When we were purchasing our “forever home” a couple years ago, we did a lot of the searching on Redfin.com but made the purchase with a full service agent.
Redfin.com is a real estate search site that has full-service agents on staff to help you close on a home.
I would do all of my searches with Redfin.com, go to open houses, and otherwise use the service like my own personal home search engine. At the same time, we had a full service agent who was willing to continue scouring the MLS (multiple listing service, the real estate registration service used by brokers in our geographic area) knowing what we were looking for.
We would eventually find our home through very creative legwork on the part of agent, which I’ll explain below.
In using this dual system, I became familiar with the advantages of both methods (Redfin vs. full service agent).
Advantages of Redfin
The number one advantage of Redfin is in cost savings. The standard brokerage commission on a home sale is 6%, with 3% going to the buyer’s agent and 3% going to the seller’s agent. When you buy with Redfin, they get their 3% Buyers’ Agent commission and splits a portion of that with you. The amount is based on a sliding scale and that amount is shown on each listing on Redfin.
I just peeked at a listing for a $397,000 townhome nearby and the commission refund was $2,780 (0.7% of the purchase price).
Redfin is able to do this because they pay their agents on a flat rate, rather than a percentage commission.
Redfin’s other advantage, which you get even if you don’t buy through them, is one of the most well-designed real estate search engines available. I’ve looked on some of the local and national real estate brokerages and their searches are abysmal. While you don’t get the up to the minute results like with the MLS, it’s good enough in a market like this one.
Another advantage in the data each of the listings pull in. If you’ve ever seen a standard real estate listing, it doesn’t have much outside of the specifications of the property. Redfin pulls in from various data sources to include a lot of local pricing data, schools, and even notes from other agents who have visited. It just speeds up the research process.
Advantages of a Full Service Agent
Hands on attention and a better understanding of the area you’re looking in. A full service agent, in helping you buy a home, will be vested in trying to get you into your ideal home as soon as possible and should spend the time to understand your needs. They don’t get paid when you look at houses so they’ll only want to show you the ones they know you’ll like.
They will also get creative. When we purchased our second home, our agent knew we liked a certain area and scoured the unsold listings from the last few years and contacted the listing agents. We found a home we loved, arranged a visit, and ultimately purchased the home. You will only get that from a full service agent.
Real estate agents are like anyone other service provider, quality will vary. If you get a really good one, like we did, and it’s fantastic. If you get an unresponsive one, someone who isn’t as committed or interested in your success, then none of these advantages matter.
What’s the big difference?
It comes down to this — Redfin pays you to do more work and helps you with some tools.
A rock-solid full service agent cannot be beat. Someone who is hungry, attentive, and knowledgeable will beat out every single time. (you can also sell a house without a realtor)
The problem is when you get a full service agent who doesn’t give you full service. To avoid that, I’d ask for references or look up transactions they were involved in to learn more about their process and techniques. Do your research because there’s a world of difference between a good and bad agent.
Besides the specific agent you get, one big difference is that Redfin will never require you to sign a contract to start looking at houses. Some agents will.
I’ve heard horror stories where an agent required a buyer sign a contract for a year before the agent would show them any houses. The buyer, not knowing any better, did and then found a new construction they loved which didn’t require or need them to have a buyer’s agent. They had to either pay off the agent or wait for the year to expire before buying a home! (and you can imagine it was not a pleasant experience)
I understand why an agent would want a buyer to sign a contract. Showing homes is time consuming but I believe that cost is part of the business.
In the end, you get what you pay for. I’ve never used Redfin to buy or sell a home but folks who have tell me it’s very transactional. If you’re a DIY type, it’s perfect for you. If you need guidance or you’d like someone to search for you, then it’s not as hands on as a good full service agent might be. Then again, a bad full service agent is not worth the extra so it comes down to finding a solid agent.
This article supports our Buying Your First Home Guide.
We used Redfin to buy our house. We actually started out with a full-service agent that was with an agency who had a relationship with one of our employers. She was very traditional and felt that her “knowledge” of the market exceeded any research we did on our own. Further, most of the houses my husband and I identified were a result of our efforts, not her’s. Once we came upon Redfin, it was the perfect solution. Our agent was much more technologically savvy and comfortable with how people search for houses these days. Realtors’ value isn’t what it used… Read more »
Exactly! If you have a plain vanilla real estate agent, you’re over paying. If you have someone who is a rockstar, attentive to your needs and goes above and beyond (which says something, to have to use that qualifier), then they are worth the fee. Would you pay $6,000 for someone to find you a house you couldn’t find on your own? To send out fliers or mailers to a neighborhood, to scour old unsold listings, and other creative methods? Sure. But to pay $6,000 extra to print out a list of houses on the MLS? No thanks. Redfin is… Read more »
Buyers don’t pay agents out of their pocket when they purchase a home. That fee is charged to the seller. What you are saying is incorrect.
The seller will take this into account in any pricing decision, the actual individual handing money over to the agent is irrelevant. If instead, the buyer paid the commission, then housing prices would adjust accordingly.
All commissions paid are part of the cost… whether you are a Buyer or Seller. If the total commission is less then the Seller is able to lower the asking price if necessary. The Market decides the price but individual circumstances (including Agent knowledge and competence) and liquidity needs will make that “asking price” vary several percent plus or minus. Real Estate is not liquid like an ounce of gold. In every large market there are individual Agents that can meet or beat Redfin’s model. As Mr. Wang says you just have to figure out which one will work for… Read more »
Do you understand that not all properties available or coming on the market are listed on the MLS and good full time agents know about such properties? Stop being delusional, RedFin will lose you money!
While true, I don’t think that’s a good enough reason to skip Redfin completely. I’d argue that an agent who sells a home without listing it on MLS, and getting it in front of as many people as possible, is not fulfilling their responsibility to the seller.
I have to tell you that you are incorrect in regards to a new home purchase and someone signing a buyers contract. There is no paying off a realtor. That is not legal nor is it ethical. I have never come across that scenario and I don’t know who you spoke to and how much research you did. Quite honestly it sounds like you made it up on the fly. The commission on a new home is built into the price including incentives. So if a full service agent doesn’t receive it the builder will. I most recently was able… Read more »
Sounds like you’re trying to defend your profession against the winds of change… Like a rude cab drive that doesn’t care that his cab smells, or that his abnoxious music is too loud, or that the Uber/Lyft driver next to him at the stoplight is giving better service, with more comfort, making a better living, and is charging less.. I sold homes for a home-builder, and let me tell you – when a realtor came in with a customer, we knew we were losing $, so we didn’t give the customer the same incentives they would have had without a… Read more »
Redfin is a full service brokerage, not a search engine with agents.
I am a Redfin agent and have worked as a traditional agent as well. I have never changed the service I give to a client. I work just as hard if not harder now for both my buyer clients and my seller clients. I’m not sure where you area all hearing Redfin is just an online service. We are real people/agents stomping ground in neighborhoods throughout the country.
I did not care for Redfin, they have agents show the property and the agent they assign to represent you often never even saw the home they are going to “represent” you on. The Redfin agent did not know to include some mounted speakers and appliances as the Redfin agent did not even know they are there and never has been to the home. So they offer you a rebate but you loose in on the other end. On the selling side they lowball the target list price, it seems they only want to go after the low hanging fruit… Read more »
Thanks for sharing your experiences, I think it’s important to note that you can’t expect a full realtor experience when working with Redfin because they rely on higher volume since they earn less per unit sold. I imagine that a rock solid real estate agent will beat Redfin every single time but there are plenty of mediocre or new or bad agents that overcharge compared to Redfin, right?
I heartily disagree Jim. You SHOULD expect a full service experience with your Redfin agent and if you don’t get it, you should rate them on their survey accordingly. We are paid a salary with benefits, but we DO get a bonus at the end of the transaction that is directly connected to a customer service survey. We send them out a few days after the closing and all of them are posted to the agent’s profile. ALL of them. Good or bad. Trust me, the bad ones hurt, because we go out of our way to earn a 10… Read more »
Hi Jennifer, it could be the timing of my original review and the experiences back then. Many years have passed so it’s very possible that things have evolved since then (as many companies often do) and I appreciate you sharing your thoughts!
Redfin please please please be the Uber of real estate , consumers are in great need of a company that is well structured and actually have a modern business model. There are good honest agents out there, but there are far too many fly by night agents, hence the industry needs a major overhaul. Most of the bad agents only cares about you when they can make a buck from you and runs when they can’t. I always end up doing the leg work myself. Think about this why do I have to pay a 6% fee to list my… Read more »
Chang, From what I have read there is not a chance in high heaven that you will pay 7% to list your house. Not if you are looking for push button service. To think that all it takes is to stand around in an open house to get the job done, again your sadly mistaken. As a home seller using a full service agent, you don’t pay for the marketing, photo’s, virtual tours, flyers, direct mail or the websites that are created for your property. Only when the home sells do you pay. If the home does not sell you… Read more »
Well, I’ll chime in here and say that we just had the _worst_ experience with a realtor. The guy knew less about the homes he showed us than we did, communicated as well as a rock, and dropped us as clients via a long email detailing how we weren’t a good “fit”–all because it’s a “hot seller’s market” right now, and “not a bubble,” and he doesn’t want to present an aggressive offer in this market. All because of his “reputation.” But what does he think this behavior does for his reputation? Does he not know that we’ll review him… Read more »
I’ve never understood this type of short term thinking – small fish, big fish, whatever. Don’t think in terms of fish! Just give the best service you can because it’s more than one transaction.
That seriously isn’t cool how you were treated. I am sorry you had that experience. I wish I could have been all you should have gotten and above all expectations.
I listed my house with Redfin and it was the worst experience I ever had. They did not advocate for me as a seller but just wanted a quick sale. They told me that I needed to take the first offer period. Our agent was friends with the buyers agent and talked me into listing the home lower than I wanted so her friend could get our home at the price the buyer wanted to pay. They are not helpful and truly hang you out to dry. The commission reduction and this model does not work. Their getting a salary… Read more »
I love this article. Thank you Jim.
You’re welcome!
Great breakdown of the differences of hiring a full service Realtor or Redfin’s discounted Realtor services. I am a Mortgage Broker and have worked with Redfin before in the home buying transaction. The borrower had a great experience with them and the discount that Redfin gave them paid for a portion of the closing costs for the home buyer. But that is just one experience. I think you are spot on your details helping a home buyer decide which way to go with a Realtor choice.
I’ve been a Realtor for over 10 yrs now & I’m looking to see what’s new & innovative in the Real Estate industry, that lead me to this article. I’m not a Redfin agent nor have I had any dealings with one. I would like to tell anyone who cares to read this that I have personally worked with good & bad agents from many, many different companies. Old & young, experienced or new to the industry, there are agents that just should not be in this industry & agents that will bend over backwards for you, regardless of the… Read more »
These are great points, thank you for sharing your insights!
If you are a broker, then you understand that a buyer’s agency agreement is VERY important. It protects the time that you’ve already spent with the buyers (could be years) and allows you to commit your time to that buyer without worrying about wasting your time. A buyer’s agency agreement is easy to terminate. Any buyer can terminate the agreement by sending an email or even a text to notify the agent. There is no risk for a buyer in signing a buyer agency agreement.
In the DC area, we are required by the RE board to get a Buyers Agency Agreement signed. It spells out my fiduciary responsibility to a client and does not bind them to me.
This is a really great article. I am researching Redfin for a Masters program. It is refreshing to see the comments for and against the use of a different business model. At the end of it all, folks will do business with folks that like and feel comfortable with based on their goals and objectives. Thank goodness we have options. Additionally, the Buyer Agency Agreements (DC and Maryland) are time-based. So I am able to date the Agreement for the actual day of work with buyers for our first appointment, if they are uncomfortable authorizing more time together. The one-day… Read more »
As a skilled negotiator, that knows the area I service intimately, I can save you way more than your Redfin rebate. And I’ll be with you every step of the way.
And the rebate is also taxable income, so subtract 25-30%
That isn’t true. Either statement.
Classic realtor trying to push their point of view with falsehoods. Redfin is the BEST. I have bought 6 properties and sold 3 with them. I am a real estate professional and know what i am talking about. And the idea that you can fire you commission based realtor and just get another is a falsehood. Most often by the time you realize they lost you a lot of money it is too late to do anything about it. The difference with Redfin is that bad agents get bad reviews and get FIRED. I have seen this happen. What happens… Read more »
False! It’s considered a reduction to the final purchase price.
I signed a contract with an agent. In a month and a half, he has shown us 6 houses, which I found. He never put me on an MLS listing email. It is nearly impossible to get him to show us a house because he is always busy. We have lost out on at least 3 good houses because he would not show them because he am was busy. I want to cancel the contract but don’t know how. I am completely frustrated and angry!
The contract should tell you how to cancel it (or just when it expires) — have you reviewed it?
Call his broker and explain. You may be able to get out of the contract that way.
Jim, I am sitting at my computer reading mostly about buyer’s agreements. I have the exclusive right to sell agreement listing agreement in front of me. On Saturday it will be 30 and my agent has not shown the house once. I have had showings with many other brokerages but my agent does not call and tell me what took place. She set up a Open House and didn’t even show up for it. On this agreement there is no period of time beginning or ending. I believe I do not have to honor this agreement…can you tell me yes… Read more »
I’m afraid I don’t know much about those types of agreements (and nothing about yours specifically) and you’ll have to consult a professional on that.
I liked this article and also the replies. While looking at Redfin, I saw an agent who seemed he might be good. I read his reviews and the types of properties whose transactions he was involved in. I also saw that he is listed on other sites as well. Initially I considered contacting him directly, but after reading this article, I am at a quandry of which way to take. I would be interested in someone who can find listings before everyone else sees them. I live in Atlanta and want a condo on the say $110k range. These units… Read more »
My best advice as a 22 year, full-time Realtor in Scottsdale Arizona – attend open houses to find and work with an agent who is active in the area! They often know of homes coming up as they talk to many neighbors in the community of their open house. No better way to find someone well-versed in the area you’re targeting. Look for open house times on Zillow and then visit open house until you find an agent you like and are comfortable with. Also, find out how long they’ve been in the business and whether or not they are… Read more »
I agree with Amy Jo but would like to add that a newer agent can be just as beneficial as a more seasoned agent. I suggest you set up buyer meetings with 2-3 agents. Have your questions in hand and ask every question you can think of. Pay attention to how you and each agent vibe. Is this an agent that listens to you and are you listening to them? Is this agent someone you can see spending time with and working closely to achieve your goals? Take a good friend to the meeting and also observe how that friend… Read more »
I found this article interesting. It is helpful to know how consumers are doing business in these modern times. I will say, however, that as a 22 year licensed Realtor and not a Redfin agent, your article focuses primarily on the search for the home, and not the expertise a seasoned and experienced agent brings to the contractual/legal portion of the transaction. We have continuing education requirements and many broker meetings that keep us on top of situational hazards in the marketplace that aren’t covered at all in this article. What happens when you are in a contract where you… Read more »
Please correct me if I’m wrong, but real estate agents are not lawyers and therefore if one of the parties is in breach of contract, then they cannot give legal advice. What they can do is refer them to a lawyer.
All of our experience with full service agents is that they can give their “thoughts” unofficially but always defer to the appropriate professionals – lawyers, home inspectors, etc.
Amy Jo hit the nail on the head! Most escrows are not easy to close and come with their fair share of obstacles. The negotiating aspect is hard enough and takes a seasoned agent, but buyers have to really consider what can happen when the poop hits the fan. I’ve been through escrows where the appraisal didn’t match the purchase price, loan didn’t get approved, tax transcripts not issued in time by the IRS, seller’s not able to move out as promised, fights over the per diem, the list goes on and on. I have dealt with some very bad… Read more »
Richard, As a seller, I did research to find a productive agent to sell my house quickly. It is very difficult and I find the industry to be all “smoke and mirrors” and no transparency at all. I need truthful information – but it doesn’t exist. The reviews of real estate agents on trulia, zillow and realtor.com are all bogus anyway. EVERY agent has 5 stars and all glowing reviews because the agents pay the websites and don’t allow negative reviews to be published. They all say they are #1 in sales and have hundreds of closed sales. It’s difficult… Read more »
Nanie, the reason why your house is not selling is because it is over priced. The main reason why a house does not sell is because it is over priced. If a property is not priced right, the longer it stays on the market. A home that is on the market a long time, loses its value drastically. Properties that are on the market for a long time (here in DC and Northern VAn20+ days is considered a long time) become very stale. On the MLS people will no longer see the listing right away, even if you drop the… Read more »
I recently interviewed a Redfin agent to potentially sell my home. I never got the impression she was NOT a full service agent. The services seemed comparable to the other agents I interviewed. She’s also worked in the area for decades for other major brokers, and switched to Redfin a couple of years ago – negating claims by some that these agents have no knowledge of a geographic area. I am leery of “full service” agents providing their comments here because, of course, they are going to sway you to go their way. As would anyone selling their services. My… Read more »
Hi Paul, do you really think good a good realtor would quit being a full service agent to go work for Redfin because Redfin has “better agents” and they make more money? All of the traditional, full service agents who do not make it in real estate quit or they end up going to work for Redfin. Why would anyone quit their highest paying job to go work for for another job where they receive much lower pay? Redfin agents make A LOT less than traditional agents as they have to share their commission with every Redfin agent (they make… Read more »
I think the way you are saying is not persuasive because you are only blaming the sellers. As you know there are so many real estate agents making clients unhappy. As someone already said somewhere above, there are many reasons why “no wonder why no respect”.