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This is the fourth installment of Inman’s Talking Talent series. For Part One, click here. For Part Two, click here. And for Part Three, click here.
With everything that has been happening this year — commission lawsuits, the DOJ, the tepid market, etc. — Redfin might not have been on a lot of radars this year. But it should have been.
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While much of the industry was dealing with existential dread, Redfin made a major pivot: Redfin Next. The program, announced late in 2023 but rolled out nationally in 2024, jettisoned Redfin’s old salary model for agents and replaced it with commissions. The move was explicitly a play to attract stronger talent; while some companies have turned to acquisitions or franchising or global expansion to find talent in these uncertain times, Redfin chose a different path and reimagined one of its core differentiators.
Jason Aleem
As part of the Talking Talent series, Inman recently caught up with Jason Aleem, Redfin’s chief of real estate services. The conversation touched on Redfin Next, and how the company thinks about recruiting and retention at this moment, among other things.
And the takeaway from this conversation is that, according to Aleem, Redfin Next’s commission model is working. The company has brought on hundreds of agents since launching the program, some of them “boomerang agents” who previously worked at Redfin, and the agents themselves are earning more money. In that light, Aleem described the move as clearly the right one for Redfin.
What follows is a version of Inman’s conversation with Aleem that has been edited for length and clarity.
Inman: It has been a new type of year for Redfin with the pivot to the commission model. Talk to me about how that’s going.
Jason Aleem: It’s been one of the most transformative things we’ve ever done for the company and for our customers. And it’s all built around us having the best agents and being able to provide the best customer experience.
If you look at what we’ve done so far, we’re at about 1,800 agents or so. We’ve made almost 700 hires under this Next program, which doesn’t sound like a massive number compared to some of the other brokerages. But we don’t need that many agents to be a small but mighty team. And that’s partly because if you look at Real Trends, the amount of deals we do per agent is so much larger than the competition. So we’ve been able to staff pretty aggressively through Next.
How many markets has this model rolled out in?
We did this in four waves. It is now in all Redfin markets. So we kicked it off in four markets and quickly saw that this is exactly what’s good for customers because we saw an improvement in our close rate. And that’s how many people come and meet with us and decide to actually work with us. And then we saw more agents that were much happier because they were starting to make more money.
Then we started to see a different mix of agents and talent being attracted to the business. So we quickly scaled from four markets in January to being nationwide as of the end of October.
We saw a little bit of attrition, which is to be expected with a big transition like this. But the vast majority of our top agents stayed. The amazing thing is we started to see a lot of what we call boomerang agents return to the company because they’ve seen that this plan really works.
As this transition has rolled out, have the type of transactions your agents are handling changed? For example, are your agents doing more or less luxury? Is the typical Redfin deal different now?
Most of the deals are the same.
We didn’t change a ton in regards to how we generate demand. But I would say that a lot of the talent that we’re attracting, they drive a lot of loyalty business that is in higher price points. And that has led us to doing more luxury because they bring some of that business with them.
The other thing I would say is that a lot of the people who have joined are just better in some of those different high-end spaces. So we’re taking care of that luxury clientele better than what we did before.
Is the average Redfin agent earning more today than they were a year ago?
If you look at our wave one markets, which were basically Southern California and San Francisco — so LA, Orange County, San Diego, San Francisco — the people who are in those markets are making about 25 percent more this year than what they did the year before.
And then if you go to our wave two bucket — which is Chicago, Dallas, Miami, New York, Palm Beach and, I think, D.C. and Connecticut — they’re making about 20 percent more than what they did the year before. And that’s on average in both of those places. But you do have some people in those markets who are absolutely crushing it.
We set a goal where we wanted to have our first million-dollar producer who actually took home a million bucks. And we did that. We made it happen in Orange County.
Then we also had an agent in our Chicago market who ended up doing like a quarter million bucks in their first three months on this new plan. So when it comes to increasing compensation year over year, it’s pretty clear that this is the plan.
You mentioned boomerang agents. Do you have any numbers on how many folks have been at Redfin, left, and then returned?
So one of the things I’ve been most excited about are the boomerang agents. These are the folks who know Redfin, know Redfin culture, know Redfin systems, know Redfin leadership, and for whatever reason decided to leave and try something else out. And that’s great. Then they heard about this new plan and said, you know what, this is the best of both worlds.
Out of that almost 700 agents that I mentioned earlier, about 13 percent of them are boomerang agents.
Are you going out and actively headhunting, or are most of the people who join Redfin seeking you out?
Both.
In the past, we were much more of a passive recruiting team where a lot of people sought us out.
But we have a new mantra and it’s “sales leaders are recruiters.” And a lot of our sales leaders who had mostly been focused on just managing the team, making sure the customer is well taken care of, we’ve pivoted a large portion of their time to building their team via recruiting and retention.
So our sales leaders who are closest to the business are really engaged in the process. So if you look at the mix, we have a healthy mix of new talent that’s coming because an existing agent referred them.
This year has been arguably the most tumultuous for real estate ever with all the commission lawsuits. As you’ve talked to agents during the recruiting process, what are they saying?
There have been tectonic shifts this year. We want to have those conversations with people. And it’s one of the best things about having sales leaders as recruiters is that there are real conversations happening on the ground with really informed people.
When it comes to things like NAR, we really try to take the approach, going back to our values of transparency and our strategy of ease and being on demand, where we make it easy to get out to see at home. But we also wanted to make sure we stayed completely above board and compliant.
So we have our fee agreement, where it’s super easy for people to get into a home, but we’re also able to abide by the rules. That’s attracted talent. There has been talent who stay with us because it means they’re going to get more at-bats.
Our stance on Clear Cooperation is wanting to make sure the marketplace stays open and that we’re taking care of customers and sellers in the right way. That has been one that our agents have found attractive.
You mentioned NAR. Redfin itself left NAR, but I’m curious about the agents themselves. Are most Redfin agents still members?
Most agents are still members. If you do the research it’s pretty darn hard to extract yourself from that organization because, operationally, so many parts of the business are dependent on access to information or access to forms or cooperation.
We still have our same stances on some of the things that need to change with NAR. But at the end of the day, we need to take care of customers and agents. So we’re making sure that we’re being thoughtful about how we extricate ourselves from that situation.
What’s your message for agents and brokers right now?
Give us a call. Let’s talk. The world’s changing.
I do think that there will be more and more consolidation in the space. If you want to go to a place where you can 100 percent focus on the customer and the things that you do best, you should give us a call because we laid out a bunch of easy buttons for agents to be able to pop in and do what they do best.