Monday, March 10, 2008

Redfin-Call me a skeptic

The name has been tossed around, but we have never had direct experience with which to form an opinion...until now. For those of you who are unfamiliar with Redfin, they are an online brokerage whose claim to fame is that they refund a large portion of their commission to the buyer at closing. They share this in common with Zip Realty, another online brokerage that is a bit more established. I am familiar with Zip; I actually interviewed with them when I was looking for a place to hang my license. It wasn't the right fit for me, but I don't have anything negative to say about them or their business model.

Redfin, however, I am not so sure about. Let me start by saying that I have never met a Redfin agent. That is not to say that they don't exist, but where are they? I realize that a lot of their work is computer based, but don't they need to visit the homes they are selling? On tour, we meet agents from all the major offices, and many smaller ones. It is our duty, as your agents, to see and be familiar with as many homes as possible...not just the home you want to buy, and certainly not after you have made the offer.

This all started at our open house this weekend. I met a nice young man with serious interest in the property. He let me know that he had some questions, but that he was working with Redfin and "will that be a problem?" I think they are told to identify themselves as Redfin customers. I laughed and said, "No, but it scares me a bit." He had a lot of Tenancy in Common questions, as the building is being offered either as a whole or as two separate TIC interests. I answered his questions, and he told me he would be in touch.

He called me twice today, the first time was to let me know his pre-approval had gone through with Wells Fargo, again something they are told to do through the Redfin website. The second time he called was when the red flags went up. He said that he had been on the Redfin website, and he couldn't find the listing for the entire building. The listings for the separate units were there, but not for the two unit building. He needed to find the listing on their site in order to make the offer.

That is when I started to realize how Redfin works. You search on their website for listings. You go to open houses on your own and find a property you are interested in. You get pre-approved on your own, and when you are ready to make an offer, you fill out some form on their site and then get paired up with an agent. They even have a process so that you can come to your own conclusion on how much to offer.

Of course they can refund a majority of their commission to the buyers; they haven't done any work! I went on their site to see what else I could find. Another shocker was that they only give you two home tours for free. The third and fourth cost $250 each and are subtracted from your closing credit. After four tours, you need to pay the $250 up front. Of course they don't want to spend too much time with you...they're hardly making any money!

There are a couple of things that are important to mention. At the end of the day, getting a refund check is a great thing. However, you do get what you pay for; this may not be one of the places to cut corners. Working with a good agent from a top brokerage may not get you a credit from their commission, but it will get you:

1) Unlimited time spent touring homes, providing information, and answering questions
2) Informed opinions on value and condition
3) Top negotiating skills that may end up saving you the same amount of money...or more
4) Protection...knowledge is key

In this economy, everyone is trying to save a buck. That is easy to understand. Just be careful; protect yourself, and if you don't have the time it takes to learn the ins and outs of buying property by yourself, hire a professional to help you!

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