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Redfin 1% Listing Fee: How it Works (& Better Alternatives)

Have you heard of Redfin? What's their business model? Learn how working with full-service Clever Real Estate agents will save you money over working with Redfin's agents. Connect with a Clever Partner Agent in your area.

Have you heard of Redfin? What's their business model? Learn how working with full-service Clever Real Estate agents will save you money over working with Redfin's agents. Connect with a Clever Partner Agent in your area.

One thing that American consumers take for granted is how vital competition is in the marketplace. Businesses continuously try to increase their level of performance and lower prices so they can win more customers. This model benefits everyone.

This healthy competition is clear in the real estate marketplace. If you are planning to sell your home, we think you should contact a Clever Partner Agent by filling out the online form from our website. Our agents work for top-tier real estate agencies in your area and will provide high-level service to you at a discounted rate.

But just as you have choices on where you buy your shoes and which plumber you hire to fix your toilet, you also have other options when finding the right company to sell your house. One of those choices is Redfin.

Redfin's Website

There's no doubt that Redfin utilizes pretty neat technology to sell homes. Buyers can go on a virtual walk through houses using Redfin's 3D photography, which is cool to see in action. Redfin's listings are full of valuable information regarding the neighborhood, comps, schools, and other pertinent livability statistics.

Redfin's ability to crunch data is also impressive. People across the industry use Redfin's numbers to obtain a clearer picture of what is going on in each real estate market. Even people who are not interested in buying or selling real estate can get sucked into Redfin's attractive website, looking at homes and information about their own neighborhoods.

Redfin's Business Model

Yes, Redfin has an attractive website, but what about their business model? What promises do they make to homeowners ready to sell?

In an average real estate transaction, the homeowner pays 6% of the amount of the sale to real estate agents. 3% goes to the listing agent, and 3% goes to the buyer's agent.

At first glance, Redfin looks as if it promises to sell homes for a 1% commission. We at Clever know how attractive a 1% commission is to customers because that's what we offer to our clients as well.

As you dig deeper into Redfin's website, you will discover the “fine print” regarding the 1% listing fee. Redfin can't promise customers a 1% rate in every market, but they promise it in 27% of the markets they serve. The “fine print” continues and informs homeowners that the listing commission is subject to change and that market-based minimums determine it.

To receive a 1% listing fee in most of Redfin's markets, you have first to sell your home with a Redfin agent, and then buy a new home within 365 days with another Redfin agent. You will be charged 1.5% for the sale of your home, but when you buy a new home, Redfin will send you a check for the.5% difference.

Customers also need to understand that the 1% commission cannot be less than $6,500.

How Redfin's Numbers Work

The average home in the U.S. is sold for around $225,000. If a Redfin agent serves your area, and the agent sells your home, you will need to pay your listing agent $6,500, as 1% of $225,000 is only $2,250. Your agent's commission is instead 2.8%, which is less than the 3% you would pay in many markets.

You would need to pay the buyer's agent their 3% cut of the amount you receive from the house as well unless your buyer didn't have an agent working on their behalf. If that is the case, you will need to pay an extra 1% of the purchase price of the house to your Redfin agent.

So in this scenario, if you go with a Redfin agent, you will pay realtors a 5.8% commission instead of the 6% most agents receive.

Redfin's Service

Although a business' web presence is important, an attractive website does not always mean that customers will receive exceptional service.

Redfin works on a team philosophy. Instead of having one agent who knows you and the details of your property, you may have different people represent you at the various stages of your sale. While Redfin promises you will work with a discounted real estate agent, they do not guarantee that the agent will be a top-rated or full-service agent.

Also, Redfin does not offer service to Americans in less populated areas. They do not have a presence in North Dakota, South Dakota, Wyoming, Montana, Alaska, and Louisiana.

Alternative to Redfin

There are some benefits to working with Redfin. The website is user friendly, and their discount agents will work for less than the 3% that most agents request, but if you're concerned about receiving the attention of a full-service agent, reach out to Clever Real Estate.

Fill out the form on our website, and we will direct you to a top-selling agent working in your area. Our Clever Partner Agents have agreed to sell your home for $3,000 on homes below $350,000 or 1% of the price of the house selling more than $350,000.

If you have an average-priced home that is sold for $225,000, you will pay $3,000 to your listing agent if you work through a full-service Clever Partner Agent. If you work with the Redfin team, you will pay $6,500. Working with Clever will save you $3,500.

Visit both websites, but before you decide, crunch the numbers. We think you'll see that working with Clever Real Estate will save you thousands of dollars in commissions.


Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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