Redfin.com: the future, or a crock?

Everything else
1

Redfin.com. Seems pretty cool – kind of like Expedia for the real estate industry, or something. Save tens of thousands of dollars while still getting basically the same service.

Anyone used them? Anyone know anyone who’s used them? Is this the way of the future, or is it a colossal scam of some type I am not clueful enough to understand?

Please advise, since we’re meeting with our realtor tomorrow to potentially sign a three-month contract (assuming she doesn’t think our house should price too high), and it’d be really nice to have a plan B.

2

I’ve been looking at houses recently, and they seem like the real deal. A an old co-worker of mine just used them to buy a house, and they were pretty happy.

I’ve really only investigated them from the buyer’s side, but it seems pretty slick. They give you the tools to find a house, and when you want to make an offer, then you get a full fledged agent. Once you’re at that point, it’s no different than having a normal realtor. Especially nice is that their agents don’t work on comission - they work on customer satisfaction bonuses instead.

My GF and I ended up going with a standard realtor for a few reasons, though:

  • Neither of us have owned before, so we really like the idea of someone walking through the process with us. We’re concerned that without some guidance, we’d make bad choices that outweigh the savings from Redfin.

  • As a buyer, you get one 3-hour tour to see houses with a Redfin agent. You spend $250 for each 3-hour tour after that.

  • The realtor we went with (recommended from several people we knew) has contracting experience, and is going the extra mile to help us make some informed decisions - the foreclosed house we’re looking at needs a lot of work, so he’s the one arranging estimates and additional walkthroughs.

My understanding is that selling a house is a bit different, with them listing the house for a flat fee. You save money by giving them a flat fee instead of a comission, but you’ve got to do a lot more work yourself. What sucks is that there’s no real way to get out of paying the buyer’s agent comission, sadly.

They usually have meet-n-greet nights with the agents, but that won’t work for you given your short timeframe. You may just want to call them and see what they say about listing your house.

3

One of the best reasons to go with a realtor, especially if you’re buying a house, is the experience they bring not only to the area, but their connections. When I bought a house a few years back, I found an older lady who not only knew every neighborhood in the area (showing me places I would never have ordinarily thought of) she knew everyone from the other agent to the title people, inspectors, everything else. It helped out a lot, especially being a first time buyer.

And the money an agent is paid is pretty much built into the price of a house, so whether you go with an online company or a flesh and blood agent, you’re going to be paying the same amount anyway. I know this from the time I used to work for a software company that processed mortgage documents: the amount that the agents get is a set amount that isn’t up for negotiation in most cases. I mean … they are performing a service and that’s how they get paid, so I see no problem with it. Any reputable Realtor is going to be on your side, because they will want to keep you as a reference, and even down the line, if you end up having to sell your house (like I did a few years later) they will be there to help you sell as well.

IMO, it’s an industry that really is people driven – and you want to have a good person on your side helping you make the negotiation.

4

The percent commission is set at time of listing (some states have a mandated range, others are wide open). You can set a smaller percentage, but you’ll get less Realtors coming around to show your house, as they’ll get less of a commission if their buyer bites. The commission can additionally be split differently between the buyer and seller agents (typically, it’s 50/50), depending on the deal that is struck. Finally, if the agents aren’t independent (as most aren’t), they end up getting anywhere from 5-15% of that cut, with their agencies taking the lion’s share.

I always hate to see places like Redfin or FSBO.com (or whatever) blame the Realtors for the market or for the difficulty you have buying or selling a house. As Ath and Crater have mentioned, they bring experience and knowledge to the transaction that can turn in your favor quite easily.

Sure, like in any sales profession, you’ll find some individuals aren’t as good at the game as others. But with a system like Redfin, you’re speaking to the lowest common denominator of targeted experience. You have no chance of finding a good deal like what’s been stated already in this thread.

5

Sure, that explains why the news is full of sob stories about weepy but stalwart families of peach pickers and gas station attendents and ditch diggers getting foreclosed on their $500k houses.

Realtors are salesmen, salesmen are scum, and that 6% commission is one of the biggest scams ever put over on the public. “Built in”? Sheesh. Now that we’re finally moving into a buyer’s market, I hope they choke on their diseased forked tongues and drown in their own black stinking bile.

6

No, that would be the fault of a Mortgage broker, not a Realtor. A buyer’s agent isn’t selling you anything, they’re helping you buy a house that fits into your budget, and that’s a fine distinction that some people don’t seem to understand. If your own agent is giving you the hard sell on a house, it’s time to find a different agent. The good ones, the ones who have been around a long time, and who know what the housing market was like before the boom, are the ones you want to look for.

7

Bullshit conflating of Realtor and Lender. Just because some Lender out there decided to put risk into the hands of people who couldn’t pay off the loan in the first place doesn’t mean the Realtor is at fault.

Any Realtor, if you don’t already have financing, will try and match you up with a bank or a broker, but it’s that bank’s decision on whether or not you’re qualified for that loan. The scenes that you describe are the fault of the lenders that figured they could squeeze a few bucks of interest out of some poor folks who should have known better.

What a ridiculous generalization, troll.

8

Much like wussy divorce lawyers or fair-minded malpractice attorneys or convenient HMO plans or leprechauns, I’ve heard of such things but never met one.

9

Your strawmans are full to overstuffing today, stusser.

10

Obvious troll is obvious.

11

I know you guys had a great experience with your realtor, but the fact is that you paid someone 6% the cost of your new house for a relatively small amount of work.

Now realtors are certainly useful; they understand the environment, help you market your home properly, facilitate all the paperwork, and guide you through the legal side. That’s a valuable service, certainly valuable enough to be billed at 100s of dollars per hour. A realtor might spend 40 man-hours to sell your house, and for that time they should be compensated accordingly. Even at $200/hour, that’s only eight grand.

12

I would agree it’s mostly the fault of mortgage brokers, but not entirely. It took several firm reminders about our price range for our realtor to stop taking us to houses priced $100k - $250k ABOVE our maximum price. In this case, our realtor (who came highly recommended and, to be fair, did find us a great house) also tried to pressure us to settle at a price $20k above what we ended up paying after some negotiation.

A good realtor is a good thing to have, but their interests and your interests are not necessarily congruent, and it’s definitely important to keep that in mind.

13

I’m with stusser on this one, I’m not a fan of the way realtors are compensated. It gives them motives to churn houses fast instead of waiting for the right deal or the best price for the party they represent. It gives them zero motive to encourage someone to avoid a bad deal because they only get paid when a deal closes.

They may have some useful experience, especially for a first time buyer, but I don’t think that’s valuable enough to be worth the thousand of dollars of commission they reel in.

Such agents used to make sense in an age when it was difficult for buyers and sellers to connect in a local market but the internet has changed the game. The realtors are either going to adapt to better methods for more reasonable fees or die. I suspect the former is more likely and the next few years should be an interesting shakeout.

14

The two agents split the commission, so each really gets a paltry 2.5% - 3%. On a $400k house, that’s $10k - $12k each, which while more than your rough figure, isn’t like they’re each making $24k on the purchase.

From what I’ve seen in my area, commissions are around 2.5% with the market being as bad as it is, so at least that’s 1% less you pay to sell.

I agree, though, it really does feel like a scam. We started looking at houses through a bunch of websites (Zip Realty, Redfin), so by the time we started talking to a realtor, it was like “Hi, these are the houses we’re interested in - let’s go see them”. I really started wondering what this guy was bringing to the table that was worth $8k.

So far, we feel like he’s pulling his weight. He’s asked a lot of questions about what we want or don’t (and remembers the answers), and offers his opinions on different houses that we’ve seen. He hasn’t tried to push anything outside of our stated range yet, which has been nice.

I really hope that the Redfin model takes off - I like the idea that realtors are paid a salary and receive bonuses for customer satisfaction. It seems more transparent than the current ‘used car salesman’ model.

15

You’re obviously misinformed, so I’ll try to relate this to you, again:

6% is divided between the seller and the buyer (typically 50/50). If your Realtor works for an agency (Century 21, for example), that agency will take at least 90% of that commission. Additionally, the agency will take out any costs incurred during the listing of that house from the selling agent’s commission. If the agent advertised your house the paper, the agency was billed, and they pass that cost on to the agent.

Typically, a listing agent will walk away from a sale with half a point to 1.5%, depending on the deal with their agency (some agencies incentivise their agents through increased percentages based on dollars sold and goals met). In my area, the average house costs 165,000. This means that a Realtor walking away from a typical sale will see something like 800 to 2000 dollars, before the agency charges them for advertising. If an agent put at least 40 hours of work into selling that house, that’s 20.00 to 50.00 an hour, before costs.

Subtracting costs (say, 100-200 for advertising over the time of the listing, 80-100 tech fee for lockboxes (etc), 100 for signage, and any costs associated with hosting open houses – some Realtors will put out a spread of food), a Realtor on the bottom end of those percentages will be paid less than minimum wage.

Realtors also have fees and dues for their status in the profession. The Wisconsin dues add up to something like 500.00 a year. If you don’t pay them, you can’t work as a Realtor.

On top of this, Realtors are contractors, and are 1099d by their agencies at the end of the year.

My house has been on the market for 7 months, now. My agent is working for pennies and to pay off her bills to the agency.

16

A good Realtor makes a comfortable living off of referrals. A bad Realtor will be eclipsed by even the most cut and dry listing services. Ask any Realtor, and he/she will tell you that cold-calling expired listings, mailers, and any form of self-advertisement is to shore up their existing referral business.

Because of the beleaguered market, it’s increasingly important to Realtors that they provide informed knowledge to their clients, and create enough of a service to their buyers and sellers that there’s no question that the repeat business will come their way eventually.

You get what you pay for in any case. If you want to buy a house off the Internet, be my guest, but you’ll find that you’re not getting any better service than that douche that wants to sell you the flea-bitten rag on the wrong side of town for 20k over sticker. The only difference is that you’re not paying the douche at the agency, you’re paying the douche running the online listing service (albeit with less money).

17

That’s a really sad story but who cares how it’s split or what they actually take home? I only care what I’m out of pocket. It’s just too much money, and it shouldn’t be “priced into the cost of buying”. Realtors provide a worthwhile service, but it shouldn’t be tied to the price of the home.

18

You were the one that seemed to care, and you seem to have a reading comprehension issue, so I explained to you.

Like I said above, you get what you pay for. If what you’re looking for is the same process by which you purchase used dildos on eBay to purchase your home, then be my guest.

19

I see that housing prices have come down some.

20

Are you a realtor yourself? You seem to be getting sand caught in your vagina.