Founded in 2004 in Seattle, Redfin has grown into one of the largest and most innovative real estate brokerages in the U.S., with a company valuation of nearly $2 billion. Redfin was one of the pioneers of the discount brokerage world, and now employs over 2,000 in-house agents across the nation.
Redfin is known for offering a 1% listing fee— but is it legit? And is Redfin right for you?
- What is Redfin?
- What Services Does Redfin Offer?
- How Does Redfin Work for Sellers?
- Is Redfin Really 1%?
- Redfin vs. Traditional Real Estate Agent
- Redfin Pros and Cons
- Traditional Agent Pros and Cons
- Surveying Redfin Reviews
- Sizing Up Redfin Competitors
- Redfin vs. Zillow
- Redfin vs. Flat Fee MLS
- Redfin vs. Clever
What is Redfin?
Redfin is an online real estate brokerage and listing portal whose website is one of the most comprehensive sources for online property listings and neighborhood data, rivaled only by fellow real estate giant Zillow. Their brokerage arm also employs thousands of in-house agents, using an innovative salary-based model, instead of the traditional commission-based model. Redfin operates in over 80 markets in the U.S.
The benefit of this model to sellers is that they can get a full-service selling experience from Redfin while paying a listing fee between 1% and 2.5%, depending on the package they choose, as opposed to the 3% they’d typically pay a traditional agent. This can be a great deal for some sellers, but there are limits and conditions that come with the Redfin model, which we’ll go into below.
What Services Does Redfin Offer?
Redfin offers several different types and tiers of services, from a quick, easy iBuyer purchase, to a deluxe concierge service.
Redfin’s Standard Listing Service
This is Redfin’s standard offering. If you opt for Redfin’s standard listing, you’ll be paired with a local Redfin agent and given a package of supplementary services, including:
- Professional photos
- A 3D walkthrough (an important feature if you’re selling during the pandemic)
- Featured placement on Redfin’s website
- A personalized dashboard to monitor your listing’s online traffic
- Data-assisted pricing
- Yard signs, open houses, and other traditional marketing tools
This package comes with a 1.5% listing fee, which is about half of what a seller would pay a traditional agent. However, for sellers who need more help, Redfin also offers a Concierge Service.
Redfin’s Concierge Service
This deluxe package— which isn’t available in all Redfin markets— includes everything offered in the standard listing, plus extensive help preparing your home for the market. A Redfin expert will draft a home improvement plan, recommending updates to pump up a home’s selling price, and then schedule and oversee the work as it’s done by their own vendor partners.
Redfin says that homes prepped by the Concierge Service sell 15% faster than comparable homes.
This level of services comes with a 2.5% listing fee, which is still a half-percent less than a traditional real estate commission. Redfin sellers can also get 0.5% knocked off if you also buy with Redfin. Like the standard listing service, the Concierge Service comes with minimum commission in many markets.
Of course, potential Redfin customers should keep in mind that whether they pay 1% for selling and buying with Redfin, 1.5% for the standard listing, or 2.5% for the Concierge listing, they’ll still have to offer a buyer’s agent commission of 3%, meaning that their total commission will range from 4% to 5.5%.
For sellers who are under time constraints, or simply prioritize ease of transaction over getting the highest possible price, Redfin offers an instant, iBuyer-style sale through Redfin Now.
Here’s how it works: once a seller submits their property to Redfin Now, Redfin’s experts assess the home’s value, and make a cash offer. If you agree to their offer, you must close within 10-30 days of accepting the offer.
Selling through Redfin Now means you won’t have to bother with repairs, updates, open houses, or time-consuming price negotiations. However, iBuyers in general pay less for homes than those homes could get on the open market in a traditional sale, and Redfin Now isn’t cheap; the average fees for a Redfin Now sale are 6%-12%, meaning that a seller could potentially end up getting less for their home and paying double a traditional commission.
How Does Redfin Work for Sellers?
Redfin offers a whole spectrum of services under one umbrella, from the quick iBuyer sale through Redfin Now, to the deluxe full-service-plus experience of the Redfin Concierge Service. But the Redfin feature that can have the most impact on the seller experience is the Redfin agent model.
A traditional real estate agent is essentially an independent contractor; although they may work for a brokerage, they earn their money through commission. That means they take a percentage of every sale. In the big picture, that means the traditional agent’s interests align perfectly with the seller’s interests: both of them want to sell for the highest price possible. This incentivizes the agent to hustle on the seller’s (and their own) behalf.
The Redfin agent is an in-house salaried employee, so that commission-based incentive has been removed. Whether your home sells for significantly above ask, or for significantly below market value, they’ll be paid the same. This isn’t to say that Redfin agents aren’t professionals who put in a great effort on behalf of their clients. But from a systemic perspective, a certain amount of incentive has been removed.
This decentralized, corporate structure can also lead to other complications. Redfin agents are assigned multiple properties, and any support staff you work with through Redfin are also in-house employees who are likely juggling multiple projects.
Some customers have reported that their Redfin agent was less responsive than they would’ve liked, and that this was possibly due to a high burden of clients. Again, this is far from a universal experience, but it’s certainly a risk inherent in this kind of business model.
Sellers who use Redfin’s Concierge Service will likely receive a higher, more personalized level of attention, but they’re also paying a 2.5% listing fee, which is only a half-percent lower than a traditional listing fee. Sellers considering Redfin should do their research, and figure out if the savings they’d realize with Redfin is worth the trade-offs.
If there’s one Redfin service that offers a level of service that matches the industry standard, it’s probably Redfin Now. Like other iBuyers, Redfin Now uses algorithms to value homes, and extends a fast, cash offer. Although it’s impossible to compare Redfin Now’s algorithms to its iBuyer competitor algorithms— these data analysis tools are closely guarded intellectual property— it’s safe to say that the Redfin Now process is on par with other top iBuyers.
That being said, homeowners who sell their homes to iBuyers generally receive lower prices than they’d get from a traditional market sale. Several recent studies found that homes sold to iBuyers brought in 11-15% less than they would have on the open market.
Is Redfin Really 1%?
Redfin advertises a 1% commission, despite the fact that their standard listing fee is 1.5%.
So what gives?
Well, Redfin offers a special 1% fee if you sell AND buy through Redfin. This offers a streamlined, integrated experience at a cheaper rate for the customer, and makes financial sense for Redfin, since your Redfin buyer’s agent will receive a 3% commission from your purchase transaction.
There are, however, some Redfin conditions that could push your costs past that 1% price point. For example, Redfin has a minimum listing fee of $5,250 in the Washington, D.C. market. A homeowner looking to sell a $350,000 home in D.C. through Redfin, and also buy their next home through them, in order to access the 1% listing fee, would be disappointed to learn that the minimum listing fee far exceeds an actual 1% fee.
This tablet contains the 80 markets Redfin operates in, as well as the minimum listing fee Redfin charges:
|Market||Listing Fee||Minimum Fee|
|New York City & Long Island||1.50%||$5,000|
|Northern New England||1.50%||$3,250|
|Salt Lake City||1.50%||$3,000|
The average minimum Redfin listing fee across all markets is $3,323, so sellers living in a market with a minimum fee should keep that in mind if they’re hoping to reduce costs by going with Redfin.
There’s one more exception, too. In markets where Redfin isn’t active, they can refer you to an affiliated partner agent. This agent isn’t obligated to offer Redfin’s rates, so you may end up paying 6% for your Redfin experience.
Redfin not offered in your area, or in an area with a high minimum fee? You should consider Clever Real Estate. Clever offers 1% or $3000 flat fee real estate agents regardless of the market. Their agents provide the same amazing service you expect from top-rated agents.
Clever is Redfin’s #1 Competitor
Find top-rated, full-service agents who help you sell your house for 1% or $3000. Start saving today.
Redfin vs. Traditional Real Estate Agent
Redfin definitely offers some advantages over the traditional real estate agent, but there are many things that a traditional real estate agent may do better than Redfin. Let’s take a closer look at some of the pros and cons.of Redfin and some of the pros and cons of a traditional agent.
Redfin Pros and Cons
As a huge national brokerage, many of Redfin’s advantages are related to cost and scale. But their downsides are related to the impersonal nature of big business, and the many rules and regulations that go hand in hand with that.
If you opt for Redfin’s deluxe Concierge Service, you’ll pay a listing fee of 2.5%. If you opt for their standard listing, you’ll pay 1.5%, and if you buy and sell with Redfin, and live in an eligible market, you could pay as little as 1%. That’s a real and significant discount, compared to a traditional agent.
Redfin operates in over 80 markets nationally, and in areas they don’t cover, they can refer you to a local broker.
Because every Redfin is a salaried Redfin employee, you can be sure they’re working from the same playbook as their peers. In an industry known for secrecy and eccentricity, that can make your selling experience much less stressful.
Access to Data
Redfin mines a lot of user data from their sales and listings website, so they’ve discovered everything from the best day of the week for an open house, to what kind of listing photos people click on, to the features that buyers find most attractive. When you work with Redfin, all this data is working for you.
A Redfin agent is a salaried employee, much like any other white collar worker. So regardless of how much your home sells for— or if it sells at all— they’ll make the same amount of money. While most Redfin agents are perfectly professional, there’s definitely the possibility that the absence of a percentage-based commission could take away a certain edge at the negotiation table.
Some Agents Are Less Communicative
Some customer reviews have reported that Redfin agents aren’t as responsive as they’d like them to be, often taking days to return phone calls or emails. This could be due to a high workload— Redfin agents are often assigned a large number of clients— or to the fact that Redfin’s large, corporate structure is simply more complicated than the traditional agent-seller one-on-one relationship.
Your Choice of Agent Is Limited
If you want to get Redfin’s rates, you must work with one of their in-house agents. That limits your choices, and if you don’t click with your agent, you may not have the option to work with a different one.
They May Refer You to an Outside Agent
If Redfin doesn’t operate in your area, they may refer you to a non-Redfin agent. However, this agent isn’t required to offer you the same rates as Redfin, so you may end up paying a standard commission.
Traditional Agent Pros and Cons
The traditional real estate agent offers a warm, personal selling experience. But it comes at a significant cost.
Traditional Agent Pros
They’re Personally Invested In Your Home Sale
A traditional agent makes a 6% commission, so the more money your home sells for, the more commission they’ll make. This fact ensures that they’ll help you showcase your home to the biggest possible pool of buyers, and negotiate the price of your home up as high as possible.
They’re Embedded In Their Market
A traditional agent is an independent contractor— even if they work for a brokerage, they’re essentially all alone out there. That means that, if your agent has been in the business for any significant amount of time, they’ve become extensively networked with other local professionals, and observed market trends up close. This firsthand experience is extremely valuable for sellers, and it would be hard to match for a Redfin agent who’s assigned clients by their manager, and can fall back on their salary when they don’t close a sale.
Traditional Agent Cons
The standard commission when you sell through a traditional agent is 6%; for a $250,000 home, that’s $15,000 you’d be paying. That’s no small price.
Your Mileage May Vary
Thoroughly research any agent you’re thinking of working with; seek out online reviews and, if possible, speak to people who’ve worked with them before. If an agent is just starting out, they may overlook important parts of the sales process, or leave money on the table through inexperienced negotiation. Make sure you know who you’re working with.
Surveying Redfin Reviews
Looking at specific reviews, a couple themes emerge. One is that satisfied customers describe a fast, smooth transaction. The other is that, when Redfin falls short, it’s often in the area of communication.
These reviews from Consumer Affairs illustrate the most common pitfall of Redfin’s size— getting lost in the shuffle. While these negative experiences are the exception, it’s a good idea for any prospective Redfin customer to ask their agent how much experience they have, what their workload is like, and what kind of response times they offer.
Are Redfin Agents Good?
Redfin agents are generally good, yes. Although they market themselves as a great place for an agent just starting out in the business, they have a vetting process in place, and they provide in-house training. And one big advantage of working at such a large company is that every employee has access to a huge amount of institutional knowledge and mentoring.
Redfin specifically recruits agents who offer great customer service and tech savvy. If those are qualities you’re looking for in an agent, you should have a good selling experience. If your priorities lie elsewhere— in price negotiation, for example— you may not.
The drawbacks of Redfin agents stem more from the company’s business model than from the agents themselves. Since Redfin agents are paid a salary, instead of working for a percentage-based commission, they’re less incentivized than a traditional agent to get you the highest price possible for your home. And because Redfin is such a huge company, with so many employees, getting in touch with your agent can be more of a challenge than if you were working with a local agent. As the reviews above show, one of the most common complaints among Redfin customers is poor communication.
Sizing Up Redfin Competitors
So how does Redfin stack up against some of their main rivals? Let’s do a few side-by-side comparisons.
Redfin vs. Zillow
Like Redfin, Zillow offers a comprehensive listings website, as well as a robust data analytics operation. But that’s where the similarities end.
While Redfin decided to bring on thousands of in-house agents, to concentrate on sales, Zillow has chosen to concentrate on leveraging their data. The most visible example of this is the Zillow Zestimate, which provides an algorithmically generated home value for almost any property. This can be a useful resource for sellers who are trying to figure out how to price their home, or for anyone trying to figure out where the market is going.
If you want to get an agent through Zillow, they’ll refer you to someone in your area, but they’ll charge the standard 6% commission. Zillow is more of a reference source, while Redfin is a one-stop-shop for real estate services.
Redfin vs. Flat Fee MLS
Redfin and the flat fee MLS discount broker have one major quality in common: they both offer a chance to sell your home while paying a reduced commission. But the main difference is what you actually get for your money.
The standard flat fee MLS broker charges you a fee— usually in the hundreds of dollars— to list your home on the local MLS. And that’s where their services end— they don’t help you with open houses, they don’t advise you through negotiation and closing, and many of them don’t even give you a yard sign. You pay very little, but you get very little.
Is it worth it? Only if you’re prepared to do all the work of selling your home by yourself. If you’re selling a $200,000 home, a 1.5% commission with Redfin would come to $3,000, while you could get a flat fee MLS listing for about $300. That $2,700 in savings may seem tempting, but are you sure you can negotiate the highest possible price, against an experienced buyer’s agent?
Redfin charges slightly more than a flat fee MLS broker, but they also offer vastly more services. If you go with the standard 1.5% Redfin listing, you’ll still get a full service selling experience that includes everything you can expect from a traditional agent— advice on pricing, open houses and showings, price negotiation, help through closing, etc.
The bottom line is that Redfin charges more than a flat fee MLS broker but offers a LOT more services.
Redfin Vs. Clever
Clever Real Estate’s business model is very straightforward; they pair sellers with a top, pre-vetted local agent, who provides a full service selling experience for a flat fee of $3,000, or 1% if the home sells for more than $350,000.
The advantages here are clear: because sellers are paired with a local agent, instead of a Redfin in-house agent, they’re working with a more experienced, more independent, more savvy professional. And that $3,000 flat fee is much simpler than Redfin’s more complicated fee structure of 1% (unless you’re in a market with minimum listing fees), 1.5%, or 2.5%.
While Redfin does offer data analysis and an online dashboard that allows sellers to monitor traffic to their listing, a good local agent can provide an on-the-ground sense of the market that’s just as accurate, if not moreso.
Clever’s pricing structure is less expensive than all but Redfin’s 1% fee— which isn’t available in all markets, and subject to a lot of conditions. That makes Clever a slight but unambiguous favorite here, as they combine a favorable pricing structure with high quality agents.
If you’re looking to partner with a top local agent, and take advantage of a full service selling experience for a low, flat fee of $3,000, get in touch with Clever Real Estate today!
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