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Buying a House with Redfin Experience

Posted By Jim On 01/05/2010 @ 7:51 am In Personal Finance | 35 Comments

For 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 [3] 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 [4]). 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 [5] 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 [6], 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 [7] 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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[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/buying-a-house-with-redfin-experience.html

[3] Redfin: http://www.redfin.com

[4] commission refund: http://www.redfin.com/buy-a-home/faq#redfin-refund

[5] Marshall Park: http://www.redfin.com/real-estate-agents/marshall-park

[6] Taylor Connolly: http://www.redfin.com/real-estate-agents/taylor-connolly

[7] preapproval letter: http://www.bargaineering.com/articles/prequalifying-preauthorizing-preapproving-letters-differences-explained.html

Thank you for reading!