Let's say the owner of a $400,000 home decides to list their home for sale with Redfin (not a possibility in Arizona as of yet, but local readers can substitute the flat-fee listing company of their choice for the example.) Under a 6% commission schedule, the total commission would be $24,000.
The advertised commission cost of a Redfin listing is $3,000. So the seller would be spending $21,000 less on their commission, right? Well, no.
The $3,000 isn't the full commission -- and Redfin knows this. Down in the Frequently Asked Commission is the disclaimer that Redfin recommends paying a 3% commission to the agent bringing a buyer to your home. So rather than a $3,000 commission, the seller actually would be paying $15,000 - the so-called savings are approximately $9,000.
A seller isn't required to pay 3% to a buyers' agent, of course. The seller can offer any amount they choose, all the way down to a single dollar, and still be listed in the MLS per the MLS' rules of cooperation. But the lower the amount offered, the less likely a home will be shown to perspective buyers.
Those damn greedy Realtors, you say. They won't show a home with less than a 3% co-broke? How dare they!
Except ...
Let's also look at a Redfin buyer (again, substitute any local buyer-brokerage utilizing a rebate model.) A Redfin buyer receives a rebate of two-thirds of the buyers' agent fee when they purchase a home. So by purchasing the home with a 2% co-broke rather than a 3% co-broke, the buyer is losing a portion of their own rebate - the rebate drops to $5,060 from $8,040 on a $400,000 home.
FOR THE FULL ARTICLE, PLEASE VISIT DALTON'S ARIZONA HOMES BLOG
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