USCTrojanCPA said:
As long as real estate is doing well, Redfin stock will do well. Back when Redfin started years and years ago they used to offer 2/3 commission rebates then shortly after that they went to 50% commission rebates and then in the past few years then went to a very convoluted black box calculation where the rebate is around 30% if you meet a certain minimum commission for Redfin. I'm sure that was all done in preparation for the IPO and when they had enough business being generated from their website. I really like what Redfin did in terms of being a disruptor to the whole real estate commission model but there are some who don't like their assembly line structure. Overall, I think customers have benefits from Redfin existing. The real estate companies and professionals that continue to innovate will benefit in the future.
Apparently, when Redfin first started they were offering a 3/4 commission rebate, but the backlash from other Seattle realtors was so intense they soon dropped it to 2/3. I guess that still wasn't profitable enough and they dropped it again to 1/2 a few years later. When I bought in 2010 using Redfin, 50% was the rebate amount. The house we bought was turnkey aside from one major item. It needed a new roof, and the Redfin rebate was a enough to cover that. Thanks Redfin! I was happy with the service too, but maybe because I didn't need a lot of hand holding. First time buyers might need more coddling from their agents.
One of the key features for us was being able to quickly view the houses we had already toured, as they were saved to our Redfin profile (36 homes in total). After touring so many houses, things started to blur together. We ended up falling out of escrow on our first choice due to an inspection that revealed soil liquification and a crumbling foundation. That was no good. Having the profiles of the houses we toured allowed us to go back and review them again and decide which one we wanted to offer on next, if any. It was about 2-3 weeks after touring it that we offered on the house that we currently own, thanks to this feature.
After we bought, Redfin lowered their commission refunds to 1/3, which I thought was pretty low, and now I'm surprised to see that it's only 1/5. I mean why call themselves a discount brokerage at this point? May as well collect the whole commission and invest it in better technology and service. I'm not sure it would be worth using them again at this reduced amount.
Here's an article talking about their early days:
In its early radical days, Redfin tried to win market share by offering lower prices than competitors. Initially, it rebated to buyers about three-quarters of the customary 3 percent commission a buyer?s agent gets on a home sale.
Buyers would attend open houses and do their own research, then ask Redfin to write up the offer and close the deal.
Rival brokerages and the multiple-listing services that serve themreacted vehemently.
?Competing agents have threatened us with violence, intimidated our customers and tried to block their offers,? Kelman testified before Congress in 2006, the year Redfin launched in Seattle and the Bay Area.
After a year of industry backlash, Redfin backed off its aggressive buyer?s rebate.
http://www.seattletimes.com/busines...tional-brokers-still-a-house-to-house-battle/