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Buying a House with Redfin Experience

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Redfin LogoFor the last few months, my wife and I have batted around the idea of buying a new home. There’s nothing wrong with our current home but we’d really like a place that had some character to it. A place that was slightly bigger and one that wasn’t quite cookie-cutter (we’re in a townhome now, so we’re identical to everything around us). We love our current house, so we don’t have a big reason to leave, and with her focus on school and mine on work, it’s one of those passive searches.

We use Redfin to do the searching because their technology is by far the best of any I’ve seen. The integration with Google maps, the search capabilities (you can search on the type of home, type of listing, whether it has a view, garage, etc.), regional sales data ($ per square foot, charted by date in a particular city), ability to save listings, and it’s ease of use make it perfect for house searching. My wife and I share the same account and save listings we like to show one another. You can search within some of the most convenient geographic restraints too – city, county, university, etc.

Their claim to fame though, is the fact that they refund half of the buyer’s agent’s commission (more on their commission refund). They pay their agents a salary, not a commission, so you pocket those savings at 1.5% the purchase price of the house, with a minimum commission of $5,500.

Redfin Experience

One of my good friends in Virginia recently bought his house after searching on Redfin and using one of their real estate agents. He was taking advantage of the $8,000 first time homebuyer credit and Redfin’s commission refund program, which put a lot of money in his pocket. Fortunately he spent some time explaining how the process worked and how, despite it being more work on his part, it was well worth it because he saved several thousand dollars using Redfin.

Redfin Agent Teams

Standard real estate agents work on commission when a home is bought or sold. Redfin agents are paid a salary and they work in a team. On a typical team there will usually be multiple realtors each specializing in one or two things. There are agents that only show listings, getting paid on a per show basis. There are agents that do the paperwork of submitting offers, negotiating, getting documents in order, closing, etc. Then there are agents that coordinate all that – coordinate the showings, which agent gets the showing, what gets shown, as well as ushering along the closing process.

My friend’s agent was Marshall Park and as you can see on his team there are two field agents and a coordinator. My friend, in his several week process, worked with three of them (only one of the field agents) from start to finish. Taylor Connolly, a name that keeps appearing on my searches because he supports our county, works with three field agents.

Viewing Listings

My friend said that the first step in the process is to view some of the listings. You search on Redfin, select some listings and request an agent to help you along. You talked to the coordinator and worked with field agents to visit each listing. Unlike a traditional agent, who probably drives you from place to place, you are responsible for finding your way around (though I imagine you can just follow the field agent?).

This type of “do it yourself” mentality is important because the agents aren’t necessarily very knowledgeable about the homes, your needs, and how the two can meet. Remember, their job is to show you the house you want to see, they aren’t picking houses they think you want to see based on your preferences. It’s a less personal experience but you benefit on the back end by saving on the commission.

Making An Offer

When you are ready to make an offer, there is a process online for you to kick off an offer. Before you start, you’ll need to upload a preapproval letter before they’ll let you submit an offer. After you submit an approved preapproval letter and an offer, you start working with an agent to get everything in order. From here, it sounded like the process was very much like a traditional real estate agent.

At this point my friend revealed that there was a heavy sense that Redfin was for the do-it-yourself crowd who don’t like the For Sale By Owner arena but knew enough that traditional real estate hand-holding was unnecessary. The trade-off here is that you don’t get “coddled” in the process but you also get a huge commission refund on the back end.

Another comment my friend made was that his agent, Marshall, was very responsible. He’d submit an offer online and get a phone call the next day. My friend is a pretty fast moving, no-BS type who doesn’t mince words, so to say he was “very responsive” is pretty high praise. What’s also cool is that you can read all the reviews of the agents, something you probably can’t do with traditional agents as easily.

Closing

At this point, the coordinator returns and handles the closing process. All the title insurance, lending, etc. is all done at this phase and while Redfin does send someone to the close itself, my friends said the person was pretty much clueless about the process. Again, this was expected so it didn’t bother him one bit. At close or just before the close, you can opt to have the refund applied to your closing costs or as a check. My friend chose to apply it to closing costs.

Overall, it seems like Redfin was a good experience for my friend, who bought his first house, but may not be a good option if you don’t like the DIY mentality. The commission refund is a really compelling offer and the DIY aspect doesn’t scare me at all. Plus, even if you don’t use Redfin to buy, I challenge anyone to find a real estate search engine that is superior to theirs.

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35 Responses to “Buying a House with Redfin Experience”

  1. Trav says:

    When I bought a home, I looked into redfin but was not comfortable with it…

    I built a good relationship with a realtor and they were able to give me 2% back. The process was somewhat similar to redfin’s, I did my own research into homes and listing sites, this was efficient for me and decreased the research to be done by the realtor. The realtor just took me to homes that I wanted to see and because of that time savings, he was able to give back to me a larger portion of his commission.

    I’ve also heard of several experiences where my friends have received 1.5% back from their realtors, comparable to redfin. Perhaps homebuyers can try asking their realtor for more incentive to stick with him/her.

  2. Ryan says:

    You failed to mention one important thing (although it is quickly realized when you go to the website). They are only setup in certain major city areas, with the closet city to Florida is Atlanta.

  3. Yes, I might use RedFin or something like it next we buy. However, we just bought recently but were brand new to the city, even this part of the country, so we really needed a realtor who could show us around the different neighborhoods.

    I really like the idea of having a realtor team with different experts for different parts of the process. I find that realtors rarely excel along all parts of the process – our realtor for example sucked real hard at negotiating – so having experts (who hopefully are good at what they do) sounds attractive.

  4. mannymacho says:

    That looks like a really useful site! Too bad we don’t have it down here in Houston… :(

  5. Jeremy says:

    We are using Redfin right now in Anne Arundel County, MD and it is great! Thh website is by far the best! We were sick of dealing with really BAD agents that started their second careers during the Boom and DON’T have a clue how to negotiate. Redfin allows you to do your own research and get money back for doing it. Thay are going to cause a lot of BAD agents to lose their jobs and go back to their first careers, which will be good for almost all!

  6. MichaelM says:

    That’s basically how we used our standard-issue REALTOR (TM) real estate agent. We did all the looking because he didn’t really understand what we wanted*, and couldn’t seem to be bothered to learn…

    I wish I would’ve known more about RedFin a year ago. :-(

    * He couldn’t seem to comprehend that we would consider a house that needed work, or that we were capable DIY-ers that could fix lots of problems ourselves.

  7. ziglet19 says:

    We bought our first house last year. We did use Redfin for some searching but did not consider using a Redfin agent for the process, because we had never bought a house before. Now that we’ve beent through the process and understand it a little better, I would consider going through Redfin for the next house we eventually buy.

  8. Chris says:

    Used Redfin to buy a house this year and loved the whole process. They let us take our time to search (6 months) and let us go on 5 different home tours during that time. I would recommend them to anyone.

  9. MoneyReasons says:

    I would like to move to a large house with more character too (although I’m paying my current house mortgage off in Feb). Surprisingly, it’s my wife and kids that don’t want to move. It’s not like we would be moving to a new city, go figure…

    I’ve never heard of Redfin before but now I’ll consider using it if I ever convince my family to take the plunge!

    thanks! My “passive search” for a bigger house will continue solo for now… :)

  10. John says:

    My wife and I started with Redfin when we were searching for a home in 2008. We were new to the home buying experience and didn’t have much luck getting help to see the properties in Virgina. We got a lot of hassle from the selling agents. However, one selling agent was a huge help and we decided to use him to help us buy instead of Redfin.

    I think Redfin is great for the experienced buyer, but not for first timers. A helping hand is a big relief when questions come up and advise is needed.

  11. cubiclegeoff says:

    We bought our first house a couple of months ago and used Redfin in the Boston area. You do have to be willing to do some work yourself, such as search for houses you want to see, but it was easy and we preferred it that way since we could always see new listings, could find what we really wanted just as easily, and we could always keep to our own schedule since we could easily contact Redfin with the listings we wanted to see and when and there was always someone available to do the showings. Although the field agent didn’t know the area as well as a traditional agent would, you can look over a wider area, and they know the general trends. We knew what we were looking for in general anyway so local knowledge wasn’t that important to us. Our field agent was great and very helpful pointing out things that we should be aware or didn’t notice ourselves.

    My brother is buying a house in the same metro area and is using a traditional agent. Comparing our experiences definitely shows the benefit of Redfin. He ended up always having to find houses to look at, the agent wasn’t always as convenient for showings, and didn’t seem to want to fight for anything. With Redfin, you do more fighting, but at least you know something is being done and you can get the best price.

    My only problem I had was I wish the agent we worked with would have been in touch more. However, whenever I called or emailed, I always got a prompt response, and he was always able to answer all of my questions. I definitely recommend it to others, especially computer savvy people that like to take the lead. Plus the check at the end was great.

    • Ara says:

      I like the search and comparison capabilities of Redfin a lot. However, I am currently using Redfin as a search tool but working with a traditional agent, and here’s why: My agent knows many of the seller’s agents in my area, their quirks, their selling strategies, etc. He gives me tips about why a house is priced a certain way, advice (beyond the comps) on what a reasonable offer is. His negotiations skills are very good. He can refer me to a good home inspector (crucial, believe me!).

      In the end, I feel that whatever money I end up paying him, he will have more than earned it and probably saved me quite a bit more than 50% of his commission in the bargain. Sorry, Refin. But I like your site! :-)

  12. stuarsj says:

    Looks like a great website, wish we had it here.

  13. zapeta says:

    I played around with their map feature for a bit, very nice. I wish they’d expand across the US so I could use their service in my area.

  14. Jason Unger says:

    I used Redfin to find my house, but ended up going with a local real estate agent (family friend) to purchase.

    Out of all the real estate aggregation sites, it’s got the most listings and easily the best interface.

  15. Izalot says:

    Seems to be very limited in areas provided for now but cool idea.

  16. Jeanette says:

    We used Redfin to buy our first home in 2008. Since we are on the computer all the time, we really liked that we are able to search and figure out exactly what we liked and don’t like about some of our target houses before shortlisting some houses to look at. All the field agent had to do was let us access the houses and we were able to make our own determination. Having watched House Hunters on HGTV for months before we went house hunting was really helpful.

    Our agent was really supportive and knowledgable. We were really serious about our purchase and put in fair offers for the houses we liked and only closed on the third house we put in an offer on. The first one had problems with the roof and leaks onto the siding so we walked away and the second one was a little bizzare demand from the seller’s agent. And our agent was understanding and supportive of our decisions all the way. Our house now is great and I am really glad that we walked away from problem homes and unreasonable seller demands. Try Redin, it’s really good if you don’t need others to do your research for you.

  17. Mark says:

    Just an FYI, In San Diego I have noticed that the houses available on Redfin are usually a subset of what is actually available. In my area alone, 3 houses that are available on my street do not show up on Redfin.

    • Ara says:

      When this happens, usually your search criteria are too restrictive. I have found houses in the LA area at the same time as my agent (not a Redfin agent) who was checking the regular MLS.

  18. NateUVM says:

    Be careful seeking that rebate… They DO have a minimum fee of $5,500. If that’s more than half the buying agent’s commission (and in states where it’s only 2.5%, it could easily be the case), then your refund is only what is left, and not the full 1/2. If the buying agent’s commission is LESS than the $5,500, then you would have to make up the difference.

    They mention something about there being a minimum sales price that they engage in in order to prevent this, but I think this only works with the 3% commission.

    Not saying that this is a bad deal (seems like a great one, actually!), just, as always, be careful and read the fine print. Make sure that you know exactly what your benefit here is.

  19. eric says:

    Sounds good. Is the process hard for someone who’s buying a home for the first time though? I have some friends that are might be interested in going this route.

    • cubiclegeoff says:

      Nope, this bought our first house this way and I had only a little idea of what I was doing, although not really. I think real estate agents make it more complicated than necessary to make sure they still have jobs.

      Also, you do need to do a lot yourself, but they will do the comparative market analysis for you if you ask and help you out on pricing.

  20. Steve M says:

    NateUVM:
    One point of clarification – I work at Redfin, in the accounting office, in fact I’m the guy who cuts those refund checks. While you are correct that our 50% refund is subject to a $5500.00 minimum (the client receives the next $5500.00 and 50% of any commission above the first $11,000.00), we do not “charge” our customers to make up the difference if the full commission falls below our minimum. If the full commission is less than $5500.00, the client would receive no refund but would not owe Redfin anything.

  21. henry nunez says:

    I am licensed real estate broker in CA with a master degree in real estate development and own my own brokerage with 70 agents in 2007 and have now implemented a different business plan with 10 agents. All agents hold community elected or appointed positions in local cities, non-profits or civic groups-community leaders.That’s my disclosure and have nothing against Redfin they have their niche in the market as I do.

    The article actually sounded like it was written by an employee of Redfin because every time a negative was mentioned it was quickly offset by the commission reimbursement.

    The problem is the risk the buyer assumes by not using an ethical experienced traditional agent is unacceptable by my standard. The showing is a crucial informative time where the experience of the agent is invaluable. Foreseeable problems in the neighborhood, certain styles of homes have typical problems due to the construction of that particular architecture, leaks, mold or mildew or conditions that may lead to it or larger issues at a later time. The roof may have 5 layers but the top one is new or maybe the city is considering rezoning the area or one of the schools may be closing. Issues like this must not be dismissed and may not even be on the “salaried” agents radar. It certainly should not be placed on the home inspection company either.

    Generally, the type of agent that moves to that type of salaried position is one that has difficulty with consistent success in real estate. It might be there not good in one of our disciplines like prospecting for clients, consistent monthly sales or lacking sales skills. Not to say they are bad but rather to point out the wide variety of skills and drive it takes to be successful in real estate. I know there are good people at Redfin I am not implying there isn’t there has to be or they would be out of business.

    It is very demanding but those types of people are the ones I want working for me in any industry I need service. They take pride in their work, constantly educate themselves and are aware of the current issues that affect our property rights and home values and litigation. That’s why they get referrals and consistently sell properties every month.

    The national median salary for real estate agents is $35,715. Which means they all don’t sell every month and they all do not have high quality skills. There are many agents that do not know the purchase contracts and all other forms very well. It’s unbelievable but true. It’s not uncommon to receive improperly filled out contracts and that don’t understand the process and procedures. So you do need to be diligent about the agent you choose to work with. Most people will ask friends or family or they will recommend someone they trust and have worked with thus the referral based on reputation and experience.

    FYI I am a male 51 not married with a beautiful daughter of 22 years but if I had a family I would not be in this business because it is too demanding for a family, that’s just my opinion.

    Homes are usualy the largest investments of peoples lives and it may not be the time to save money and sacrifice the benefits of knowledge. Knowledge is the most important resource of all industries. If you are single and understand the risks you are assuming that’s one thing but to put your wife and family at risk is not an option. The same thing with a variable rate loan, don’t do it if you have a wife or family it’s too much risk, period.

    I appreciate Redfin’s business model and understand it but it has not grown as fast as projected. The reason is that such a small percentage of the home buying market use their service so they need to be located in heavily populated areas. If it was so great and popular there would be one in every city just as there is traditional real estate offices.

    The target market for Redfin as described in article “At this point my friend revealed that there was a heavy sense that Redfin was for the do-it-yourself crowd who don’t like the For Sale By Owner arena but knew enough that traditional real estate hand-holding was unnecessary.” I know may professionals that are very educated and experienced in real estate transactions that would never considering not us an agent.

    Lastly, the closing is so so crucial and needs extra detailed attention to make sure your the title to your home is clear that there are no liens or limitations or past C.C.&R.’s and conditions that negatively affect your ownership. Not many of you reading this even know what that means. Your loan docs need to be verified and your prorations of taxes and other costs are correct and the final figures are correct. Ya Ya escrow and title company are supposed to do that but the agents always need to manage and supervise everybody’s work and verify the accuracy and at the same time provide emotional support to the buyer to get through this stressful process of buying a home.

    OK that’s my two cents and hope to hear from any of you and don’t forget there is a place and time for everything and I respect everyone’s choice and I wish success to all agents and offices because there is enough business for all of us. I only hope that everyone has the opportunity to conduct many transactions because that is where the fun and thrill of this business is. It is very rewarding and I love it.

    Just the excerpts from the article below is enough to make me reject this option of real estate:
    1. “because the agents aren’t necessarily very knowledgeable about the homes, your needs, and how the two can meet. Remember, their job is to show you the house you want to see, they aren’t picking houses they think you want to see based on your preferences. It’s a less personal experience but you benefit on the back end by saving on the commission.” WRONG IT’S THEIR KNOWLEDGE THAT NEED A CHILD CAN OPEN THE DOOR FOR YOU
    2.”At this point my friend revealed that there was a heavy sense that Redfin was for the do-it-yourself crowd who don’t like the For Sale By Owner arena but knew enough that traditional real estate hand-holding was unnecessary. The trade-off here is that you don’t get “coddled” in the process but you also get a huge commission refund on the back end.” THAT’S NOT HOW I DESCRIBE KNOWLEDGE, EXPERIENCE AND PROVIDING EMOTIONAL SUPPORT AND FRIENDSHIP
    3.”All the title insurance, lending, etc. is all done at this phase and while Redfin does send someone to the close itself, my friends said the person was pretty much clueless about the process. Again, this was expected so it didn’t bother him one bit.” THIS IS THE AREA BUYERS HAVE ABSOLUTELY NO CLUE AND YOU WANT TO RELY ON A CLUELESS AGENT OF STAFF TO ENSURE YOUR PROPER TITLE ON A PURCHASE IN THE HUNDREDS OF THOUSANDS NOT ME OR ANY OF MY FAMILY OR FRIENDS AND EVEN IF SOMEONE I DIDN’T CARE TOO MUCH FOR ASKED FOR MY ADVICE I WOULD SAY THE SAME

    • VK-IL says:

      I’d like to ask you about the foreseeable problems with the neighborhood. How is that different from steering? In my opinion, any agent who advises their clients not to buy in a certain neighborhood is most likely breaking the licensing law.

      The best you can suggest is that the potential buyer consult the city/village/district police department for information about crime, talk to the neighbors about the neighborhood likes and dislikes. I’d think that if you are telling your buyers that the neighborhood is ‘going bad’, you may be in violation of your licensing laws.

      • Kyle Russell says:

        Without jumping to “steering”, a foreseeable problem could be a proposed rail line running through the filed behind your home, planned power line and hub construction, a club recently purchasing the corner building when you believe the street to be quiet, eminent domain paper work pending through half the neighborhood, demolition of the nearby recreation center, planes flying overhead, flood charts that show the area has been hit twice in the last decade, and so on. Knowledge of the are does not imply evil motives to push anyone in any direction or an attempt to violate fair housing laws, but it could save the client from owning the newest metro stop in the city when they started the process wanting to settle down with a quiet property on the outskirts of the city.

  22. Jim says:

    When the market was flooded with inexperienced real estate agents in the housing boom, many buyers used agents that didn’t have the experience you talk about. Knowledge of zoning changes? Typical problems with a house of that age? The agents didn’t have that knowledge because they weren’t like you, with years of experience under their belt, so my feeling is that Redfin offers the same type of service with a rebate check at the end.

    And I’m not an employee of Redfin nor am I compensated in any way by them for anything.

  23. Stu says:

    To imply that Redfin agents are unethical and inexperienced is quite ignorant. My wife and I are about to go to work for Redfin, and we have been in the top 20% of producers in our office (300 agents), for over 8 years. We know the business inside and out, and we see the trending evolution of the business. I know that some agents/brokers with with Real Estate masters degrees might get upset about this, but this is the free market at work. I would encourage you to see what you can do to compete, instead of talking down about Redfin.

  24. dasnich says:

    I tried to use Redfin to find a new home. After months of viewing homes with different agents, having offers regected without even a counter, and seeing others get properties that we would have paid more for right in front of us, I started to question the process. Come to find out the brokerage community that controls the listings does not like to work with Redfin and was giving advantages to other agents. This was very frustrating. While Redfin promised me back half their commission (only 15% on short sales) it was not worth it. I don’t think it was smart to let someone that works for a company that gives me their money so easily negotiate the biggest purchase of my life. We researched and found a top agent and they found us the perfect home and saved us more than 1.5% through relationships and negotiations. In addition, they did all the work. Go figure.

  25. Chris says:

    I tried to include some useful links to website with advice about working with a real estate agent, overviews of the home buying process, and statistics about buying a home (from HUD and NAHB) but this blog thought I was a spammer so I had to remove them–sorry.

    I am seriously considering selecting a Redfin agent, because I have done my research and already have a title company, have pre-quals with 3 mortgage companies, and have identified my own home inspection company so I know they aren’t in anyone’s pocket, they are working for me.

    A useful thing to know… when a mortage company apraises a property, they only are concerned that it appraises for the loan amount, not what you pay for it.


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