The map search juggernaut

With pretty normal commissions

Redfin is a real estate brokerage with the best multiple listing service (MLS) search engine available, provided your local MLS is included in their current coverage and you don’t hate maps. Redfin makes it easy to search for homes that are for sale or perhaps more importantly, homes that have recently sold along with their photos. This prior sales home search feature can be used to to accurately price homes using the PPSF method. Just be sure to ignore the Redfin Estimate on prices, as this number is about as accurate as the Zestimate-- in other words, not very.

Redfin also helps people buy and sell homes, but agents receive an incentive-based compensation based on customer satisfaction instead of commissions like traditional agents. Redfin, however, does generate revenue from commissions and most of their customers are buyers, which get a small rebate by. The main pitch to home sellers is that they can sell their home for 1%, but it pays to read the fine print.


That fine print states that the 1% commission is actually a 4% total commission when unnecessary buyers agent commissions are included.

The other potential issue that can affect your net proceeds relates to how Redfin thinks about pricing. We’ve talked about how high commissions cause brokers to convince home sellers to underprice their homes, so they save time and make their jobs easier, but Redfin’s agents are on salary so you may not get as much pressure to compromise your net proceeds. However, Redfin does get compensated with commissions at the brokerage level, and they do likely succumb to the same forces at an organizational level that individual agents do. The proof is that they advertise their high sales-to-list ratio, as evidence of doing a good job of selling homes at higher prices. It is confusing marketing, and it just means they under-price homes like other brokers as they list them in the MLS.

Finally, an upgraded offer includes a full staging package for 5% total commission, but those types of packages have been shown to have no effect on sales prices.

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