North Sound Property News

Local online real estate brokerage Redfin just released their second annual customer satisfaction report called “The Redfin Advantage.”  One of the areas they are touting heavily is the negotiating advantage that Redfin’s customers are supposed to receive. 

Here’s Redfin’s graphical representation of their advantage:

I thought it would be a fun idea to compare their numbers to my own, just to see how I’d do. 

Let’s look at the facts.  According to Redfin:

In King County, Washington, Redfin buyers paid on average 98.885% of the listing price, while people who purchased a home through other brokerages paid 99.383% of the listing price. The difference of 0.498% represents an average savings of $2,490.

Redfin did not include numbers for Snohomish County, so I am comparing my results across both Snohomish and King because my market area straddles both counties.  Here is what my results showed:

My buyers paid an average of 96.79% of the average listing price, compared to the above referenced 99.383% through other agents/brokers and 98.885% with Redfin. 

The difference represents an average savings of $10,468 compared to other brokers/agents, and nearly $8,000 more than the Redfin “advantage.”  It also saves an average of about $13,000 off of list price, if we’re going to represent it as shown above.  This is about $2,000 less than the “Redfin Advantage.” 

Uh oh, looks like I’m not doing that well.  Except there are a few catches to the Redfin model.

 For starters, Redfin charges for home tours.  The first two are free, the third and fourth tours are $250 each, which is subtracted from the commission rebate, and after that each tour is $250 in advance.  I’ve yet to meet the client that didn’t need to tour at least 5 homes before choosing one they like.   Usually it’s between 5 and 10, depending on the client.  For the sake of argument, you could end up giving Redfin back the entire difference, or more, between their “advantage” and mine.

 In fairness, Redfin also suggests that you access homes by going to open houses or getting the listing agent to show you the house.  Where do I start with why this is a bad idea?  One of the most important services a buyer agent provides is feedback about the homes you are touring and the areas where you are looking.  Sometimes, this feedback comes in the form of a criticism or warning about potential problems.  You will not get this kind of feedback at an open house, or from the listing agent.  You may get it from your Redfin agent, but you’ll pay for the priveledge.

In fairness, not all traditional agents provide this kind of feedback either.  That just means you need to find an agent who will.  A good agent is going to be very upfront with you about all the pros and cons of what you are doing, because they want your repeat and referral business.  Ultimately we want you to be pleased with your purchase and to feel that there were no unpleasant surprises.

Another disadvantage is that Redfin agents are not area specialists.  They may not know much about the schools or how pending developments are affecting the market.  They may not know much about how different floor plans do on resale in your given market.  They may not know about changes going on with companies in the area that could affect home values.  And they probably don’t know much about the soils in a given neighborhood.  Nor are they going to know about how active or inactive a particular homeowners association might be.  These are just a few of the kinds of local knowledge can save or cost you quite a bit of money over the long haul of owning your home and that you might wish you’d known later on down the road.

I have to admit that I love companies that dare to do things differently, and I think the online brokerage concept has a lot of merit.   And, from what I’ve seen of him online, Glenn Kelman seems like a great guy.  Over the long haul, I believe that online brokerage is the direction all brokerages and agents will be heading.  So this is not a Redfin bash.  I do think that Redfin seems to compare pretty favorably to the “average” (or downright bad) agent, which is a good thing for them and their clients.  But I also think that a great, full-service agent can still beat the online model, hands-down. 

I guess it all comes down to the agent you choose.

 *Props to Ben at Seattle Housing Buzz for the idea.

About the Author: Sandy Kaduce is a REALTOR (tm) with Skyline Properties NW who serves buyers and sellers in North King and South Snohomish counties. She is incoming 2009 President of the Mukilteo Chamber of Commerce, as well as Vice President of Site Selection for Habitat for Humanity of Snohomish County. For more information, visit Sandy on the web at www.sandykaduce.com! Read more from this author