Redfin vs. traditional broker

[EconProf]

Anybody here have any experience with Redfin. As I understand it, they charge 1% to get you listed and then you specify the commission for the buyer’s broker, supposedly 3% or 2 1/2%. Given today’s house values, it seems the old 6% (now 5%?) model is obsolete. Thoughts?

[svelte]

My son has bought through Redfin, transaction went very well. As I recall he got cash back when the sale completed.

Also have a close friend who is a Redfin agent, he loves the company and touts them every chance he gets, whether you use him specifically or not.

I think if I ever sold again (not likely) that is the route I’d go.

[sdrealtor]

Ive done a transactions with them representing buyers. My experiences have not been great. Each time I entered hoping for the best and being dissapointed.

They are working a bunch of transactions, dont know the details of the transaction and didnt counsel their clients properly. When I receive an offer nowfrom a buyer represented by them all things equal I consider that a weakness vis a vis another buyer with traditional representation. In full dislcosure, I feel the same way about some agents Ive worked with also but with them it was systemic. You can get the same financial arrangements with traditional experinced involved agents.

As for your friend my experience is they love them until they dont. Most of the top producing agents there move on after a few years.

For many they are fine but if I had an out of area family or friend that asked me Id send them elsewhere. YMMV

[EconProf]

Thanks SDrealtor. I’ve learned over the years to trust your opinions.
The unusual times we are have currently in San Diego real estate may be especially helpful to Redfin for several reasons.
Given that for sale inventories are unusually low, prices have risen markedly, savvy buyers can access information they previously couldn’t, and bidding wars start within hours of a listing hitting the market (or so I’ve heard), Redfin’s approach to cutting the old commission rate down seems logical. And isn’t Zillow getting into the game in a similar way? All this suggests selling real estate with the old rules is being eroded by technology, more freely available information, and a new competitor that challenges the status quo.
Lots of other industries have been shaken up by similar forces and shrunken, such as newspapers, Amazon, taxicab companies (think Uber), hotels (BnB’s), etc.

[svelte]

[quote=sdrealtor]

As for your friend my experience is they love them until they dont. Most of the top producing agents there move on after a few years.
[/quote]

You could say “employees love them until they don’t” about virtually any company in any industry.

Top producers can probably make more $$ on their own, my friend is very sharp and appreciates the security provided by the great benefits that Redfin offers. He went through a very costly medical issue last year and they covered the expenses and gave him generous time off to recuperate. I don’t think he’s going anywhere soon, he’s a very loyal guy.

[Anonymous]

They charge 1.5% for the listing side.

Way down in the fine print, they tell you that if you also buy a home from them, they will mail you back 0.5% at the end.

But once you figure it out that on the buy side they only send out people to open the door (and pay them $50/ea.), you realize you are on your own. You should also consider what could happen if you are in a multiple-offer situation, and your offer was submitted by the red team.

[scaredyclassic]

i used redfin to buy and got money back. agent was super patient, we were shopping about 18 m. and looked at about 50plus houses.

was a short sale, with problems mid sale, including who’d pay for a repair, and he did I guess ok, though I wasn’t fully pleased with how he handled it, but i dont think that was redfin, just pressure to close.

[sdrealtor]

Just a few more words but first a disclaimer. I have nothing against Redfin and love their technology. Them being more successful does not hurt me nor does them be less so help me. As an individual agent doing anywhere from 8 to 20 transactions a year I stay out of the politics in this business.

With that said the money in real estate is made by the 20% of agents that do a decent amount of business year in and year out while watching costs and running a profitable business. Thats what I do and what I suspect Jim does as well.

The brokerages we work under are not very profitable. They can only make money on volume, by skimming a larger share from agents that do the actual work or ancillary services (title, escrow, lending).

The same financial arrangements offered by Redfin are offered by many far more skilled and experienced agents. We can do so more profitably as we are more nimble, have more control over costs and less overhead.

While they can get listing market share by discounting their side their survival depends upon representing buyers and getting the 2.5% on the buyers side that full service agents support.The brokerage business is very low margin. If they ever truly took over they would have to change their financial model or the business would collapse because it could not be profitable.

Its a delicate balance between old and new and both are needed to support the whole shooting match. The old rules are NOT eroded by technology but rather technology is being used to skim a segment of the business off by venture backed and publicly traded companies with the sales pitch they will change the business. Their real goal is to build a company that can be sold to a greater fool. Having worked in prior careers in the world of VC Ive seen these VC guys at work from the inside. They are best sales people in the world and could sell an eskimo ice. Selling the promises of riches and changing the industry to a bunch of realtors could be easier than selling that ice to someone on a deserted tropical island.

I have no fear of the redfins, zillows or ventured backed tech brokerages. They are all built to be sold not to succeed.

[sdrealtor]

[quote=svelte][quote=sdrealtor]

As for your friend my experience is they love them until they dont. Most of the top producing agents there move on after a few years.
[/quote]

You could say “employees love them until they don’t” about virtually any company in any industry.

Top producers can probably make more $$ on their own, my friend is very sharp and appreciates the security provided by the great benefits that Redfin offers. He went through a very costly medical issue last year and they covered the expenses and gave him generous time off to recuperate. I don’t think he’s going anywhere soon, he’s a very loyal guy.[/quote]

Im glad your buddy had a safety net provided by them and hope he’s doing well. I also hope this country gets off its ass and starts addressing what i see as the #1 issue in our country which is lack of affordable health care for everyone.

Those benefits do not come cheap and as I mentioned above real estate brokerage is not that profitable. RDFN has never been profitable and has no profit in sight. I hope your friend understands loyalty is one way street in corporate America and frankly why so many of us have chosen this business to get control of our lives. When it no longer makes sense to operate as they do all bets are off for your friend.

I think the analyst report from ML/BOA sums up RDFN nicely.

An agency like any other, other than losing money

Redfin’s thesis has always been based on the fact that they were taking market share aggressively and (somehow) leveraging technology to create a fundamentally better real estate brokerage. The truth, laid bare in 2Q, however, is far less interesting: they are a discount brokerage that has driven share gains on low prices and marketing spend. In 2Q, they lost market share and their core/real business contracted as the market for housing was shut down in the first half of the quarter with back half of the quarter results and 3Q guidance showing improvement as macro forces (heavy Fed liquidity
injections, move to suburbization) drove overall improvements in the housing market.

They are a macro play on housing – and a very expensive one at that.

[sdrealtor]

[quote=scaredyclassic]i used redfin to buy and got money back. agent was super patient, we were shopping about 18 m. and looked at about 50plus houses.

was a short sale, with problems mid sale, including who’d pay for a repair, and he did I guess ok, though I wasn’t fully pleased with how he handled it, but i dont think that was redfin, just pressure to close.[/quote]

The financial arrangements offered by RDFN when you bought as no longer available. It was a loss leader to build market share and was never going to work. They are not really different from independent agents now except for the lack of personal service. As agents the most important thing we do is communicate and work together with other agents to resolve what can be complex issues. The more people invloved in the transaction the less likely one is to get past those issues. I could tell war stories all day. Most expereinced agents can

[Anonymous]

sdrealtor said: ‘As agents the most important thing we do is communicate and work together with other agents to resolve what can be complex issues. The more people involved in the transaction the less likely one is to get past those issues. I could tell war stories all day. Most experienced agents can.’

This is where Redfin agents are different – they just process orders, and don’t get too involved. It’s ok with me and maybe all agents should have a list of different services available with different fee structures.

The problem with Redfin is Glenn. He insists on calling his staff people ‘realtors’ and claims they do the same as us – but they don’t. Every employee has a different role as they pass you down the conveyor belt.

Glenn likes to play the race card, which he has done frequently, but Redfin doesn’t show lower-priced listings – claiming they are below the Redfin minimum price, and for buyers to just call the listing agent instead.

He also publicizes how many people buy homes sight unseen, while pushing Matterport 3D tours as a substitute. But not seeing a home with a professional realtor before making an offer is what’s good for Glenn, not the buyers.

The truth deserves to be exposed.

[svelte]

Kind of predictable that realtors on here would not like Redfin.

There may be valid points to their position, but there are also folks who use Redfin and get a pleasant result – with more money in their pocket at the end of the day.

Different strokes for different folks.

[Anonymous]

Hello svelte!

It’s not like or dislike – it’s truth vs. BS.

Another common assumption is you would make more money – but it ignores the fact that houses sell for different prices, depending on the listing agent.

Realtors who are very experienced at delivering advanced marketing techniques that generate the maximum amount of qualified buyers who are then given personable and full attention that encourages them to pay top dollar AND make it to the finish line are the agents who sell your home for retail, or retail-plus.

The rest leave money on the table. A lot of money.

All agents are not alike. Get Good Help.

[svelte]

When my son bought his house, we did a lot of research before he bought. I’m that type of guy – I look at things from every angle possible before we jump in.

I know he did not overpay for his house and actually got quite the deal, so he did not leave money on the table – I can guarantee you that.

For less thorough people, I can see where a traditional type of realtor would make sense. We aren’t babes in the woods when it comes to buying and selling. FYI I did sell a house I owned in northern Calif in 2019 and I did not choose Redfin to do the sale. I felt that would be a drawback because the home was in a small tight-knit community and I felt the realtors would discriminate against a Redfin-listed home…though that is getting harder and harder to do with the internet and all.

I evaluate each situation and choose a realtor appropriately. With my Nor Cal home, I felt Redfin did not make sense. With my son’s San Diego purchase, they did.

Also, Redfin gets a bit stronger each year.

[img_assist|nid=27214|title=2019 Redfin Market Share|desc=|link=node|align=left|width=466|height=203]

And somebody somewhere is betting on their stock:

[img_assist|nid=27215|title=Redfin Stock Price Aug 2020|desc=|link=node|align=left|width=466|height=291]

[sdrealtor]

[quote=svelte]Kind of predictable that realtors on here would not like Redfin.

There may be valid points to their position, but there are also folks who use Redfin and get a pleasant result – with more money in their pocket at the end of the day.

Different strokes for different folks.[/quote]

Like I said I do not dislike them and they have no impact on my business. Like Jim said its truth vs BS and what we see and experience personally.

Lots of people have good experiences with them. Lots of people have good experiences with stupid, unethical, incompetent agents. I know hundreds of agents for a couple decades and there are lots of great ones but there are also tons that are incompetent, would sell their mother down the river for a commission check or just plain dont care.

I have worked with many agents I wouldnt trust to sell their own home only to hear a past client or friend fawn over them.

The difference between what they and you experience and what we experience comes down to this. You buy/sell a house, maybe two, maybe 3, 4 or 5 but that is your life experience. More often than not real estate expereinces go well and when they dont all is forgotten once it closes and the property appreciates a few years.

But we see these things across dozens of transactions personally and through our colleagues eyes. We have a much bigger body of experience to evaluate these things on. Things dont always go well. Mistakes are made all the time. People get screwed all the time. It is truly the wild west out here and while some avoid issues you never know what lies around the corner.

And the more money in their pocket at the end of the day is patently false. There are quality independent agents that offer the same or better financial arrangements. There are expereinced agents who simply do a better job while charging more but netting more.

Again I dont dislike RDFN. They have done a lot of great things. Ive met many of their agents who I genuinely like. I had an inexperienced Redfin agent represent a buyer that put more money in my sellers pocket then they ever had a right to get. I use their app every day when out in the field. I have my clients use it also. But to claim that over the long run you are getting the same for less just isnt true and I know this from having a few hundred real estate transactions under my belt.

[Author]

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