Redfin Direct: Buy a house online without a buyer agent

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Redfin Direct: Buy a house online without a buyer agent

Allan Smith
Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes

Will the U.S. ever get to the point not needing real estate agents by using tech? Redfin Direct is rolling out in CA, already in a couple other markets. The house has to be listed by Redfin, but a buyer can log in and purchase the house if they are comfortable without an agent. Seller only pays about 3.5% commission instead of the typical 6%.

I wonder if this means we are getting closer to simpler, streamlined real estate sales. Agents mostly handle the paperwork and client emotions. Would love to see block-chain get involved.

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y

As any agent who does a descent amount of business can tell you, not likely.  People on this site have a skewed view of things, because its filled with people who buy a house every month. The average person buys 2 or 3 houses in a lifetime, and each time are generally terrified to do so. 

And there is no typical commissions. Average commissions drop during good economies and rise during recessions. Your estimate of the typical is more consummate with a recession rate as opposed to todays rate.

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  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    6y

    Yes I can see the agent going the way of the stock broker, not in the near future but over time.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    As any agent who does a descent amount of business can tell you, not likely.  People on this site have a skewed view of things, because its filled with people who buy a house every month. The average person buys 2 or 3 houses in a lifetime, and each time are generally terrified to do so. 

    And there is no typical commissions. Average commissions drop during good economies and rise during recessions. Your estimate of the typical is more consummate with a recession rate as opposed to todays rate.

    [email protected]301-893-4635Podcast Guest on Show #192
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  • Scott Anderson
    Rental Property Investor · AZ · Member since 2018 · 212 posts · 183 votes
    6y

    Why would a typical buyer want to buy something while unrepresented from a represented seller?!

    That’s a business tactic for Redfin to sign up cheap sellers. The better it works the sooner a big change will come and that change isn’t necessarily one that’ll be good for the typical consumer.

    Negotiations are human level decisions. I’m personally preparing for an agentless industry but it’s a ways out how I see it. 

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  • Allan Smith
    OP
    Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @russell That's a good perspective. Most people would be terrified to buy a house without an agent. Never thought about that. It's always a big purchase for a homeowner, but I wonder if time and culture will change the preferences of the general public. 

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    6y

    @Russell Brazil

    I think you make an excellent point. Maybe we are entering, albeit at a snails pace, a two tier market. Experienced investors who don’t need or want representation may be able to list their properties for a low charge, or buy a property with a commission rebate/ lower price. Those homeowners may choose full representation both ways. We’ll have to wait and see.

    If brokers were going to be displaced, it would have happened by now as we’ve had the technology for 15 years and access to it for 10. Obviously, many, if not most people, believe that real estate brokers and their agents bring enough value to the table to justify their commissions.

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Allan Smith:

    Will the U.S. ever get to the point not needing real estate agents by using tech? Redfin Direct is rolling out in CA, already in a couple other markets. The house has to be listed by Redfin, but a buyer can log in and purchase the house if they are comfortable without an agent. Seller only pays about 3.5% commission instead of the typical 6%.

    I wonder if this means we are getting closer to simpler, streamlined real estate sales. Agents mostly handle the paperwork and client emotions. Would love to see block-chain get involved.

     Just curious how the seller paying 3.8% vs 5 or 6% helps the buyer?  Reduced purchase price?  Does Redfin help the buyer in any way?

    My view is since more than 9 out of 10 buyers and sellers don't have a clue, they should obtain good agent representation. My current purchase I'm going solo as usual and the seller is paying zero.  The entire $22k that would have normally been paid in commissions is coming off the purchase price.  Wait, it's more than 22 but you get the idea. 

    How would I benefit if the seller paid 3.8% as a buyer? If they're listed anyway  I'd rather they pay 5 or 6 and I get represented most cases.

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  • John Barrows
    Real Estate Broker · Auburn, WA · Member since 2015 · 151 posts · 106 votes
    6y

    FSBO businesses have been around prior to real estate itself. REALLY, one thinks Redfin is different but, they aren't. It's a listing gimmick to get a steady flow of people to come through the door to generate business for people sitting on their butt in the bullpen office waiting for the phone to ring.

    Look at the number of people giving their livelihoods away for pennies on the dollar. I'll list your property for $95 (with MLS) access, or $295 and we'll send you the paperwork to sell your house. One of the best ones is $495 listing fee with an agent who will write up the deal and represent you at closing.

    All of the professional/good agents will work with a seller (especially) if the seller is buying another house through the agent for a 1% fee! All Redfin has done is create a steady stream of buyers for their real estate (bullpen licensed agents) that buyers have ZERO LOYALTY as agents will whore their services to any person walking through the front door or calling on the telephone. I can do creative advertising or BUY, A SUNDAY MORNING REAL ESTATE SHOW,  that creates a steady flow of business. It's just an advertising gimmick. I know several (agents) who work with Redfin. They do a few pieces of business a year but, waste a lot of time and money running after the business.

    Redfin has a good business model for stay at home types that want business but, aren't willing to get on the phones to generate the business. I do know the commission splits are all favored towards Redfin and not the agent! Same with Zillow and others trying to break into the real estate market. Good luck when a recession hits! All those agents will be looking for real hourly paying jobs! That's just how it works folks!

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  • Allan Smith
    OP
    Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @Steve Vaughan As for what's in it for the buyer, the Redfin landing page I linked in OP mostly talks about how an offer without an agent is attractive to a seller because they'll pay less in fees. Supposedly gives an edge in multi-offer situations. In sum, not great.

    I think you guys make a great point. It's just a gimmick to get more traffic for now. No real advantages.

    I listed a house with a redfin agent once to try out the lower commission. He didn't do anything. Talked a great game and anytime I expressed concern and reminded him that he has a listing with me, his only solution was just wait a little longer. Gave up after 3 months with him. Listed it with a good local agent and it sold that weekend. Dropped the price about $4k, which was the 3rd price drop. Redfin is kind of a joke when it comes to listing properties.

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  • Andrew Asper
    Spokane, WA · Member since 2017 · 2 posts · 1 vote
    6y

    @Allan Smith

    This is definitely something that I have been thinking about a lot lately. I feel like someone could eliminate the realtor and automate the process. Schedule walkthroughs, make offers, home inspectors, apply for loans, all online without having to deal with a realtor. The issue would be getting the general public onboard and getting realtors to play nice so that the platform could gain traction. Technically, it should be easy. In practice, it would be very hard to get people to make the switch and feel confident making the biggest purchase(s) of their life without "expert help."

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