Redfin’s iBuyer Service Continues to Expand Across the U.S.
If you’re selling a home, iBuyers like RedfinNow might offer the best deal that you can find on the market. iBuyers can offer all-cash offers, which give you an upfront payment on your home without having to deal with various fees and agreements. Redfin’s iBuyers service has been buying more homes because of the great deals that sellers can get.
While iBuyers are great for sellers, it might not be fair for buyers because they have to compete with companies that have the tools and the money to outbid them for property listings. Some people have speculated that iBuyers have contributed to real estate market manipulation. iBuyers buy homes and sell them more for what they’re actually worth, which causes average home prices to increase.
What is Redfin?
Founded in 2004, Redfin is one of the top real estate brokerages in the U.S. Redfin uses a lot of modern technology to keep its services up to date with the latest real estate trends, similar to Zillow. While Redfin and Zillow are often compared to each other, it’s important to point out that Zillow isn't a national real estate brokerage like Redfin.
Difference between Zillow and Redfin
Zillow does hold real estate broker licenses in certain states, mainly for its Zillow Home service, but it often hires third-party real estate brokerages and agents to conduct transactions. Zillow conducts most of its business as a real estate marketplace where people can use its website to purchase, sell, and rent homes directly from the homeowner or use an agent to make an offer on it.
In contrast, Redfin is a brokerage that has its own agents for customers when they use Redfin’s platform to buy or sell a home.
Redfin allows users to save money compared to other brokerages.
Redfin claims that users save an average of $8,200 when buying or selling homes on its platform. Sellers who use the platform pay fewer fees on average, including a total commission fee of 4 percent of the deal. The national average commission fee that's charged to a seller is usually around 6 percent, where the fee is split between the listing and the buyer’s agent.
With Redfin, the approximate 4 percent commission fee is split to where the buyer’s agent receives 75 percent of the commission and the Redfin listing agent only receives 1 percent. On average, Redfin says that buyers will receive a refund that comes from part of the commission fees. This allows the seller and buyer to possibly benefit in some way from using the platform.
From a consumer’s perspective, paying only a 1 percent listing fee can be a great bargain compared to Redfin’s competitors. However, if you’re a listing agent for Redfin, you’re potentially losing out on money compared to if you worked for a different brokerage.
Redfin's employer rating compared to other brokerage firms
According to Indeed, Redfin has a higher overall employer rating than competitors like Keller Williams Realty. Keller Williams, one of the biggest traditional brokerages in the country, currently has an overall rating of 4.3, while Redfin has a rating of 3.4. Salary is one of the biggest factors that contribute to the ratings.
Real estate agents and realtors tend to get paid less when working for Redfin. Most of it can be derived from the company's modern real estate business plan. Compared to other companies, the buyer and seller’s agents for Redfin will likely receive less in compensation from transactions because there are fewer fees. Another factor is how agents get paired with potential clients.
For many brokerages, agents are often able to look for clients and find the best ones possible. With Redfin, the company generally pairs the agent with a client. This can be a potential disadvantage for consumers as well because Redfin clients tend to work with multiple agents throughout the transaction process. Other brokerages will have one agent stick with a client for the entire sale, which allows the client to build a better relationship with that one agent.
Is RedfinNow worth it?
From a seller’s perspective, RedfinNow can be very rewarding. You can receive an all-cash offer, which is something that you generally won’t find when selling a home. There are perks for buyers as well when searching for RedfinNow homes. Buyers can do self-guided tours of the company’s homes without an appointment and can open the doors with the Redfin app.