Lots of opportunities to continue to grow over time. They have these classic network effects, both through their online listings, as well as, like we mentioned, those relationships that the brokers have with folks in each one of those communities, the relationships they build with their existing customers. I don't want to throw all Redfin agents under the bus but in my experience they are average to mediocre when it comes to servicing clients. I like that a lot! Redfin Agents meet customers on Redfin.com, so they don’t spend time looking for new clients—they focus only on you. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. The complicated nature of real estate negotiations is why many traditional real estate professionals take issue with Redfin Direct. See you at the top! At SimpleShowing, we provide consumers a team-based approach using advanced technology along with our staff of full-service agents. You don't really get that with another type of broker. On average, homes listed with Redfin sell for $2,800 more** and are 6% more likely to close within 90 days than comparable homes listed by other brokerages. The compensation structure for a Redfin agent, you're salaried with a bonus and benefits, you usually get stock options. The folks who are on a very high end of the real estate brokerage market, of course, will be making more than that. If you want to stick with Redfin for the refund, do some research and request a new agent. What can you say about Redfin's market opportunity relative to where they stand today? According to the Bureau of Labor Statistics, the average real estate agent makes around $46,000. And when you have something that makes sense both for the customer and for the person providing the service, the broker, it just really makes a ton of sense. My Redfin guy works for Redfin and isn’t proactive, which is largely my issue. If you don’t trust your agent, you shouldn’t work with them. When you have an industry -- and maybe we'll talk about this later on the show -- like real estate brokerage that really hasn't undergone a lot of change over the past several decades, you have a company like Redfin that is leveraging technology, putting an incentive structure in place that makes sense, both from the person going through, like I said, the real estate transaction's point of view, and from the point of view of the broker, there's just a lot to like there. Nick Sciple: Right, you talk about, when we list out these numbers, oh, you're paying 1% or 1.5% Redfin vs. 3% to a traditional buyer's agent or seller's agent. They're also doing all the scheduling themselves, unless they've hired a personal assistant to do that. So I think it's easier for them to be more of an advocate for the buyer or seller. I am a first time home buyer. This means they’re getting paid whether your home sells or not. Like an army of real estate Terminators, Redfin agents are augmented by technology that vastly improves their power. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Here’s my take on the truth as to why Redfin is secretly trying to kill the real estate agent. There are bonuses. It's good for them to sell at a higher price. Traditional, full-service real estate agents typically charge a 3% listing fee when selling a home. loans Cookies help us deliver our Services. I think of Redfin agents in the same way. Happier in your new home Our customer satisfaction rates are consistently higher than the competition, thanks to our technology and local agents. When you're a Redfin agent, that support system is built into the company that you work for. Traditional Real Estate Agent. As a contractor there are a lot of added expenses: licensing fees, Realtor Association fees, continuing education fees, Redfin required car insurance level, printing, gas, etc. Real estate agent vs Redfin agent? There is no incentive to generate the highest possible price. [10] But much of the magic happens behind the scenes. Sciple: Yeah, and you're seeing some of this in the numbers. So if you start with Redfin, and a Redfin agent, one of the great advantages -- and this is something that we don't talk about a lot. That works for a lot of people. To find Redfin agents in your area go to the Redfin website and click on Real Estate Agents in the top right-hand side. You may file a complaint against licensed real estate agents with your state's real estate commission (whatever agency is responsible for the licensing of the agents), but the "complaint" against the seller would have to be a civil suit for damages. They don't directly receive a commission, regardless of whether you're buying or selling a home. What kind of questions do you suggest asking the agent? All of that will be handled entirely within the Redfin family. houses In a competitive market, it may not be the best choice. This is all money that you carry on your book. Pat Cunningham, an agent with Compass Real Estate… Redfin Unlimited Liability Company (trade name, Redfin) is a licensed and registered real estate brokerage in British Columbia and Ontario only. Redfin, Compass and Purplebricks are world leaders in terms of disruptive real estate agency models. which is typical of real estate industry. Bonuses just got much lower this year. A traditional agent with neighborhood experience may have advised us to be more careful around a ‘snake oil salesman’ disguised as a realtor. But the difference is that Redfin's network, which is going nationwide, those are all employees. He isn’t as proactive as I think a normal realtor would be, as I mostly look up listings and send them to him to ask him for tours. In contrast, Redfin Agents are full-time salaried employees. But overall, as an advocate, a traditional realtor is completely incentivized to get you into the highest transaction they possibly can. Yesterday, I attended an open house and was encouraged to interview agents to find a realtor who might be more proactive. First, your Redfin Agent will ask about your selling motivations. Good experience so far and has good knowledge of the area and what houses are going for. Consistent, kind of average, but you could have done better. Because they handle so much of the transaction, the upfront fees in the transaction itself can be lower, because they're just taking a greater part of the overall transaction itself. On the buyer’s side of things, we use a refund model and take the middleman out of tour scheduling by providing users the ability to schedule showings and view listings on our website. Already, I get the sense that the service will be much better. Again, another important thing to note, we talked about how little they've penetrated their addressable market. Buying and Selling With Redfin vs. a Realtor: What's the Difference? **** Pricing your home. That agent is like a Coldwell Banker agent. They get paid ONLY if and when the sale goes through. Redfin’s technology is visible to consumers mostly on the buyer’s side of its business. You're not hiring that out. Importantly, these fees vary from region to region and … So why are we talking about the pros and cons of using Redfin versus the other agencies? I’m in a market that has switched more to a buyers market. So, by offering you more services, and shrinking the time it takes for you to move from point A to point B, and making that a smoother experience, they earn more. Trusted listings from REALTOR® Agents. This only works on your computer, not the app. foreclosure Nick Sciple: Right, you talk about, when we list out these numbers, oh, you're paying 1% or 1.5% Redfin vs. 3% to a traditional buyer's agent or seller's agent. Let's conquer your financial goals together...faster. So, that 1% or 2% really can translate to thousands or tens of thousands of dollars. Certainly, I really like that not only is the average pay package a little bit higher, but the incentives are aligned. Redfin Stock Has Doubled This Year. They do that themselves. Sciple: Right. Redfin has reported that their repeat business is growing at a 35% rate relative to their online customers they're bringing in, only growing at a 20% rate. That's huge! Once you click on the link, you will be directed to a page where you can enter the city, neighborhood or zip code that you’re looking to buy or sell in. (And the inexperience is another.). Each occupies a particular market niche, from low-cost to high-touch, high fee. It's really a significant amount of money. This way of operating is really efficient in some ways because Redfin agents do show a lot of houses, but the weakness is that they are often bouncing from one client to the next, from one area to the next. They're not making it on a giant commission, they're making it on getting you into the right mortgage, and then they're making a little extra on getting you a good title that makes sense for the property that you're buying, and so forth. They rent, basically, the right to use the Coldwell Banker name, or, Century 21, or REMAX, which just recently ended up striking a deal with Redfin and then pulling out of it. I am starting to feel maybe interviewing an agent might not be a bad idea. Neighborhood familiarity is important and even if Redfin claims their agent specialize in that neighborhood – it doesn’t matter! I don’t. lending Redfin Is Real Estate's Cautious Growth Story, What to Look for From Redfin Over the Next 5 Years, Copyright, Trademark and Patent Information. Redfin and other discount brokerages have a very different business model than your traditional Realtor. Redfin is a broker, with roughly a thousand real estate agents. investing The standard brokerage commission on a home sale is 6%, with 3% going to the buyer's agent and 3% going to the seller's agent. Actually, Redfin folks have access to the full (in maryland) MRIS listings, as they are actually realtors. If you've listened to Industry Focus for a while, if you've been with us at The Motley Fool, you've probably heard us say, use a fee-based financial planner because their interests are more likely to be aligned with yours. Market data powered by FactSet and Web Financial Group. financing So if you’re shopping for new listing ideas via the Internet, Redfin may be the best choice if you don’t want to waste you (and your real estate agent’s) time. Anything around that broker side of the transaction, Tim, that appeals to you as an investor? Investing in real estate? This is a problem that the financial services industry has, too. If I worked for Redfin, I’d say Redfin. That's just the real estate commissions part of the business. If you choose to work with Redfin, your agent is a full-time Redfin employee, and they’ve been vetted and trained by Redfin. Cumulative Growth of a $10,000 Investment in Stock Advisor, Why Buyers, Sellers, and Agents Are Flocking to Redfin @themotleyfool #stocks $RDFN. This is another way that they're aligned with the buyer or the seller -- they make more money when the buyer and seller either save more money or make more money. Just as some long and foster agents are good and some are bad. Stacking Up – REX vs. Redfin 2020 “Why America’s real-estate brokers are such a rip-off” – The Economist; Real Estate Agent Commissions Are Shrouded In Secrecy, New Study Shows; 5 Differences Between REX and Discount Brokerages If you start in L.A., and you say you're going to move to Seattle for a job, you could theoretically sell your home in L.A., move up to Seattle, let Redfin take care of the sale in L.A. while you focus on settling in Seattle. apartment And it could be that you sell it with Redfin Now, which is their instant buyer program; traditionally, by finding the right home using their website, and then getting the broker to do the work for you of getting the title set up and getting the mortgage set up and working with those mortgage arms. I am currently talking to an agent I met at an open house who really made an impression on me and will be interviewing them. Best case scenario you will live paycheck to paycheck and one day your job will be extinct because that's what Redfin wants to achieve- kill all realtors with technology and minimum salary employees. Because REX is the only real estate company not using the MLS to sell homes, our sellers are not obligated to pay a buyer’s agent commission. Compared to traditional real estate agents who charge a 6% fee, REX sellers save $25,000 on average. When you’re ready to buy a house, we function like a traditio… I've heard, through folks who've dealt with Redfin agents, that this is something that they really like, because they focus on the sale, they focus on the customer, more of their time is focused on the customer, whether it's the buy or the sale. Those bonuses are based on sale price. On the surface, Redfin is just a real estate agency like Keller Williams and RE/MAX. If you are using a screen reader, or having trouble reading this website, please call Redfin Customer Support for help at 1-844-759-7732 . I don’t know much about them other than checking their site like I’d check Zillow. He works for KW. I recently started my house search a few weeks ago and began working with a Redfin agent who has taken me on several tours. In using this dual system, I became familiar with the advantages of both methods (Redfin vs. full service agent). IME, I have a lot of clients who started w/Redfin and decided they needed more expertise and access to hard to find properties or off market properties. Choosing an Agent. The guy who is my agent has excellent reviews, and overall, he is a nice guy, but he only has a few years of experience. There's two sides of this transaction. That's a great model, because it means that the more satisfied the customer, the more that they like the moving experience, the more they're going to come back to Redfin. Redfin offers a small rebate to entice their leads to use their service, but you are getting the McDonalds of real estate experiences. That 1% or 2% difference can really make a huge difference in the amount of money you take home as a seller, or your effective selling price as a buyer when you have to account for that in the selling price. Redfin can handle all of that. whether it's moving from state to state, like you were mentioning, Tim, or whether it's just, next time they go to buy or sell a home, Redfin is the first place they think of. They're expanding their core business with the real estate brokerage, as Tim said, into mortgages, into title insurance, expanding their operation. borrowing As you mentioned, Redfin, according to data they put out, sells their listings quicker, sells them at a higher average price. On this clip from Industry Focus: Energy, Motley Fool analyst Tim Beyers and Industry Focus host Nick Sciple break down Redfin's value proposition to each of the important stakeholders in the homebuying process. The number one advantage of Redfin is in cost savings. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have spent in your profession. The happier you are, the more he or she earns. Returns as of 12/18/2020. There are other national real estate brands, but those brands basically are holding companies that have local contracted agents. That's usually the way it is. To distinguish itself from other national real estate firms such as Century 21, Re/Max and Coldwell Banker, Redfin offers a twist on broker/agent commissions — in the form of rebates. We'll talk about the industry a little bit. I’ve never done this before so I’m not sure how to go about with interviewing agents to try and find the best one for my search. Stay traditional !!! Potential buyers use redfin.com to search for and explore listings. It is important to note that REALTOR.ca is not an MLS® System. This is a company that, really, as it scales, feels like it can become a snowball rolling downhill, and just pick up more and more as things go along. Let’s take a closer look at some of the pros and cons.of Redfin and some of the pros and cons of a traditional agent. Agent technology is geared towards iPhone, can be clunky using Android. The MLS® mark and associated logos identify professional services rendered by REALTOR® members of CREA to effect the purchase, sale and lease of real estate as part of a cooperative selling system. By many measures, Redfin (NASDAQ:RDFN) stands apart from other real estate brokerages. Can Zillow and Redfin Make Money Buying and Selling Houses? They are supposed to show a certain number of clients houses every week and have official and unofficial quotas to hit. mortgages RedFin agents are paid a salary and benefits. BUT Redfin is really geared more to the types of buyers that do their own research versus those that want an agent to rustle up listings. Press question mark to learn the rest of the keyboard shortcuts. And that's just not true for a Redfin agent. Redfin agents provide full service in exchange for a 1-1.5% listing fee. Advantages of Redfin. Yes, Redfin directors cut bonuses for their agents who grew their business. Redfin is a company around $1.5 billion today; $487 million in revenue in 2018, going into an $80 billion addressable market. They aren't strong negotiators and often they split the duties with regards to servicing the client which can lead to confusion at times. 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