Redfin has been a leader in real estate marketing tech for years. More recently, they've exploded on the discount brokerage scene leaning heavily on technology and salaried agent teams to streamline transactions.
However, when you read the fineprint, Redfin's lower commission doesn't save sellers as much money as it appears. While many people associate a 1%-1.5% listing commission with Redfin, depending on your market and its minimum fee, you could pay twice that.
On the other hand, with Clever, sellers across the country pay a flat fee of $3,000 or a 1% commission (if the house is more than $350,000). It doesn't matter where you're located, the commission is the same.
In the meantime, let's talk about how much Redfin's realtor fees really are and the type of service you can expect.
What is Redfin?
Launched in the mid-2000s, Redfin is a well known real estate website that provides a range of online tools and industry data on everything from overall market trends to specific home values. Redfin has also built a reputation for providing lower commission options in the discounted brokerage market.
Redfin claims home sellers who use Redfin's discount agents pay only 1.5% (or 1% in certain markets), instead of the 3% listing commission that you would expect to pay a traditional agent, while providing the same full-service experience.
What is a Redfin Agent?
When you work with a Redfin Agent, you aren't really working with a traditional full-service realtor. And this is reflected in the lack of personalized service you receive.
Redfin Agents work more like a team that performs transactional procedures when needed. You'll be assigned a single agent when you sign up, but different agents may show up to show your home or for the inspection.
Redfin Agents aren't paid by commission, they are paid on a salary whether your house sells or not. They earn bonuses dependent on a balance of the closing prices and favorable customer reviews, but their main financial motivation isn't getting sellers the best price.
How much are Redfin Agent fees?
Redfin boasts that its commissions are as low as 1%, but this is sort of a half-truth.
What you can really expect are total agent fees between 2%-4.5% depending on the market conditions, the location, the seller's situation — and the buyer's situation.
Redfin sellers pay 1%-1.5% in fees to their listing Redfin Agent. This does not include the buyer's agent commission of 3%. If the buyer doesn't have an agent, Redfin adds an additional 1% to the seller's fee.
To get the lowest rate of 1%, you're required to buy a house using a Redfin Agent within one year of selling your house with Redfin. They'll charge you 1.5% at closing, and refund 0.5% when you buy with them.
So instead of a simple 1%-1.5% commission model, Redfin's fees break down as follows:
- If you sell with Redfin, your fee is 1.5% plus a buyer's agent fee of 3% for a total of 4.5%.
- If you sell with Redfin to a buyer with no agent, your fee is 1.5% plus an additional unrepresented buyer fee of 1% for a total of 2.5%.
- If you sell to a Redfin buyer, the buyer fee is 1% or $6,500, whichever is greater which you would then add to your seller fee of 1.5% (2.5% or 1.5%+$6,500).
- If you happen to qualify for the 1% Redfin rate by buying with Redfin within one year after you sell with Redfin — in certain markets — your fee will be:
- 2% if you sell to an unrepresented buyer.
- 4% if you sell to a buyer with an agent.
- 1% + 1% or $6,500 (whichever is greater) if you sell to a Redfin buyer.
Redfin vs. Traditional Realtors
The going rate for full-service realtors is 3% plus the buyer agent fee of 3% for a total amount of 6%. The seller is on the hook for both their agent's fee and the buyer agent fee. Compared to a full-service realtor, you would save 1.5% under most conditions at by using Redfin.
To put this in perspective, if your house sold for $300,000 with a Redfin agent, you would pay $13,500. But with a traditional agent, you would pay $18,000. Redfin could save you $4,500 on the sale of a $300,000 house.
It may sound like you will have your own personal agent when you sign up with Redfin but you won't. You'll end up working a team of agents who each cover a specific part of the transaction.
Your house will be evaluated by algorithmic software. A photographer will come out and take pictures. Redfin will list your house on their website and the MLS, and from that point on, who you deal with is whoever is available.
If you're thinking of using Redfin to shave 1.5% off your commission, make sure you do your due diligence and read previous Redfin customer reviews online first just like you would when choosing a traditional agent.
One of the biggest mistakes sellers make when they are trying to save money on realtor commissions is underestimating how much the personalized service of a traditional realtor plays into getting you the best possible price for your house.
Traditional realtors are experts in local market trends because they have to be. They're incentivized to aggressively price a house to sell at top dollar. They personally prepare a professional Comparative Market Analysis (CMA) on your house taking into account all of the minor details that will increase its value. They understand how staging and preparing a house properly can bring in more on the sales price.
Expert realtors have developed large professional networks, understand how to market in their local area, and how to screen buyers. But getting a buyer in the door is only the beginning of a successful real estate sale. Negotiations, inspections, and everything leading to closing can affect the sale price, too.
What is a fair realtor commission?
Every seller wants to have the best advantage in their local market to get the most for their house. But, let's face it, traditional realtors are expensive. Many people are looking at what discount brokers like Redfin can do for them.
But does it make sense to sacrifice price in exchange for saving realtor fees? You can get a fair realtor commission for high-end services with low-commission, experienced realtors.
Clever Real Estate partners with local, top-rated real estate agents across the U.S. from major brokerages. In comparison to Redfin agents, who are paid whether or not they close, Clever Partner Agents offer a personalized customer experience aimed at getting you the best price for your home. And they have a good reason for it.
Traditional agents have to pay a huge overhead in marketing costs to stay in business. By connecting sellers and agents, Clever saves agents time and money. In exchange, the agents offer their full services for less.
Clever Partner Agents charge a flat-rate listing fee of $3,000, or 1% if your house sells for $350,000 or more. Connect with a full-service realtor in your neighborhood today.