I was following a lively question and answer set on a Redfin forum when someone in the discussion (a Redfin representative?) accused other party (sounded like a consumer) of being "out to get Redfin." The consumer was arguing that Redfin's offer of "2 percent back" to the buyer is false advertising since Redfin's policy is to rebate the buyer 2/3 of the commission they receive, whatever it is.

While I sympathize with the consumer in this discussion, is it just me, or is the focus on the wrong issue? Doesn't anybody but me have a problem with the term "refund" being used to describe the seller's money being turned over to the buyer? It's NOT a refund, since it was never the buyer's money to begin with.

In case you need a refresher on just how this works, sellers pay a commission to a listing agent, who then offers part of the commission to agents inside or outside their firm who bring a buyer. This offer is intended to compensate a cooperating agent. It is paid by the seller. It is not paid by the buyer. For those of you who want to argue with me about that, just ask yourself who gets stuck with the shortfall in a foreclosure or a short sale. That, of course, would be the seller's side.

Poor Redfin! They've based an entire business model on a source of income over which they have no control. And the more vocal they are, the sooner sellers will refuse to offer commissions to buyer's agents if they are just going to give it away. Redfin SHOULD feel paranoid!

Recently, Redfin got its hand slapped over their "Sweet Digs" blog in Northern California. Their retort is that the traditional real estate model and the MLS are "evil forces" out to get them. The irony is that if Redfin succeeds in toppling the traditional model, there won't be any money to fund their own snazzy new business model. That traditional model is the basis for an offer of compensation by the listing firm to the selling firm. Mess with that and there goes your whole plan.

Got any other ideas, Redfin?