Redfin vs. full service agent?

[usctrojanman29_IHB]

The agents at open houses invariably ask some questions and I answer their questions accurately. One of my answers is. "We are waiting still", and, "for a couple more years at least." Every single agent who has heard my responses in the last month or so has said something to the effect, "You better not wait too long. Don't let yourself get priced out."

Here is what is so irritating about there advice, and I hope there are a bunch of lurking realtors out there reading this:

What in the world makes them think that I should listen to their advice?

How arrogant must one be to give out huge money advice to someone they have just met and know close to nothing about?

Do they really think that I would care to work with someone so arrogant?

What were they telling people in 2005 and 2006?

Does it ever occur to them after hearing what my timing has been to ask for my advice rather than deign to give theirs?

What in the world makes them an expert?

Did they time the market and sell in 05/06, and then proceed to rent?

Would it be presumptive of me to assume the opposite, and that in fact, many of these advice giving experts drank the kool-aid and bought at the peak or upgraded at the peak?

They are salespeople. I wouldn't go in expecting them to be the Warren Buffett of financial advice. I would go in expecting a car salesman. With some low expectations, you won't be so disappointed.

Exactly. Why are they giving advice?

They can't help it....they like to hear themselves talk and think that they actually know what they are talking about. It's all about getting a deal closed to them (that's why many realtors will tune their clients out if their clients want to wait to buy).

 

[cl12_IHB]

I found our experience with Redfin very similar to yours. I would just like to add that the whole process is computerized and different people specialize in different areas of the purchase process. The main agent specialized in negotiation - that's all she focus on. Once contract is signed the paper work is then handled by some one who specializes in everything from opening to closing escrow. There are computerized check points on everything that has to be done. You get reminder emails about all the steps, such as dates you have to take care of the contigencies, inspection deadlines, etc. You get PDF copies of all documents. Nothing is left to human error. I used regular agents before and even very good agents sometimes overlook things. I was quite impressed by how smooth the Refin process was.

Another thing about Redfin is that you have no doubt that you will get your rebate. With a regular agent there is always some nagging doubt. Because in the end the agent has to cough up the rebate from his/her own commission - a rather painful process for the agent, even though he has agreed to it. With Redfin the rebate is a corporate process. The people who handle your case, such as the negotiating agent, have no interest in this money. It is yours from the beginning by policy.

So if you like to do your homework on choosing a house using Redfin for the purchase process is a great choice.

"Soylent Green is People" pretty much describes it well. We used Redfin and were very pleased with the service we received.

- The field agents are not specialists. They are basically there to open doors and can answer some basic questions about the house and neighborhood.

- The actual agent who writes the contract and negotiates are pretty experienced (probably more experienced than several regular agents because all they do is write/negotiate contracts and don't waste time touring, escrow coordination, et cetera). We never met ours in person until closing day, but we didn't care. Our agent responded to e-mail at various times of the day (and night), including weekends. And that responsiveness is all we cared about.

- The agent who writes the contract works very closely with you and helps you figure out what to put in the contract and how to respond to counter-offers. And since, that agent is salaried, we knew she had no vested interest.

- We must have e-mailed and phoned our agent 30 times over the 4 days of negotiations (including the weekend), so I think they work as closely with you as a local real estate agent would have.

- We're Type-A's so we like doing most of the research ourselves. So, while the field agent and the Redfin agent provided solid advice, we did our own homework (drove around the neighborhood at night, talked to neighbors, had our Redfin agent pull preliminary title report, et cetera).

- One positive for us was that Redfin is not pushy. There is no sales pressure or random calls to see how we're doing. I can see this being a negative for some as it can be perceived as Redfin not caring about you. But if you contact your Redfin agent about anything (or if they hear from Title, Escrow, or another third-party), you will hear promptly back.

- Finally, we did get a $13k+ refund check (non-taxable), which made any minor deficiencies in the Redfin process moot. I don't know what extra stuff Redfin (or a local real estate agent) could have done for us to give up that substantial an amount.

Having said that, I understand that Redfin is not for everyone. If you prefer face-to-face contact or have very specific housing needs that you simply cannot (or do not want to) research yourself, then a non-Redfin agent will probably fit your needs better. And with the market downturn, you can possibly negotiate a lower commission or refund with most real estate agents, so that potentially helps as well.

 

[SoCal78_IHB]

I found our experience with Redfin very similar to yours. I would just like to add that the whole process is computerized and different people specialize in different areas of the purchase process. The main agent specialized in negotiation - that's all she focus on. Once contract is signed the paper work is then handled by some one who specializes in everything from opening to closing escrow. There are computerized check points on everything that has to be done. You get reminder emails about all the steps, such as dates you have to take care of the contigencies, inspection deadlines, etc. You get PDF copies of all documents. Nothing is left to human error. I used regular agents before and even very good agents sometimes overlook things. I was quite impressed by how smooth the Refin process was.

Another thing about Redfin is that you have no doubt that you will get your rebate. With a regular agent there is always some nagging doubt. Because in the end the agent has to cough up the rebate from his/her own commission - a rather painful process for the agent, even though he has agreed to it. With Redfin the rebate is a corporate process. The people who handle your case, such as the negotiating agent, have no interest in this money. It is yours from the beginning by policy.

So if you like to do your homework on choosing a house using Redfin for the purchase process is a great choice.

A couple questions... using Redfin, did you ever feel like you had to explain yourself multiple times to multiple people, tell the same story twice? That is something I have liked about working with only one person in the mix.

Wouldn't a contract signed by the agent remove nagging doubt about them holding up their end of the deal to contribute part of their commission? I would only think there would be any doubts if a client was just taking their word for it without something in writing or if it was handled outside of escrow, which as far as I've heard, is not legally permissible / enforceable (according to Trojan? I could be wrong on that.)

 

[cl12_IHB]

For your first question, no, I didn't have to tell my story multiple times. The next person in charge of the process is introduced by the earlier person, and he also sends an email to introduce himself. I liked the fact that the person in charge of handling the escrow, for example, specialized in that. He does not have other priorities other than making sure everything goes smooth with your escrow.

For the second question regarding the rebate, I think the problem with regular agents is that there are no conventional procedures to follow. One agent I used wanted to sign a contract about the rebate that he himself draw up. Ok, that's a written contract, but you have to trust his language. Or you could hire a lawyer to review and revise his contract to protect yourself - what a hassle. The point is because there are no regulations and conventions to follow, it is up to you to protect your interests. In the end, anything can happen when you want that rebate check - having an agent to give up some of his commission may be like pulling his teeth. You need to be on guard. With Redfin you are dealing with a corporation with detailed written policies reguarding the rebate. The rebate is built into their process. It is someone's job to print and send rebate checks.(their accounting department)

I found our experience with Redfin very similar to yours. I would just like to add that the whole process is computerized and different people specialize in different areas of the purchase process. The main agent specialized in negotiation - that's all she focus on. Once contract is signed the paper work is then handled by some one who specializes in everything from opening to closing escrow. There are computerized check points on everything that has to be done. You get reminder emails about all the steps, such as dates you have to take care of the contigencies, inspection deadlines, etc. You get PDF copies of all documents. Nothing is left to human error. I used regular agents before and even very good agents sometimes overlook things. I was quite impressed by how smooth the Refin process was.

Another thing about Redfin is that you have no doubt that you will get your rebate. With a regular agent there is always some nagging doubt. Because in the end the agent has to cough up the rebate from his/her own commission - a rather painful process for the agent, even though he has agreed to it. With Redfin the rebate is a corporate process. The people who handle your case, such as the negotiating agent, have no interest in this money. It is yours from the beginning by policy.

So if you like to do your homework on choosing a house using Redfin for the purchase process is a great choice.

A couple questions... using Redfin, did you ever feel like you had to explain yourself multiple times to multiple people, tell the same story twice? That is something I have liked about working with only one person in the mix.

Wouldn't a contract signed by the agent remove nagging doubt about them holding up their end of the deal to contribute part of their commission? I would only think there would be any doubts if a client was just taking their word for it without something in writing or if it was handled outside of escrow, which as far as I've heard, is not legally permissible / enforceable (according to Trojan? I could be wrong on that.)

 

[cl12_IHB]

I would like to add that for your second question regarding the rebate, if everything is handled by escrow than it should not make any difference between Redfin and a regular agent. However, if for any reason the agent needs to cut you a check from his commission, that could be different.

I found our experience with Redfin very similar to yours. I would just like to add that the whole process is computerized and different people specialize in different areas of the purchase process. The main agent specialized in negotiation - that's all she focus on. Once contract is signed the paper work is then handled by some one who specializes in everything from opening to closing escrow. There are computerized check points on everything that has to be done. You get reminder emails about all the steps, such as dates you have to take care of the contigencies, inspection deadlines, etc. You get PDF copies of all documents. Nothing is left to human error. I used regular agents before and even very good agents sometimes overlook things. I was quite impressed by how smooth the Refin process was.

Another thing about Redfin is that you have no doubt that you will get your rebate. With a regular agent there is always some nagging doubt. Because in the end the agent has to cough up the rebate from his/her own commission - a rather painful process for the agent, even though he has agreed to it. With Redfin the rebate is a corporate process. The people who handle your case, such as the negotiating agent, have no interest in this money. It is yours from the beginning by policy.

So if you like to do your homework on choosing a house using Redfin for the purchase process is a great choice.

A couple questions... using Redfin, did you ever feel like you had to explain yourself multiple times to multiple people, tell the same story twice? That is something I have liked about working with only one person in the mix.

Wouldn't a contract signed by the agent remove nagging doubt about them holding up their end of the deal to contribute part of their commission? I would only think there would be any doubts if a client was just taking their word for it without something in writing or if it was handled outside of escrow, which as far as I've heard, is not legally permissible / enforceable (according to Trojan? I could be wrong on that.)

 

[popak_IHB]

A couple questions... using Redfin, did you ever feel like you had to explain yourself multiple times to multiple people, tell the same story twice? That is something I have liked about working with only one person in the mix.

For us, once a transaction coordinator was assigned (the Redfin person who handles all issues from open to close of escrow), we continued to cc our original agent on everything. So she knew exactly how everything was proceeding. And even then, for repair negotiations and other out-of-the-ordinary escrow issues, the original agent dives back in. So the transaction coordinator is more to take the routine administrative tasks away from the actual Redfin agent.

One thing that's a little different is that you will need to describe the house to your Redfin agent and why you want to offer a certain amount, if it's different than what the comps support (since the Redfin agent does not tour houses with you). This is especially true if you want to order substantially less than the listing price (redfin.com's built-in cut off is 15% below listing, I think, but rest assured that that's not a hard cut off). For example, we wanted to bid $750,000 on a house that was listed at $899,000. The house was older and required some work. The comps did not support that high a price either. It took all of 2 minutes for the Redfin agent to agree with us and she wrote the offer without any further questions (we did not get that hosue and, eventually, it went off the market without selling).

So if you see a house that is significantly different than the available comps, just reasonably explain the offer you want to put in and that's it.

 

[popak_IHB]

I forgot to mention one of the primary reasons we went with Redfin. You can tour as many houses as you want with Redfin. Ultimately, if you don't think their services are a match for you, you're free to place an offer on a house with your own real estate agent (even if you originally saw the house with a Redfin field agent).

So you're not locked into using Redfin for months and months. The only time you're "locked in" is if you place an offer on a particular house with a Redfin agent. Then you cannot go to another real estate agent for that particular house (which makes sense).

 

[IrvineRealtor_IHB]

If you could get this same service, under the same terms, and additionally have an accountability factor for the broker, wouldn't that be even more attractive? That is why I see this medium as such a valuable resource for you as end-users.

One of the blessings and curses of exposure on this site is that as realtor, I am accountable for whatever I do, or is perceived that I do.

Good, bad, and ugly.

Fair or otherwise.

One of the weaknesses of the RE model is that you never know how someone has acted in the past. Or if you hear a single story, you don't know if it was just an aberration or the norm. I see that the redfin site does have some of that built into its infrastructure, but you still have no relationship with the people who have made the reviews.

Here is quite the opposite. You have every ability to contact people before, during, and after a transaction without any filters (have you ever seen someone give out a troubled client's name on a referral sheet?). This is an absolutely personal space. So much so that other relationships have spawned off of the original real estate draw.

If I were to offer that same type of service, as an ancillary branch of my existing business, would it be of interest to you as a potential client/partner?

Real question.

 

[kcmkane_IHB]

If you could get this same service, under the same terms, and additionally have an accountability factor for the broker, wouldn't that be even more attractive? That is why I see this medium as such a valuable resource for you as end-users.

If I were to offer that same type of service, as an ancillary branch of my existing business, would it be of interest to you as a potential client/partner?

Real question.

Yes.

 

[irvine_home_owner_IHB]

I forgot to mention one of the primary reasons we went with Redfin. You can tour as many houses as you want with Redfin. Ultimately, if you don't think their services are a match for you, you're free to place an offer on a house with your own real estate agent (even if you originally saw the house with a Redfin field agent).

So you can look at 50 houses with a Redfin "tour guide" agent and then decide to go with your own for the offer?

That doesn't sound right to me but if so, maybe I should freely use their time until I find the one I really want.

 

[popak_IHB]

That doesn't sound right to me but if so, maybe I should freely use their time until I find the one I really want.

That is correct. You are not locked into a contract with Redfin until you actually place an offer. And even then, it's only for that particular house.

So, theoretically, you can tour 50 houses with Redfin and then place an offer with another agent. Of course, this would not be a nice thing to do

They may catch on and kick you off as a customer if you haven't placed a single offer after seeing 50 houses, but from what I've read in the forums, that has only happened to a couple of customers and they evaluate that on a case-by-case basis.

Actually, come to think of it, we probably saw 40 houses with Redfin though we did place 3 offers over that span.

 

[usctrojanman29_IHB]

That doesn't sound right to me but if so, maybe I should freely use their time until I find the one I really want.

That is correct. You are not locked into a contract with Redfin until you actually place an offer. And even then, it's only for that particular house.

So, theoretically, you can tour 50 houses with Redfin and then place an offer with another agent. Of course, this would not be a nice thing to do

They may catch on and kick you off as a customer if you haven't placed a single offer after seeing 50 houses, but from what I've read in the forums, that has only happened to a couple of customers and they evaluate that on a case-by-case basis.

Actually, come to think of it, we probably saw 40 houses with Redfin though we did place 3 offers over that span.

Honestly, Redfin has a great business model...one that I've used before they came along. The rationale that I came up with was that if I work with active buyers who take care of a portion of the legwork, why not share in the spoils of victory? Besides, I've always felt that Southern California realtors were and still are way overpaid for the time they put into a transaction (and I understand the concept that not all buyers will translate into sales that the agent puts their time and energy into). My argument is that it takes just as much time to find/close on a $200k property as it does a $2m property so why should the buyer's agent get paid 10x times? Besides, when a good portion of the commission goes back to the buyers, it reduces the pushiness of the agent and goes a long way to better align the agents' interests with their clients' interests. If Redfin work on their service issues and get some knowledgable agents they'd be set because they are catering to a ever growing technology and information savy buyer population. Maybe I should do some consulting work for Redfin? Hmmmmmm

 

[IrvineRealtor_IHB]

Besides, when a good portion of the commission goes back to the buyers, it reduces the pushiness of the agent and goes a long way to better align the agents' interests with their clients' interests.

trojanman, don't take this personally... It sounds like you do a good job for your clients and you're impossible not to like. I don't believe you are a pushy agent because, as you've said, you do this on the side, and have other good income.

Semantically, I have to make a correction, though.

I will argue to my grave about these two points, and you keep making them over and over again. I vehemently disagree.

1. Reducing the commission to the agent does not decrease his or her pushiness. The agent that works for 1% has to close three times as many deals to make the same $$$ as an agent working for 3%. If that agent needs to make that same $$$ to make ends meet, I would contend that their "pushiness" may actually be increased to make up for volume. This is true when considering both a short-term and long-term basis.

2. This practice does not do anything to "better align" interests. The agent just has less skin in the game. Does a lasik surgeon have a client's interests more at heart if he/she works for 50% off? This is particularly true for the long-term view.

Agents are pushy, or they aren't. They act in their client's best interests, or they don't. Decreasing their pay does not improve their performance.

With that said, however, the lesson is not lost on me that several people have come to you for your "kickbacks" as you say...

I constantly have to make sure that my service and my rate are competitive with anything else out there.

-IR2

 

[graphrix_IHB]

Besides, when a good portion of the commission goes back to the buyers, it reduces the pushiness of the agent and goes a long way to better align the agents' interests with their clients' interests.

trojanman, don't take this personally... It sounds like you do a good job for your clients and you're impossible not to like. I don't believe you are a pushy agent because, as you've said, you do this on the side, and have other good income.

Semantically, I have to make a correction, though.

I will argue to my grave about these two points, and you keep making them over and over again. I vehemently disagree.

1. Reducing the commission to the agent does not decrease his or her pushiness. The agent that works for 1% has to close three times as many deals to make the same $$$ as an agent working for 3%. If that agent needs to make that same $$$ to make ends meet, I would contend that their "pushiness" may actually be increased to make up for volume. This is true when considering both a short-term and long-term basis.

2. This practice does not do anything to "better align" interests. The agent just has less skin in the game. Does a lasik surgeon have a client's interests more at heart if he/she works for 50% off? This is particularly true for the long-term view.

Agents are pushy, or they aren't. They act in their client's best interests, or they don't. Decreasing their pay does not improve their performance.

With that said, however, the lesson is not lost on me that several people have come to you for your "kickbacks" as you say...

I constantly have to make sure that my service and my rate are competitive with anything else out there.

-IR2

I have my reasons as to why IR2's model best fits me than the Redfin or t-man's model. Not to say that Redfin or t-man's model is not a fit for others, but if IHBers want to hear why I (someone who really doesn't need an agent more than most because of my RE experience, really... for all the contractual and logistics of an RE transaction, I do not need an agent... ever) would prefer IR2 over any other agent, then let me know, and I will explain. It's all in the details, and the details matter to me.

 

[garrison_IHB]

TI

 

[irvine_home_owner_IHB]

And there is still a difference between buyer vs. seller.

Has anyone listed with Redfin? How was that experience?

And unlike airlines, cars or music... there is only so much you can DIY with real estate sales. There has to be someone to let you in and look at the home, someone licensed and will be liable in case a shopper decides to help themselves to the owner's belongings. I suppose you can make arrangements with the buyer to show their home direct to sellers, but there are still privacy and security concerns in that regard.

I do think there needs to be a shift in the fee structure (which is something that the new IHB is planning to address) but at the same time, I also feel that sometimes the commission realtors get isn't enough compared to the amount of work their clients make them do (and of course that some realtors don't do enough work for the commission they do get).

 

[orgopeach_IHB]

I think it's a difference of full-service (IR) versus part-time full-service (Trojan) and bare-bone services (Redfin). Each have their own offerings and prices. IR seems to have an annoyance with Trojan for his "rebate" (kickback has such a negative connotation).

I am surprised that most people think the "rebate" is illegal but I think it's because they hear the word kickback.

There is a place in world for IR, Trojan, and Redfin. No need to rip on one or the other.

 

[orgopeach_IHB]

My boss said the "rebate" issue is fairly common in the real estate world. (We do work for largest real estate developers and companies in OC and LA.)

 

[IrvineRealtor_IHB]

Several years ago the only way you would buy an airline ticket was through a travel agency. Most customers at the time had little knowledge of the collusion between an agency and a particular airline. Often times agents would route customers through their "preferred" airline in order to gain kickbacks and incentives (and at the expense of the ticket price). The explosion of the internet brought about drastic changes to many business models. Airlines in particular lost their footing as customers now had a more transparent view on pricing. Priceline, Expedia and others came on to the scene and further eroded the airlines pricing power; those that were slow to adapt to the elasticity in pricing suffered. As an interesting side note, Orbitz was actually formed by a consortium of airlines to try to capture the internet savvy customer (somewhat of a wolf in sheep's clothing).

There will always be those that require full-service (from airline travel, to real estate transactions, to filling up your vehicle). But as the demographics of the population become more and more tech savvy, the productivity gains from those emerging technologies will shift the demand from full-service to DIY. Businesses have to continually evolve to the new marketplace or they die.

None of this is meant as a slight to IR2 or an endorsement of Troganman or Redfin; just one man's take by someone who watched his industry completely transform through the internet age.

Absolutely agree, and I think the analogy is appropriate.

Mine was simply a point of clarification: dropping someone's compensation neither improves their service nor re-aligns their motivations.

As I've stated here before, this particular online community is savvy, and I'm learning here hopefully as much as I'm sharing from the other side of the curtain.

And orgo, no disrespect was intended... was just using trojanman's own wording.

...Honestly, I would HIGHLY advise that buyers get the agents to put the split commission in writing because anything can happen, including the agent breaking their word (there was a thread in the general section where an agent didn't give as much of a commission kickback as promised).

The people have spoken, and many of them want to do their own work and pay a lower commission.

I like the quote,

“In business, the competition will bite you if you keep running; if you stand still, they will swallow you.” ~ William Knudsen Jr.

and can assure you that I won't be the one left standing still.

 

[SoCal78_IHB]

Have you guys ever seen the episode of "I Love Lucy" where the Ricardos and the Mertzes buy a diner together? They have a dispute over how it should be run. One feels they have the name and the other, the know-how. They end up dividing it, with each side selling hamburgers. When competing for a customer, a price war ensues.

Ethel Mertz: Three!

Lucy Ricardo: Two!

Ethel Mertz: One! One cent hamburgers.

Fred Mertz: Ethel, are you out of your mind?

Ethel Mertz: Well I thought this could get'em.

Fred Mertz: One cent hamburgers.

Customer: [Gives Ethel one dollar] I'd like a 100 hamburgers.

We could make our own burger; there's nothing stopping us. But, in the 50 years since the episode was made, nothing much has changed. I will buy one and when I do, it won't be the one cent burger.

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