’s condos still under construction. As they dug further, they realized that the Canadian real estate industry was years behind its counterparts in the U.S., the U.K. and Australia when it came to providing online consumer information about homes and apartments for sale. “The whole experience felt pretty dated,” says Hamidi, 31, co-founder of the Red Pin. “Transparency was the answer.” Adds Fard: “We thought that would be a really interesting gap to bridge.”
The two friends, together with Tarik Gidamy and Ali Ajellu (BSc 2007 NEW), launched TheRedPin.com in 2010 with links to condo projects. Problem was, the builders didn’t respond to consumer requests for information that came through the site, prompting complaints from their earliest customers. “That was a wake-up moment,” says Hamidi. Two years ago, the partners decided to obtain a broker’s licence and remake their firm as a real estate broker with a foot planted firmly in the online world. Last year, armed with $2.7 million in investor backing, TheRedPin.com re-emerged as a gutsy, mold-busting challenger to the entrenched GTA real estate industry. Hamidi and his team say their admittedly idealistic goal is to put buyers and sellers at the centre of the home-buying process. To that end, they jettisoned one of the industry’s sacred cows: commission-based compensation for agents.
Instead, the Red Pin’s 13 sales reps are employees compensated on a salary-and-bonus formula that takes into account feedback from customer-satisfaction surveys. They must also follow closely established work-flow procedures so clients get their full attention and answer to customer service personnel known as “angels.”
“We’ve taken the interests of the agents out of it,” says Hamidi, who points out that many agent-brokers, who are essentially franchisees for the real estate firms, spend about two-thirds of their time prospecting for new clients instead of helping the ones they’re representing. The point of the Red Pin approach is to align the agents’ interests with those of the customers as a way of short-circuiting the sort of cynicism that inspired David Mamet’s searing send-up of the realtor trade, Glengarry Glen Ross (which, by they way, they’ve watched with interest).
The company has also sought to create a kind of one-stop research approach with its website: besides the MLS listings and thousands of floor plans from pre-build condo projects, the company offers a lively mash-up of interactive maps with up-to-date information about local school rankings, stores and services, as well as time-series data on housing prices.
Strategically, the point of the exercise is to soft-sell potential buyers by using links to developers’ websites, search-engine optimization techniques and email newsletters designed to draw them to TheRedPin.com’s wealth of educational information long before they’ve signed a binding broker agreement. It’s a classic honey-pot strategy: they figured they could leverage their data-rich site to entice prospective homebuyers to sign with them instead of one of the more established firms.
Most real estate agents prefer more traditional techniques, such as flyer drops and billboard advertising. But, as Fard points out, “Ninety-eight per cent of Canadians who want homes start their search online, according to Statistics Canada.” Adds Hamidi: “We don’t have millions to put into shiny ads. Our advantage is to be engaging online.”
Having completed $100-million worth of real estate transactions in the past 18 months, Hamidi and Fard feel confident they’ve seen the future of home-buying. “We think this is where the market is going to go.”
Photo by Liam Sharp.
Q&A with Rokham Fard
Last vacation? The first four years we didn’t take vacations. We took a week off after the March 2012 financing.
Do you ever unplug? We live and breathe online.
Average work week: 60 to 70 hours.
Best business advice I ever received: Launch as soon as you can and earn your first dollar as soon as you can. The first dollar is the hardest one.
Pet peeve: Being late.
Proudest moment? When you actually launch. It’s the birth that you never forget.