REX Real Estate’s unique contribution to the discount brokerage industry is to completely eliminate the buyer’s agent commission – effectively giving sellers a big 50% discount right off the top.
But is the reduced exposure worth the savings, and does less competition translate to a lower sale price?
REX Real Estate (also known as REX Homes) is a discount real estate brokerage that currently operates in 17 states and Washington, D.C. Their unique business model is full service, concierge support for a 2% listing fee – and no buyer’s agent commission. That means that REX users would truly pay 2% to sell their home, although there is a $9,000 minimum fee for homes that sell for less than $450,000.
However, like most discount brokerages, REX Real Estate charges less, but also offers fewer services than a traditional full service experience. Read on and we’ll discuss why REX’s 2% listing fee is unique, how they eliminate the 3% buyer’s commission, go over REX Homes’ pros and cons, and survey REX Real Estate’s reviews and complaints.
- What is REX Real Estate?
- How does REX work?
- REX Homes Pros and Cons
- REX Real Estate Reviews
- REX Real Estate Complaints
- REX Real Estate Competitors
- REX vs. Redfin
- REX vs. Clever
What is REX Real Estate?
Before we get into the details of a typical REX Real Estate selling process, let’s dissect their business model, and highlight its inherent advantages and disadvantages.
REX Homes charges a 2% listing fee, and no buyer’s commission. To understand why this matters, we have to look at how a standard 6% commission breaks down. In a traditional commission, half (3%) goes to the listing agent, and half (3%) goes to the buyer’s agent.
When most discount brokerages advertise a low listing fee (“Sell your home for 1%!”), what’s unspoken is that sellers will almost always have to pay a 3% buyer’s agent commission in addition to their listing fee. So what may sound like a 1% total commission is actually a 1% listing fee, plus a 3% buyer’s commission, equaling 4% total commission.
When you sell with REX Real Estate, you will not offer or pay a commission to the buyer’s agent. That means the only cost to you is the listing fee of 2%, or the minimum fee of $9,000. That’s a significant savings from most discount brokerages, but it also comes with some distinct disadvantages.
REX doesn’t list their properties on the local MLS, which is the database that lists the vast majority of properties on the market.
When buyer’s agents partner with a client, their first move, after hearing what kind of homes the client is interested in, is often to look for properties on MLS that meet those specifications. The buyer’s agent commission is an incentive for that agent to bring their client – your prospective buyer – to your property. REX is missing out on a large chunk of buyers by not offering a buyer agent commission.
Instead of advertising to buyer’s agents on the MLS, REX Real Estate uses digital advertising to find buyers who aren’t working with an agent, which eliminates half of a traditional commission right off the bat. That, in a nutshell, is why REX Real Estate can sell your home at such a low cost.
But it also illustrates some of the shortcomings of REX Real Estate’s business model. The large majority (89%) of buyers work with agents, so if you sell with REX Homes, you’ll be drawing from a much smaller pool of prospective buyers than a seller who’s listed on the MLS. Less eyeballs on your home, means less competition, and less competition likely translates to a lower sale price.
And that’s not all. Since you’re not offering a buyer’s commission, buyer’s agents will have much less incentive to bring their clients to your home. That doesn’t mean they’ll refuse to show your home, if their client expresses interest. But if they can steer their client to a comparable home that’s offering a standard 3% commission, why wouldn’t they?
So what if an agented buyer falls in love with your home?
In this situation, REX would ask that buyer to pay their agent’s commission. That means the buyer will be responsible for a 3% commission in addition to the price of the home, which basically equates to a 3% price bump. If the buyer is head over heels in love with your home, this might not be too much of an obstacle. But for many buyers, a built-in 3% price increase would give them serious second thoughts.
How REX Real Estate Works
Here’s how the REX Real Estate process typically unfolds. First, you go to REX’s online platform and set up a profile. You’ll want to input your address and your home’s specifications, as well as when you want your listing to go live. This is where you’ll interact with your REX team going forward, as well as handle logistics like open houses, showings, offers, and more.
Next, REX Homes will send an agent to your home for an in-home meeting. They’ll inspect your home, review market data, and suggest an opening list price for your property. If you decide to go forward with REX, they’ll arrange for professional listing photos to be taken, place REX signage around your property, and brief you on how they plan to market your home.
You’ll also sign a listing agreement at this point, after which you’ll be committed to working with REX. At your chosen date, your listing will go live.
Once your listing is live, it will appear on REX Real Estate’s website, and will also appear on heavily-trafficked sites like Zillow and Trulia. One notable exception is Realtor.com – your home will not appear there. Crucially, it will also not appear on the local MLS.
REX will now use online marketing like social media, search engine ads, and remarketing to advertise your home and reach potential buyers. When buyer interest comes in, REX Homes will coordinate and assist you with showings and open houses. You’ll collaborate with them on scheduling, to make sure these showings work with your schedule.
When offers come in, REX will help you evaluate them, and help you come up with counteroffers. Once negotiations come to a close, a REX agent will guide you through closing, assisting with paperwork and other miscellaneous logistics.
REX Homes Pros and Cons
An objective look at REX Homes’ business model reveals some distinct advantages and disadvantages to their approach. Let’s look at the main ones in each category.
Pros
Low Cost
Many discount brokerages advertise a low commission, while eliding the fact that sellers will have to pay a 3% buyer’s commission on top of their listing fee, but REX Real Estate’s commission is actually as low as it sounds. Because they’ve eliminated the buyer’s commission from their transactions, “selling your home for 2%” actually means exactly what it sounds like.
Centralized Platform
As tech continues to modernize the real estate industry, the old patchwork system of communication is looking increasingly out of date. REX’s online platform does a great job of creating a “one stop shop” for sellers to survey their entire transaction, every step of the way.
Access to a Unique Pool of Buyers
REX Homes targets a nearly invisible population of unagented buyers. Because access to the MLS is restricted to real estate professionals, these unagented buyers have access to a much smaller pool of properties than an agented buyer. That means they’re likely looking at FSBO listings, which are notoriously unpredictable, or maybe even just driving around their town looking for “For Sale” signs. REX is one of the few brokerages that makes such a concerted effort to tap into this audience, and it could pay off for you in a big way if they find the right buyer.
Cons
Much Smaller Audience
In a way, REX Real Estate’s advantages are also its disadvantages. Because it doesn’t list your property on the MLS, and because almost 90% of buyers are working with an agent– who find properties for their clients almost exclusively through the MLS– your home will get a lot less exposure than a traditionally marketed home. This may not matter; after all, it only takes one buyer to complete a sale. But the market runs on competition, and the fewer people who see your home, the less competition there will be. It’s always better to have ten interested buyers than one.
Buyer’s Agents May Steer Clear
REX Homes eliminates the buyer’s commission from their transactions, but this might eliminate buyer’s agents, too. The reasoning is simple: buyer’s agents show properties to their clients and, if their client ends up buying one of them, the buyer’s agent makes a 3% commission on the sale price. That’s the only way a buyer’s agent makes money.
So even if your property is exactly what a buyer’s agent’s client is looking for, they’ll likely be hesitant to show your property to their client. Why? Because if their client buys your home, they’ll make no money off the transaction. They’ll essentially be working for free.
Of course, REX makes it clear that the buyer can pay their agent a 3% commission, and that undoubtedly happens from time to time. But this basically adds 3% to the price of the home, which will give most buyers serious pause.
REX Real Estate Reviews
REX has a very good average rating of 4.7 out of 5, based on 578 customer reviews, across Google, Facebook, and Zillow. They also sport an A+ rating with the Better Business Bureau.
Surveying REX’s reviews reveals a few trends. The positive ones tend to touch on the same qualities: responsive, knowledgeable agents who guide their clients through each step of their sale.
REX Real Estate Complaints
When it comes to the negative reviews and complaints about REX, there are common themes here, too. Customers who had a negative experience usually pointed to poor, unresponsive service, and a low level of interest from buyers. This last concern is especially relevant, because it could point to a flaw in REX’s business model— that by eschewing the MLS, sellers might have a hard time getting eyeballs on their home.
The second negative review below also addresses this concern, from a slightly different angle. This seller claims that REX tried to intentionally price their home under market value, so it would sell quickly. This suggests that some REX agents may routinely underprice homes as a way to compensate for their listings’ relatively low visibility. Sellers who use REX should do extensive market research, to make sure their property is being appropriately priced.
REX Real Estate Competitors
So how does REX Real Estate compare to its main competitors? Using their scope and business model as guides, their closest competitors are probably Redfin and Clever Real Estate. Let’s quickly compare and contrast these rivals.
REX vs. Redfin
Redfin offers a 1%-1.5% listing fee which, on the surface, looks lower than REX’s 2% listing fee.
However, if you sell with Redfin, you’ll likely pay a 3% buyer’s agent commission on top of your 1-1.5% listing fee, for a total commission of 4-4.5%. If you sell with REX, on the other hand, you’ll only pay their 2% fee, or the minimum listing fee of $9,000.
Some quick math shows the disparity here. If you sold a $300,000 home with Redfin, you’d pay a 1% listing fee of $3,000, plus a 3% buyer’s commission of $9,000, for a total of $12,000 in commission.
With REX, if you sold that same $300,000 home, you’d only pay their minimum listing fee of $9,000 for homes under $450,000. That’s a 25% savings.
Of course, there are other considerations. If you sell with Redfin, your property will appear not only on Redfin’s site, which is one of the most popular real estate sites on the internet, but also on the MLS, meaning it’ll be visible to every buyer’s agent in the market.
That level of exposure could very well lead to a higher sale price, so even though REX is 25% cheaper, your home could sell for 25% more if you went with Redfin – or possibly even more, if your home is the subject of a bidding war.
For homeowners considering both REX Real Estate and Redfin, it would be wise to consider how hot their local market is, and think about how much bidding-up potential their property has in that market. That said, if all things are equal, REX Homes is cheaper than Redfin.
REX vs. Clever
REX Homes and Clever Real Estate are somewhat similar, in that they both offer flat fee full service selling experiences. But looking at them side by side reveals several crucial differences.
REX Homes will sell your home for 2%, or a $9,000 minimum if your home sells for less than $450,000. Clever offers a $3,000 flat fee, or a 1% listing fee for homes that sell for more than $350,000. With Clever, you’ll also pay a buyer’s agent commission of 3%, whereas with REX, you won’t pay any buyer’s commission.
Let’s break down an example to see how these models compare. If you sold a $200,000 home with REX Real Estate, you’d pay a $4,000 listing fee, and no buyer’s commission. If you sold that same $200,000 home with Clever Real Estate, you’d pay a $3,000 flat fee, plus a 3% buyer’s commission of $6,000, for a total of $9,000.
REX markets your home on its own platform, but not the MLS, which limits your property’s audience. You’ll also work with their in-house team. Clever, on the other hand, matches sellers up with experienced, pre-vetted local agents who work in your local market. Your home will also be marketed on the MLS as well as all the major real estate sites, so as to maximize your pool of prospective buyers.
So for a higher price point, Clever makes sure your home is seen by the widest possible audience, and makes sure your sale is handled by a local agent with an exhaustive knowledge of the local market – not an in-house employee who may or may not be familiar with area trends. The edge seems to go to Clever in this comparison.
Real Estate Witch has partnered with Clever Real Estate to help sellers start off their real estate journey on the right foot. Clever connects buyers all over the U.S. with elite local agents, who offer a top-shelf full service sales experience for a low flat fee of $3,000, or 1% if your home sells for more than $350,000. That means Clever sellers get a significant discount on cost, and receive all the services that a full 6% commission seller would expect. It’s truly a win-win!
Contact Clever today for a free, no-obligation consultation, and start realizing your real estate goals!
Leave a Reply