Is a RedFin Agent or Discount Broker a Good Choice for the Savings?

I will be relocating with my family from Boston to the SF Peninsula for a new job at Google (Mountain View campus) in late August. We want to BUY (not rent) a home in Palo Alto or Los Altos. Our budget is $1.5MM to $3MM. We haven't chosen a Realtor yet to handle the transaction. 

Since my wife and I are using the power of the Internet to find our future home, the question is does it make since to use RedFin or a Discount broker/agent to handle the transaction saving us significant money?
  • June 21 2013 - Palo Alto
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Answers (20)

Profile picture for Blue Nile
After 2 years, is there really anything additional that can be said on the subject?

Realtors® technically can't give a useful answer on the subject regardless, due to their "code of ethics", Article 15; "Ensure that your comments about other Real Estate Professionals are truthful and not misleading".

Where does one find any documentation that a discount broker doesn't offer nor provide "full service"?  And when making generic statements about all brokerages and agents for a given franchise?  How could one possibly know all the agents, their experience, skills and qualifications, and know what services they provide for what fees?

If one has documentation that they all don't ever provide "full service", then provide the reference.  Otherwise, such claims could be used against one in a board hearing for a complaint about violating Article 15.

(Same problem exists for those agents that claim they are the "best"... their statement is a blanket statement that all other agents and brokerages are "worse"... fortunately I haven't seen that one used on this website for about 2 years now).

But what "services" is one really paying for anyway?  Some agents have posted that 80% of their "job" is "soliciting clients", and often I've seen claims of agents being paid a referral fee of 1% or more, though I've never seen any documentation for that 80% figure.

Even if only 20% to 25% of the "work" was "solicitation" to obtain clients...  how is paying that additional 20% to 25% providing any additional "service" to any individual client?   Most people I know consider "solicitations" as "harassment", not "service".

Yes, of course Redfin agents and brokerages have overhead for "promotion" and "agent marketing" too.  And Redfin is not one of the brand-names most people recognize when thinking of "quality service" like the national chains like "Coldwell Banker".  But again it is just "marketing"; there is no empirical evidence that the large brokerages and franchises provide "better service" than smaller brokerages nor other franchise chains that have not been in business as long or that haven't spent as much on national advertising.

Yes, name recognition helps some on a listing ,and even more on a solicitation... but name recognition is not the entire picture, just like it is not for what a political candidate would do in office either.
  • June 22
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Profile picture for Alan May
There's certainly nothing wrong with Redfin, or other discount brokerages.  And while I'd love to say "you get what you pay for", you often don't even get that ... full service or not.

Whether Redfin, or some other service, you want an agent who knows you, and can help you find what you want, and knows the market well enough that they can help you get the best price on the purchase.  I've heard buyers brag that they saved 4% by using a discount brokerage... when a full-service broker could have helped save 10% off the listed price, because they knew the local market well enough to know that the property was ripe for the picking.

Did they really save money with the discount brokerage... well, it's hard to quantify.  But my experience has shown me that buyers in your price range want their own personalized experienced and adept agent... at their beck and call when they need them, and you're not likely to find that with a discount brokerage.

I, am admittedly a full-service agent... (full disclosure)... but since I sell a lot of property at full-service pricing, why would I decide to switch to a discount brokerage, unless, for some reason I couldn't manage to make a living as a full service agent?
  • June 21
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Profile picture for SoCal Engr

Hopefully, I am not reading "my perspective" into Mack's answer, but I like the more reasoned response than the trite "you get what you pay for".

Paying for services you don't need is not much better than paying for services you don't get (as opposed to "paying for services you might need, because the bundled price is less"). But, making an informed decision when choosing a discounted service provider assumes you've done your homework and know what services you do/don't need when choosing a discounted service provider.

  • June 21
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I think you have to expect to give up something when receiving a discount. At the same time, you have to be sure that you're getting the value you are paying for!

Like any other brokerage, Redfin is a good choice for some people and not for others. In my experience, actual Redfin agents are quite professional, and they have a different service model than agents with a "traditional" brokerage.

  • June 21
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Profile picture for GoldenRN01
Redfin might be okay to use if you are purchasing a home, however, I under no circumstances would ever use them to sell.  We tried to use them but not only did they do a bait and switch with us in which they over valued our home to list with them, they were rude and extremely condescending when it came time to reduce the price.  They could not tell me what our house was truly worth and just kept asking us what we thought it was worth.  My response to them was, isn't that your job to tell me what it is worth?  They get pain based on customer feedback, therefore, I think they were afraid that because of our continued bad experience we had with them, that in the end we would leave bad feedback, so the Denver Office Managing Broker, Michelle Ackerman chose to have us cancel their services.  Always remember, you get what you pay for---if you want discount services, you can expect to get unprofessional and discount attention---their company is all a numbers game and they do not look out for their customers or follow through once they get a listing----RUN, DON'T WALK AWAY FROM REDFIN!!!
  • June 20
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Profile picture for IsraelKBarden
Why would you use a discount Realtor? Do you really want somebody who just rolls over and gives up their own money without a fight to represent you in negotiations? A home purchase is one of the major purchases of your life, treat it as such. If you were in a trial and looking at ten years in prison, would you use a public defender if you didn't have to?
  • April 02
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I would interview some discount agents and them some full service brokers and make up my mind.  It depends on your expectation of the service, location, market conditions, personal connection with he agent, etc.  I would not recommend shopping for an agent only by the discount they give.
  • February 08
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BUYERS DO NOT - I REPEAT - DO NOT PAY A BUYER'S AGENT COMMISSION!!!
 
  • January 29
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Absolutely, only uninformed buyers and seller pay full commission these days. Redfin does not give back much of the commission though. There are firms like ours that are much more aggressive.
  • January 26
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At some point you need to actually visit houses, if you are serious about buying. Buying site unseen is madness defined. You can see houses without an agent. Just call the name on the sign. They will make the house available to see. In this way you can be sure no agent will receive a brokerage fee (the listing agent might receive a double fee). If you know all about making and negotiating offers, and you know the area you are buying in, there is no reason to have an agent.
  • January 22
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hi, the answer is a big YES...click on my name above to see my profile and website link...good luck!
  • April 22 2014
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Hi Luke,

The seller is the party that pays the commissions: typically 2.5% to the listing agent and 2.5% to the selling (buying) agent. As a buyer, your costs would be for your lender, escrow company and for a home inspection typically. 

Would a highly qualified successful Realtor become a Redfin agent? Probably not.

I have a close family member who works at Google and they are in escrow to buy a house. Their Realtor is EXCELLENT if you would like a referral. They also used a lender that works a lot with Google employees and were able to get a good rate.
  • December 06 2013
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Redfin is more than a Full Service Brokerage.  I don't understand how anyone could consider them a "Discount Service" just because they have a model that puts the client first.  
  • December 06 2013
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Profile picture for aracz
Hi Luke,

In addition to what a lot of the other posts have mentioned, I would say asking some of your future local colleagues if they can recommend anyone they have worked with would be a good start as well. You can also look for agents that have had a lot of transactions in Mountain View, or even ask your HR department if they have any recommendations.

All the best,

Arpad

 
  • August 27 2013
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I think you've answered your own question, Luke.

All the best,
  • June 23 2013
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I would have to agree with many of the other agents that have posted replies.

You have to decide what you want from your agent and the level of service you are expecting. Many discount brokerages cut corners in ways you won't realize until you are deep in the process. They are also ala carte in the sense that you pay for each service they provide.
Finally, as the BUYERS, you are actually not the one paying the agent, the sellers pay the commission and set the amounts based on their market. My advice would be to work with a full service agent, especially since you are making such a large, cross-country move. Good luck to you!
  • June 22 2013
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In your price range, and your new job at Googe, youll have agents falling over you to find your new home. I haven't heard of one good experience from Redfin , at least in So Cal, especially in that range, and I wouldn't suggest it for you.

Buyers agents typically get 2.5% commission on a sale. I would ask any potential agent for a portion of that rebated back to you at the close of escrow, and see what they say. Some agents cant do it, some wouldn't.

Im my own broker, with no agents, and I do that all the time. It works out for both of us (the buyers and myself). But you have to do a lot of research, and you might not have the time to do it.

Spend a couple weeks in the areas you like, do as much research, because in the SF area LOCATION is very important. Internet research is good but it wouldnr mention that smell of the public dump that happens to waif over that beautifully photographed home on the hill....

PM me for more suggestions...
  • June 22 2013
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I guess the question you have to ask is, will you be getting full service with a discount broker?' I would investigate this before I make a decision.
 Buyer Agency is hard work, and very time consuming if it is to benefit the client. You need an excellent Realtor who has the time to help you find the right property, and one who is experienced in the area you want to buy in.

Working with buyers is not something every agent focuses on so that is an issue to consider as well. Since the owner of the property is the one who ultimately pays for the Buyer Agent's time, the cost is not as much of a consideration, as the excellence of the Realtor and the end result.
Good Luck!
  • June 22 2013
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Hi Luke,
I know I've answered your question in another place, so I won't repeat that response, but I do have something to add...
If an agent is providing you with a rebate or discount, are they discounting their service as well?
It's great to be frugal, but you really are in danger of getting exactly what you pay for.
I agree with Tony's answer...start talking to agents, and you'll soon get a feel for who knows their stuff.
Cheers,
Aileen
  • June 21 2013
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Profile picture for Tony Ngai
Your best bet, is to talk among your new colleagues and friends to see if they have ever work with a discount broker/agent.  Or best yet, search for agents in your area and interview them.  Find the one that best matches your compatibility and style.
  • June 21 2013
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