Redfin: The Discount Broker

Redfin: The Discount Broker

When teaming up with a real estate company, consider what you are doing carefully.

Redfin is expanding. More specifically, Redfin is expanding a 1% listing fee to 18 new markets. While this is undoubtedly good for Redfin, it can be detrimental to other companies.

This begs the question: why is Redfin doing so well? It has been growing at a faster pace than other companies, and this additional 1%, while it may not seem like much, has been making remarkable strides on the company. Agents are getting paid more, brokerages are thriving, and business as a whole seems to be on the up-rise. But how does this impact clients?

If agents and brokers receive a larger commission on a home, it means that clients lose the same margin. Yet somehow they still keep coming back – why is this? Redfin appeals to clients in some way that other companies are desperately trying to figure out. There has been reports of mediocre customer service, agents neglecting to respond to customers in a timely manner, and to top it all off, clients receive a lower compensation for their home that they could have been elsewhere.

Producing revenue does not equate to the same importance of making money. In the end, it is much more important to put your business into a company that will reward you rather than take from you. While we do not want to slander another company, this is essentially what Redfin is doing. They are taking away from clients, and while it seems as if they are thriving, they are actually taking away from agents as well. Redfin is a hierarchy, and while the 1% is helping, agents do not receive the full commission that they would in any other firm – a part of it goes to the brokerage.

To be fair, Redfin is not the only company that does this. They simply seem to be the most successful in doing so. We are not saying it is right or wrong – we are simply prompting you to ask yourself, before teaming up with a company like Redfin: why is this company so seemingly successful? What’s in it for me?