Redfin Real Estate - Realtors or Simple Order-Takers?

I haven't had any dealings with RedFin either. I find this practice a bit odd, no make that a lot odd!

Stew,

Yes, that' how it works.

And believe it or not, once they have an accepted offer, it goes to ANOTHER person who takes it from there to handle the escrow for the buyers.

Which Witch is Which?

Stewart,

What a story.  I have never heard of Redfin or a business model like this.

Now I need to research if they do business in Texas.

Hi Stewart.  How could they afford to give away a good chunk of their commission, anyway...

I don't know about you, but I am not getting rich showing homes right now...

Thanks for writing,

Ken

Bazaar * very bazaar * they must not be interested in the potential for a client/agent relationship.

Wow...I didn't realize that. So who gets commission? everyone in the food chain? And what "Realtor" would be a show-er....crazy.

Stewart - I've had no dealings with them although their search capability seems to be popular with buyers, at least some of them. This model doesn;t seem to do much for the buyer client, at least not for someone who wants true representation.

I imagine some folks are on salary or this could not work very effectively. Wonder what their turnover is like. And their client satisfaction ratings?

Jeff

Karen: Redfin's agents are paid a salary not commission.

Yeah, but they have a great website!

I've heard of Redfin, but haven't had any dealings with them.  I'll have to check out their website.  Thanks for the post, Stewart.  P.S. I wonder what those buyers thought of the whole thing.

Just have to add, "Burning Down the House" blog is hiliarious.

Redfin is not in our market but several years ago there was a company called Foxtons. I think they were from London. Same business model only for sellers. They spent $billions of dollars on advertising. Billboards all over town, every train station in the entire metro area had their billboard, they advertised everywhere even on hot dog stand umbrellas. The ads were negative attack ads about full service brokers. All their ads had the tagline WHY PAY 6%? List for 2%. I don't know how they did in the suburbs or in other markets but they barely made a dent in the market here.

They had a website for their listings and some print ads for their properties. For 2% a seller was a FSBO that was allowed to advertise on their website. They had an 800# and a seller would get a different agent for different services (if you consider what they do even a service) for additional fees.

One of my buyers attended one of their open houses and called me because they wanted me to make an offer. Offers had to be sent to an 800# fax number. I faxed the offer and got a call from a woman saying it's our exclusive only. We don't cobroke. We don't deal with other brokers. I told the buyer they would have to pay me. The buyer didn't want to pay the commission but fortunately was loyal and said if they won't pay you we don't want the property.

My manager at the time was also a lawyer. He told me that what ever their deal is with the seller is not our business. The law in NY is that all offers received by a broker must be submitted to a seller. Only a seller can accept or reject an offer. Our commission is part of our offer. The seller can accept it reject it our counter it. So I wrote another offer including our commission included the fact that the offer must be presented to the seller acoording to NY law. Two days later I received a long distance call from a man who said he was the "negotiator" and the seller is accepting our offer and the seller will be paying our commission.

They are no nonger in business.

The redfin model could not work here because contracts are only written by attorneys. All negotiations take place before a contract is written. They can be verbal or written it doesn't matter. Offers and counter offers and negotiations don't mean anything until there is a fully executed contract.

Sounds a lot like the car-dealership business model or the call-center "now if you'll just talk to my manager he'll confirm everything we've discused" as he actually takes your order.

And it sounds a lot like the common team approach to RE where buyer agents do all the (selling) work and the team leader takes all the credit.

Having a specialist handle the closing process is even more common.

Stewart, I am familiar with Redfin. I am a referral partner agent, which means that they refer business to me in Westchester County that their office on Long Island can't service. I am free to approach the clients my way but they have certain standards. I don't do it the way you experienced. 

"Joe" was probably a showing agent. They have a team collaboration. What they are doing is having people who specialize in the different aspects of the transaction handle each component. 

Go to their site and click on agents to see the local ratings. http://www.redfin.com/real-estate-agents/southern-california

While it may seem weird, I seldom see a bad review. 

Mitchell, Foxtons had a huge splash in Westchester years ago and you saw their agents running around in Minis all the time. They tanked in 2007 and blamed the market. 

That is Odd, it sounds like they are the Fast Food of Real Estate....and Fast Food Will Kill You. :)

Yes, we do things a little differently at Redfin :). Mainly, we've invested a lot in our website so customers can research homes online and our agents are organized into regional teams with different agents specializing in different functions. 

So the way seeing and buying homes works with Redfin where Redfin has its own agents is that buyers use our website to identify the houses they want to see and then send them in to us through the website. A coordinator for the region they are interested in will pick up the request to go see homes and schedule a time with one of our field agents. The field agent meets the customer at the first house on the tour and shows them the houses they're interested in. If a customer sees a home that the they're really interested in the field agent will connect the customer with the agent for the region who will negotiate the offer. Since there are just a few people on every team all the members are in close communication about what is going on and the customer shouldn't feel bounced around. 

Now how is everyone paid? Our coordinators, are salaried employees, our field agents are contractors and are paid per tour they perform, and our agents are employees paid a bonus based on the survey response that the customer gives at the end of the transaction (we post all the surveys on our site so feel free to check out what customers have to say). You can read more about how we pay our agents (we pay them well) in the our recent blog post, "What Kind Of Person Would Work as Redfin Agent?"

Why do we do things like this? Because customers want to get into homes quickly and they want agents who have a lot of experience negotiating so that they can really advocate for the client. So we split up the two functions. Does this model suit every customer? It doesn't and we're looking at a different way for serving those who want one agent from start to finish.

Now in areas where Redfin does not have its own agents we have partner agents like Phil Faranda that we send customers from the website who want to see homes. Our partner agents typically work alone and will work with the customer from start to finish. 

Hopefully that demystifies things a little bit. Happy to answer any other questions though. 

Glad to see that Matt chimed in with some clarity.  In my area they have a 'partner' affiliation where some top agents handle the client relationships much like a referral model.  Clients find a property they like, contact a partner agent and both the buyer and Redfin get a referral fee.  The listing side and seller usually would not even be aware that Redfin is in the picture unless if they see it through the commission split paperwork.

Think of it like the ActiveRain referral process - except that Redfin is the one sending out the referrals and they split part of what they get with the buyer they send.

Stewart

Redfin is very active in my neck of the woods -- they have quite a few agents showing and closing.

One of my potential clients say that if I find them a house under $800K, they'll want to use me..but anything over, they'd want Redfin because of the rebate/refund/credit etc. They said they really can't afford to pass up the $$ savings.

Redfin's performance and the quality of their service may have changed from the first few years of agents who acted merely as door-openers and order takers. Would love to hear stories from people who successfully overcame the redfin "advantages"