I’ve seen this ad before but seems like lately Redfin is doubling down on this whole 1% listing fee campaign. I get it, Redfin is ultimately a technology company. Technology companies are supposed to achieve some kind of efficiency or break through the old method couldn’t accomplish, or as the folks in the space likes to call, “disrupt.”

Often we get a proposal back from a GC or architect with a number on it we ask “what does it mean?” Meaning we want to know what it includes and what it doesn’t. What does the 1% mean, Redfin? It sounded a little too good to be true, so I took a closer look.

***Full disclosure, I’m licensed myself and I do like how easy Redfin is to use. A friend of mine’s wife is actually a product manager at Redfin. Real estate brokerage is an old and outdated business I wouldn’t mind some innovation in this space because there’s a lot about the business practice and tools we use that frustrate me.***

What’s with the asterisk?

Hmm… interesting. What does that asterisk mean?

Oh… so that doesn’t include Buyer’s agent commission? In case you aren’t familiar, in a regular real estate transaction, buyer and seller’s agent have to split whatever the commission the seller agreed to. It doesn’t always have to be even 50-50 split. In some deals, especially in commercial real estate, the listing broker is doing most of the heavy lifting and marketing so they’ll sometimes give outside representation aka Buyer’s agent less commission.

The other thing to keep in mind is you have to align the incentives. Usually you see 2.5% for Buyer’s agent, sometimes you’ll see 2.25% or I’ve seen 2% as well. Assuming it’s a normal market and a buyer is interested in two similar properties but the only difference is that one pays their agent 2.5% and the other 2%. Guess which one their agent is going to try to sway them toward?

There’s a link that say to find out more. Why don’t we check it out…

Let’s find out more

What does that last sentence mean? Potentially there’s another 1% commission? Ahhh… this brings up what we call “dual agency.”

Dual agency means an agent that represents both the seller and the buyer. Some states don’t allow this. In California it’s perfectly legal, as long as you disclose to both the seller and buyer. Why don’t some states allows this? Well, frankly it can lead to some questionable behaviors. When push comes to shove seller and buyer can’t agree on something, who do you think the agent is going to fight for more? If you said the person that pays the commission you are way smarter than Redfin thinks you are already.

This is why I don’t really like dual representation. Yeah, it’s nice to double end a deal and earn double the commission but I don’t want to put my integrity in jeopardy. I’ve heard so many times, especially down in SoCal, that a buyer will ask the listing agent to represent them so they can get the property. Personally I’d rather lose out than buying something that wasn’t fully faithfully represented to me.

To me, there’s nothing wrong with Redfin trying to leverage its platform and technology but them burying in the fine prints their incentive to double end the deal raises an eyebrow for me. Also, does this mean they’re only willing to pay 1% for outside representation if the buyer didn’t come through Redfin’s site? Good luck getting your property sold if that’s the case.

Let’s keep scrolling on this page shall we?

Is it really just 1%

Well, looks like that 1% commission doesn’t apply to about half of the markets listed here. It’s actually 1.5%. What gives? I don’t even have any real estate tips to share here. It’s just a straight up WTF. You said it’s 1% but if I live in Atlanta it’s 1.5%?

BTW, what’s this Redfin Concierge Service?

Service is extra

Oh staging is not even included I have to pay that myself? Depending on the market, I know that’s probably around $2,000. For bigger homes in higher end markets you’re looking at easily double or triple that. That’s also if I’m lucky enough to live in DC, Los Angeles, San Francisco, or Seattle metro areas. Otherwise go find and negotiate on your own with your own stager, inspector, cleaner, contractors, etc.

What do you guys think about that after reading all the fine print? Don’t get me wrong, a lot about the brokerage business is outdated and there are agents that are not earning or demonstrating their full value. Especially with the higher home prices these days and consumers having access to more information I’m with you it’s hard to justify the value of 6% commission. There are also many good agents that provide top-notch service from beginning to end you don’t have to lift a damn finger other than to DocuSign here and there.

Most of the commissions nowadays are 5%. Let’s add up Redfin’s fine print of 1 – 1.5% listing fee, 2.5% for outside representation, and 1% concierge service and you’re in the 4.5 – 5% range.

Why can’t we just call spade a spade and be transparent? It feels like something Ryan Air or Spirit Airline would do… oh you want to carry luggage with you? That’ll be $50 more. Oh you want to actually have a seat? Sorry the ticket you bought was in our standing section of the cabin, you have to pay another $100 to sit down. In case you might want to use the bathroom, you should upgrade for another $25 (they don’t actually do the last two I’m just being sarcastic).

What do you think? Is Redfin a bit egregious in how they present their messaging? Have you listed with Redfin before and what was your experience?