1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

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Topic Author
Funletter2020
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1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Funletter2020 »

Hi, I'm a first time home buyer looking to purchase a 600K home in a relatively "hot" market. We have narrowed our search area to just 1 or 2 neighborhoods and are ready to start the process to get pre-approved and find a realtor.

We are very conflicted on if we should get a traditional realtor & try to negotiate commission with them (we don't know anyone who has purchased in this area, so we'd be finding one just through internet/review searches), or if we should get a Redfin Buyer's Agent (to get the "Redfin Refund"--not sure exactly how much that could potentially save us but I believe it would be around 1%).

We feel conflicted with getting a traditional real estate agent and not negotiating the comission at all because we feel like this will be a fairly simple process for us. We know the small search area we want to buy in, we can find houses online, and just need limited hand holding when it comes to making an offer. We're not wanting or expecting a real estate agent to spend lots of time with us driving around, showing dozens of homes, etc.

Questions:

1. Has anyone PURCHASED with Redfin and received the "refund"? If so, was it worth it and how much did you save?

2. Is it common to negotiate realtor commission when purchasing? How does this process worked? Do we just ask upfront when interviewing if they'll negotiate?

Thank you!
mbres60
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by mbres60 »

Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Stormbringer
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Stormbringer »

Realtors dread working with buyers in this market, so don't expect too many favors. I know buyer's agents who are spending countless hours with buyers, writing offer after offer only to have them all rejected as someone else swoops in with a cash offer for tens of thousands over asking price.
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anon_investor
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by anon_investor »

Funletter2020 wrote: Tue Oct 26, 2021 3:23 pm Hi, I'm a first time home buyer looking to purchase a 600K home in a relatively "hot" market. We have narrowed our search area to just 1 or 2 neighborhoods and are ready to start the process to get pre-approved and find a realtor.

We are very conflicted on if we should get a traditional realtor & try to negotiate commission with them (we don't know anyone who has purchased in this area, so we'd be finding one just through internet/review searches), or if we should get a Redfin Buyer's Agent (to get the "Redfin Refund"--not sure exactly how much that could potentially save us but I believe it would be around 1%).

We feel conflicted with getting a traditional real estate agent and not negotiating the comission at all because we feel like this will be a fairly simple process for us. We know the small search area we want to buy in, we can find houses online, and just need limited hand holding when it comes to making an offer. We're not wanting or expecting a real estate agent to spend lots of time with us driving around, showing dozens of homes, etc.

Questions:

1. Has anyone PURCHASED with Redfin and received the "refund"? If so, was it worth it and how much did you save?

2. Is it common to negotiate realtor commission when purchasing? How does this process worked? Do we just ask upfront when interviewing if they'll negotiate?

Thank you!
I have not used Redfin, but I did use a similar discount broker for a condo purchase a few years back, and they applied my "refund" to the closing costs, so my closing costs were lower by the "refund" amount.
123
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by 123 »

Supposedly Redfin agents working on behalf of the buyer rebate some of the standard commission (which was determined by the seller) back to the buyer after the sale closes. One of the problems with this model is that the agent working for the buyer may not be as motivated as one who is receiving a higher (full) commission. So the agent working for the buyer may be dividing his/her time and effort between more deals in the hope that some of them close. As a result the agent may not be as available, or dedicated. Whether it makes a difference or not could depend on how complex or difficult price negotiations are as well as dealing with issues that arise while attempting to close to close the deal, home inspections etc. For some buyers real estate agents just get in the way of things, for others real estate agents are a valuable resource to guide them through a transaction that they could not complete without agent assistance.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by FoolishJumper »

I'll start by saying that I'm a part-time realtor who is licensed under a well known realty company. There are gray areas around offering rebates directly to clients. If I assist someone with purchasing or selling a home, they sign an agreement with my brokerage company (i.e. the local office of Keller Williams, Century 21, Coldwell Banker, etc) who then designates me as the agent to assist that individual in purchasing/selling a home. When the sale is complete, that local office receives the commission check from the seller and then cuts me a check for my share of the commission (often 50-95% of that original check from the seller which tends to be 2-3% of the purchase price, depending on the specific market and specific agent arrangement). There are issues (which vary greatly state to state) around what is legally considered a kickback vs a rebate, so legally I'm prevented by my brokerage company (based on documents I signed with them when I became an independent contractor for them) from providing a direct cash rebate. What I can do (whether using myself as their agent in the state where I am licensed or for friends and family who I refer them to agents in my network in other markets) is pay for explicit purchase costs, so inspection fee, buyer's attorney costs, home warranty, etc. Redfin on the other hand will explicitly layout their rebate structure up front and it is part of the contract you sign with Redfin prior to them assigning you an actual realtor to assist you - they will cut you a check (or sometimes just give you a credit on your mortgage closing statement).

Redfin tends to refer most their buying clients out to 3rd party realtors (so I could sign up to get business referred from Redfin's website - they'll take a cut of the overall commission (their cut varies depending on their rebate offered in that city) from my brokerage and then shares that referral commission with the buyer) - they call these agents 'Partner agents'. You don't really have control over the actual agent that Redfin will assign to you, but you can request a new partner agent if you aren't happy with the one you have been assigned.

From my experience, Redfin Partner agents tend to have less experience than your average agent - Redfin only requires five closed transactions if I remember correctly. If a buyer or seller is fairly competent, understands what their home (or other nearby homes if buying) are worth, then there is little value from hiring me to assist them (in comparison to another agent, whether a Redfin rebating agent or even just a random person who will fill out a contract for you and provide no other value). The problem is, you may only be entitled to $2-3k rebate (on a $600k home), and I personally believe I'm worth that much to most buyers (I don't believe I am worth the $10-15k I receive on a purchase like yours, but I didn't set up the marketplace....I only play in it).

Only you can decide what value a good realtor who will commit time to you is worth. A redfin agent is already working on a reduced commission structure, so they likely will need to extend themselves a bit more to keep their business successful, and I definitely can tell when I am working across from an over-extended real estate agent - they just don't service their client to the same degree and often accept unfavorable arrangements, because they don't view a $2k savings for you as the buyer as significant - especially because they then receive $40 less in their pocket, so they are already financially incentivized to recommend against a route of savings, but even more so, most will often recommend the avenue which is easiest for them instead of what is best for you. Much like we always press on about financial advisors here on bogleheads, even though realtors have fiduciary duty to clients, we don't have a duty to get you the absolute lowest price possible (or highest price in the case of a seller's agent) - there is only one person who is looking out for your best interest when it comes to real estate transactions and that is you!

So it truly comes down to, how well do you actually know your real estate market? How well do you understand the process of buying real estate in your market (which regionally varies widely so not really something you can just google)? How well do you know professionals who can assist you in the process - inspectors, title companies, etc etc - those are individuals who can make your homebuying experience either very positive or very negative - a good agent knows who to go with and who to avoid from experience - are you confident in your ability to see problems in a home during a walkthrough (beyond if there is a crack in a tile or scratched cabinet doors)? If you regularly browse redfin to see what houses in your desired area have been going for over the past 12 months, then it's possible you won't get value from a non-rebating agent over a rebating one when it comes to choosing the right price, but there are many more steps in home purchasing and most people over estimate their capabilities and understanding. Just something to be conscious of.
Topic Author
Funletter2020
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Funletter2020 »

mbres60 wrote: Tue Oct 26, 2021 3:26 pm Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
J295
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by J295 »

Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm
mbres60 wrote: Tue Oct 26, 2021 3:26 pm Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
Whether Redfin or not, get referrals and get a top-notch buyer’s agent. Buyers agents are no more interchangeable than are attorneys, doctors, plumbers, etc.

Disclosure. I am a retired lawyer. My spouse is a real estate agent, who does it because she’s great at it and she loves it. In our city the typical split to buyer agent is 2%. Ymmv.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by pizzy »

Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm
mbres60 wrote: Tue Oct 26, 2021 3:26 pm Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
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fortunefavored
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by fortunefavored »

Just use the Redfin agent - as you can tell, the people with a vested interest in the Realtor racket will all chime in with their incredible value, et cetera.

The Realtor cartel has managed to lobby to make rebates illegal in several states. Even in other states, most "real" agents will not play the rebate game because they have to give half of that money to their capo (the agency) - so they really only have a small amount to play with anyways.

Write your congress people if you are unhappy about the situation. Not much else you can do if you want to buy a house.
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Funletter2020
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Funletter2020 »

fortunefavored wrote: Tue Oct 26, 2021 5:40 pm Just use the Redfin agent - as you can tell, the people with a vested interest in the Realtor racket will all chime in with their incredible value, et cetera.

The Realtor cartel has managed to lobby to make rebates illegal in several states. Even in other states, most "real" agents will not play the rebate game because they have to give half of that money to their capo (the agency) - so they really only have a small amount to play with anyways.

Write your congress people if you are unhappy about the situation. Not much else you can do if you want to buy a house.
Thanks for the perspective. I'm definitely leaning the Redfin route. From searches elsewhere on this topic (Redfin agent vs. traditional) it seems like the opposition comes from realtors and not many perspectives from buyers who have experienced both and can provide feedback.
notPatience
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by notPatience »

@FoolishJumper , greatly appreciated your response. Detailed and honest and insightful.

(And for the cynics, I'm not affiliated professionally or personally with anyone in the real estate biz.)
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by jfn111 »

FoolishJumper wrote: Tue Oct 26, 2021 4:52 pm I'll start by saying that I'm a part-time realtor who is licensed under a well known realty company. There are gray areas around offering rebates directly to clients. If I assist someone with purchasing or selling a home, they sign an agreement with my brokerage company (i.e. the local office of Keller Williams, Century 21, Coldwell Banker, etc) who then designates me as the agent to assist that individual in purchasing/selling a home. When the sale is complete, that local office receives the commission check from the seller and then cuts me a check for my share of the commission (often 50-95% of that original check from the seller which tends to be 2-3% of the purchase price, depending on the specific market and specific agent arrangement). There are issues (which vary greatly state to state) around what is legally considered a kickback vs a rebate, so legally I'm prevented by my brokerage company (based on documents I signed with them when I became an independent contractor for them) from providing a direct cash rebate. What I can do (whether using myself as their agent in the state where I am licensed or for friends and family who I refer them to agents in my network in other markets) is pay for explicit purchase costs, so inspection fee, buyer's attorney costs, home warranty, etc. Redfin on the other hand will explicitly layout their rebate structure up front and it is part of the contract you sign with Redfin prior to them assigning you an actual realtor to assist you - they will cut you a check (or sometimes just give you a credit on your mortgage closing statement).

Redfin tends to refer most their buying clients out to 3rd party realtors (so I could sign up to get business referred from Redfin's website - they'll take a cut of the overall commission (their cut varies depending on their rebate offered in that city) from my brokerage and then shares that referral commission with the buyer) - they call these agents 'Partner agents'. You don't really have control over the actual agent that Redfin will assign to you, but you can request a new partner agent if you aren't happy with the one you have been assigned.

From my experience, Redfin Partner agents tend to have less experience than your average agent - Redfin only requires five closed transactions if I remember correctly. If a buyer or seller is fairly competent, understands what their home (or other nearby homes if buying) are worth, then there is little value from hiring me to assist them (in comparison to another agent, whether a Redfin rebating agent or even just a random person who will fill out a contract for you and provide no other value). The problem is, you may only be entitled to $2-3k rebate (on a $600k home), and I personally believe I'm worth that much to most buyers (I don't believe I am worth the $10-15k I receive on a purchase like yours, but I didn't set up the marketplace....I only play in it).

Only you can decide what value a good realtor who will commit time to you is worth. A redfin agent is already working on a reduced commission structure, so they likely will need to extend themselves a bit more to keep their business successful, and I definitely can tell when I am working across from an over-extended real estate agent - they just don't service their client to the same degree and often accept unfavorable arrangements, because they don't view a $2k savings for you as the buyer as significant - especially because they then receive $40 less in their pocket, so they are already financially incentivized to recommend against a route of savings, but even more so, most will often recommend the avenue which is easiest for them instead of what is best for you. Much like we always press on about financial advisors here on bogleheads, even though realtors have fiduciary duty to clients, we don't have a duty to get you the absolute lowest price possible (or highest price in the case of a seller's agent) - there is only one person who is looking out for your best interest when it comes to real estate transactions and that is you!

So it truly comes down to, how well do you actually know your real estate market? How well do you understand the process of buying real estate in your market (which regionally varies widely so not really something you can just google)? How well do you know professionals who can assist you in the process - inspectors, title companies, etc etc - those are individuals who can make your homebuying experience either very positive or very negative - a good agent knows who to go with and who to avoid from experience - are you confident in your ability to see problems in a home during a walkthrough (beyond if there is a crack in a tile or scratched cabinet doors)? If you regularly browse redfin to see what houses in your desired area have been going for over the past 12 months, then it's possible you won't get value from a non-rebating agent over a rebating one when it comes to choosing the right price, but there are many more steps in home purchasing and most people over estimate their capabilities and understanding. Just something to be conscious of.
Good recap, :sharebeer
BattyNatty
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by BattyNatty »

Just went through a similar process. What I did, which I found to have worked pretty well was:
(1) Interview the 1-2 agents who do the most listing for sellers in the small neighborhood I was targeting. Picked their brain about the market, volume they expect over coming months, questions about the neighborhood, home features, etc. Near the end of that conversation I asked if they are willing to provide a buyers rebate since we're looking in such a small area/don't need to be driven all over/etc. Each was aghast at the suggestion even being made, tried to condescendingly explain that the seller pays them*, that they only get to keep part of the commission, etc. Thanked them for their time.
(2) Interview a dedicated discount agent. Google "buyers rebate agent" and your area. In mine there are a couple independent from Redfin who rebate as a standard practice. Talk to them about how many clients they rep at once and how they handle workload. In my area currently they are so underwater most are now only taking on sellers not buyers.
(3) Interview an exclusive buyers agent who never represents sellers. Talk with them about what advantages that provides. Bonus points if you can find one who is actually a fiduciary to you. Also asked them about a buyers rebate and they didn't think it was unthinkable but talked about how in this market with multiple offers being needed by buyers frequently they weren't offering it because even clients expected to be easy often turned into long-term searchers. We did agree to a rebate of 0.5% of purchase price if we got the first house we viewed/offered since we already had one in mind.

*I will run away from any buyers agent who tries to sell me this line. The seller sets the commission % but in my state it's perfectly legal for the agent to rebate any/all of their share via closing costs. And that money funding the commission is the money I'm bringing to the deal. Just do not understand how any agent thinks something that boils down to "I would give you a better deal but I don't actually work for you" is possibly a good line to get my business. (And this exact claim being taught to all realtors is one subject of DOJ action against them on noncompetitive behavior grounds...)
Walobolo
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Walobolo »

Unless you are buying and selling inside the Redfin system I would recommend a traditional agent. For a first timer doing a one sided transaction I would focus your time on negotiating your interest rate and loan details.

What I did.
1) Get pre approval offers with multiple mortgage lenders. (I used Better, Chase, Amerisave and PNC) You will want to do this over one or two days to minimize the impact to your credit score. Some companies like Better will only do a "soft" pull which is nice.
2) Chase had a program called Home Story. By using and closing with of their preferred agents (in my case it was local Berkshire Hathaway office) I got a $1500 refund check after closing on the home sale and $2500 refund after closing on the home purchase (this was a local move). This amount was based on the sale/purchase price of the homes. I am not sure what the current offer amount is but worth checking out.
3) Better had the best rate so I took that offer to Chase and they matched it. In my case 2.75%, 30 year fixed rate, conforming loan, no points with 20% down. APR was 2.75%. There were no closing costs or loan applications fees with Chase. They also gave me the option to waive the appraisal and I saved a few more bucks there. (I only did this as I was very familiar with my local market)
4) One other reason I went with Chase/Berkshire was name recognition on my offer compared to a lesser known online broker/agent. Not sure this really matters but it worked for me.

Best of luck.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by kelvan80 »

Not a realtor but my mom is and we've personally purchased 7 houses and sold 6 in 18 years. What do you know about the home buying process? How hot is your market right now? Escalation clauses? Do you guys need contingencies of any sort? How responsive do you want your agent to be? Do you have a loan officer yet? A good realtor will hold your hand and make everything look like it's going smoothly even though they are working non stop to hold it together. You could also find a FSBO and negotiate without a realtor and just use a title company and lawyer.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by 8foot7 »

If you need a buyer's agent because you're new to home buying, then do not use a rebating broker.
If you don't need a buyer's agent, you might as well get a piece of the action by using a rebating agent.
I would emphatically suggest more people fall into the latter camp than the former. ESPECIALLY if you are building a new construction home from a production builder (i.e., not a custom home). I found nearly zero value in buyer's agents even when I was buying my first home but also with my second and third. They were mostly there is ensure the transaction happened, and any warts in the deal at all I was essentially encouraged to let them go, let them slide, look over them, ignore them. The agent we used when buying our new construction home never showed up to any meetings, walkthroughs, design center appointments, anything ("just call me if you need me but you'll be fine!") except she beat us to closing to get her $22,000 check.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by DebiT »

Using the theory that real estate is hyper local, I would ask in your area what has been working for successful buyers. A commission rebate won’t help you if your offer isn’t accepted. I would think an experienced agent would be helpful in that regard. Buyers want a good price but also a smooth transaction. Their own agent is likely to be biased toward an agent they know and have worked with, over an inexperienced agent they don’t know. In my opinion, for buyers, the worth of an agent happens at the offer and then down the line if there are difficulties before closing.

And, no, I am not an agent.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by adamthesmythe »

A few months ago, some markets were so hot it was difficult to view and make an offer before another offer was accepted. In those markets having a well-connected local agent was the way to go.

If OP does not have a need to wrap this up quickly, maybe trying for a few months with a Redfin broker may be the way to save a few bucks. Then if that doesn't work he can try a local agent.

OP should be prepared to do sufficient research on neighborhoods, local RE processes, and inspection professionals.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Luckywon »

FoolishJumper wrote: Tue Oct 26, 2021 4:52 pm ..
I didn't quote what you wrote, but wanted to thank you for your fantastic insightful response.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by humblecoder »

I've got to imagine that being a buyer's agent in a hot seller's market is pure torture for the agent. Because of bidding wars and such, it might take multiple offers to finally get one that is accepted. Or some buyers might just give up because they are frustrated and/or priced out of the market. All this translates to more work for less money for the agent.

Then you factor in that a seller's market means more demand which means more buyers, so a buyer's agent can be pickier on which clients they take.

Given that dynamic, why would a good buyer's agent negotiate away some of their commission?

Now I suppose that if you just need an agent to arrange showings and unlock the door for you then all you need is a warm body with a real estate license, so you won't mind going with somebody who is willing to cut you a deal in these conditions. But if I were that agent knowing that my commission is getting cut by a third working with a particular client, I would not expect the agent to go above and beyond. The agent will probably answer the call of a full paying customer before answering your call.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by 6bquick »

We're in the middle of both buying and selling with Redfin right now.

We've been semi-seriously looking at the local market for a while (which is definitely hotter than colder), saw a listing we liked on Redfin, needed an agent to tour the place so clicked the link to use a Redfin agent.

Long story short, for what we needed, the Redfin team has been great. close on new place 11/19, which is 49 days after offer was accepted. This date was pushed by seller, Redfin team was prepared (and assumed) we'd be closed in 30 days. received ~13% of the buyers agent fees applied to our closing.

we also decided to use the same agent to list our current place. professional photos taken yesterday, listing goes live next week, process has seemed very smooth. Thus far, I have no complaints.

as far as numbers go... assuming it sells for what I think it will, with the refund from the buy, plus the discounted sellers fee, which is discounted further because we bought from them, we're selling our place for ~2.8% total. that's buyers and sellers agent fees.

I don't envy the local agents competing for business right now. purely anectdotal, but from what we've seen/experienced, Redfin is a force to be reckoned with.
Last edited by 6bquick on Wed Oct 27, 2021 1:13 pm, edited 1 time in total.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by bsteiner »

Do buyers often hire their own brokers? I suppose you could agree to pay a broker x% of the purchase price, reduced by whatever the broker receives from the listing broker, to find a property to purchase. But I don't know of anyone who has done that.
FoolMeOnce
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by FoolMeOnce »

I've bought and sold with Redfin. They were great. On the purchase, list price was $1,000,000, we got 1% back as a check from Redfin for $10k, even though we closed for under $950k. They've changed the structure since then, so I don't know what you'd get today.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by fyre4ce »

Used a discount realtor to buy a house in a hot market last year. Worked out great. Got a 1.5% rebate, which was more than $20k tax-free. Highly recommend finding a discount buyers agent.
pizzy
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by pizzy »

bsteiner wrote: Wed Oct 27, 2021 12:05 pm Do buyers often hire their own brokers?
I don't know if hire is the right word, but how have you purchased homes in the past? Called listing agents directly?
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Big Dog
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Big Dog »

The seller 'pays' the commission.

As a first timer in a hot market, I'd look for an experienced Agent. Interview several to see who you click with. (you might think taht you don't need any hand-holding, but you don't know what you don't know. Moreover, the seller's agent could be crap and your experienced agent could be hand-holding the other guy to get them up to -- your -- snuff.)
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by bsteiner »

pizzy wrote: Wed Oct 27, 2021 12:13 pm
bsteiner wrote: Wed Oct 27, 2021 12:05 pm Do buyers often hire their own brokers?
I don't know if hire is the right word, but how have you purchased homes in the past? Called listing agents directly?
I've only bought one home, and the seller didn't have a broker.

You could call the listing agent. Or you could call any other agent. They can all sell each other's listing. The listing broker will share some of the commission with the selling broker. But that doesn't mean that the selling one is working for the buyer any more than the salesperson in the store is working for the customer.

Of course, the selling one will try to show you ones that she thinks you're more likely to want to buy, just as the salesperson in the store will try to show me items that she thinks I'm ore likely to want to buy.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Mr.Chlorine »

I closed on my first home in May 2020, right at the start of the hot market for my area. I initially began looking without an agent in October 2019, and the plan was to close in Spring 2020. Since I was born and raised in the area I thought I could save some money and not have a realtor as well. In my midsized midwest city, that was not feasible. I eventually signed on with a family friend who is a respected realtor in the area and am very glad I did. As a first-time homebuyer, there is no way I would recommend anyone go without a realtor unless they are well versed on the process. You don't know what you don't know.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

I have used two discount buyers agents both of which provided kickbacks/rebates. Overall I was happy with both. The first was Trelora and their service was prompt but minimalist. At the time they had a very low flat commission of 3k if I remember - the rest was kickback. They did provide sound advice on how much to offer but we were hesitant buyers at the time and all of our offers were very near what the home sold for but just below (within a few thousand). This happened on 4 or 5 properties. This was not the fault of the realtor, we knew we were making competitive but slightly low offers which reflected our personal hesitancy at the time. It was actually impressive how well we could target the actual sale price. With a bit more luck, or a bit more enthusiasm on our parts we likely would have landed a well priced deal. The second was the company my spouse now works for and the service was excellent.

Good agents can provide some value especially to less savvy buyers. But as the realtor above said, the value is a few thousand at most and there is no guarantee you will get a better agent by paying more.

My recommendation if you are at all savvy is to go with the lowest fee available with decent reviews. If a company had consistently poor reviews I would avoid even if the price was lower.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

Correction to above the flat fee was 2500. Which was phenomenal in a high priced market around 450k it was under 1%. They were clearly losing money. They have changed their pricing to rebate half the commission up to 6k refunded presumably as the company has matured. Given homes routinely sell over 1m here, that’s a much higher fee structure overall especially on homes over 750k.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

Big Dog wrote: Wed Oct 27, 2021 12:47 pm The seller 'pays' the commission.

As a first timer in a hot market, I'd look for an experienced Agent. Interview several to see who you click with. (you might think taht you don't need any hand-holding, but you don't know what you don't know. Moreover, the seller's agent could be crap and your experienced agent could be hand-holding the other guy to get them up to -- your -- snuff.)
This did not fit my experience described above for two discount agencies. There’s also the whole theoretical problem of paying more to someone who doesn’t really work for you.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

kelvan80 wrote: Wed Oct 27, 2021 8:44 am Not a realtor but my mom is and we've personally purchased 7 houses and sold 6 in 18 years. What do you know about the home buying process? How hot is your market right now? Escalation clauses? Do you guys need contingencies of any sort? How responsive do you want your agent to be? Do you have a loan officer yet? A good realtor will hold your hand and make everything look like it's going smoothly even though they are working non stop to hold it together. You could also find a FSBO and negotiate without a realtor and just use a title company and lawyer.
In my experience even discount agents were able and willing to walk me through all of the issues you mention. And these are extreme discount agents with fees under 1%.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

pizzy wrote: Tue Oct 26, 2021 5:28 pm
Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm
mbres60 wrote: Tue Oct 26, 2021 3:26 pm Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by pizzy »

skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm
Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm
mbres60 wrote: Tue Oct 26, 2021 3:26 pm Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
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skierincolorado
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm
Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm
mbres60 wrote: Tue Oct 26, 2021 3:26 pm Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
Jobs where the market rate is falling to meet supply and demand. So not many. The agent doesn’t even work for the buyer. Their only incentive is that the deal go through and in fact they get paid more the higher the price is.
Last edited by skierincolorado on Wed Oct 27, 2021 3:08 pm, edited 1 time in total.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by pizzy »

skierincolorado wrote: Wed Oct 27, 2021 3:06 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm
Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm

Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
Jobs where the market rate is falling to meet supply and demand. So not many.
Any examples or is it just realtors?
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skierincolorado
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

pizzy wrote: Wed Oct 27, 2021 3:08 pm
skierincolorado wrote: Wed Oct 27, 2021 3:06 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm

A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
Jobs where the market rate is falling to meet supply and demand. So not many.
Any examples or is it just realtors?
I can’t think of many jobs where the market rate is falling. Loan officers. This just shows how overpaid they are.. the market is literally forcing the wage down. I know ski bums that got into real estate and make 10x more now. The supply of agents and discount agencies will keep growing as long as they are overpaid, until a new equilibrium is reached. Why was it so easy for Redfin to break into this space? People are happy with the the service they are getting for barely half the price.
Last edited by skierincolorado on Wed Oct 27, 2021 3:14 pm, edited 1 time in total.
fyre4ce
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by fyre4ce »

pizzy wrote: Wed Oct 27, 2021 3:08 pm
skierincolorado wrote: Wed Oct 27, 2021 3:06 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm

A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
Jobs where the market rate is falling to meet supply and demand. So not many.
Any examples or is it just realtors?
Commissioned financial advisors / insurance salesmen.
pizzy
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by pizzy »

fyre4ce wrote: Wed Oct 27, 2021 3:13 pm
pizzy wrote: Wed Oct 27, 2021 3:08 pm
skierincolorado wrote: Wed Oct 27, 2021 3:06 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
Jobs where the market rate is falling to meet supply and demand. So not many.
Any examples or is it just realtors?
Commissioned financial advisors / insurance salesmen.
These are good examples. Jobs where people think they can do it on their own. And some can. Especially in this audience re: advisors. But the general public is pretty stupid, so advisors, insurance agents, realtors won’t ever go away.

Which is why corporate America has taken such a hard look to see if they can disrupt the industry and extract more profits from Main Street.
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skierincolorado
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

pizzy wrote: Wed Oct 27, 2021 3:16 pm
fyre4ce wrote: Wed Oct 27, 2021 3:13 pm
pizzy wrote: Wed Oct 27, 2021 3:08 pm
skierincolorado wrote: Wed Oct 27, 2021 3:06 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm

What other jobs do you think this about?
Jobs where the market rate is falling to meet supply and demand. So not many.
Any examples or is it just realtors?
Commissioned financial advisors / insurance salesmen.
These are good examples. Jobs where people think they can do it on their own. And some can. Especially in this audience re: advisors. But the general public is pretty stupid, so advisors, insurance agents, realtors won’t ever go away.
The people we dealt with were professionals and we were very happy with the service and saved many thousands of dollars. That’s all that matters in the end. If someone wants to pay 10k or 20k more for (hopefully/maybe) a higher level of service, it’s up to them whether it’s worth it. We weren’t even the highest offer and still got the deal because of how our agent sold us in terms of low risk financing (per neighbors who knew seller).
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Luckywon »

pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm
Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm
mbres60 wrote: Tue Oct 26, 2021 3:26 pm Unless your area is totally different from mine, sellers set the commission. They are the one's who have negotiated with their realtor how much commission they will pay. As the buyer you don't have to worry about that.
Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
When an agent selling a $2 million home makes five times as much as an agent selling a $400,000 home, I'd think one of them must be getting overpaid or one of them must be getting underpaid (or both true).
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

pizzy wrote: Wed Oct 27, 2021 3:16 pm

Which is why corporate America has taken such a hard look to see if they can disrupt the industry and extract more profits from Main Street.
I’m not sure how charging lower prices will extract more money. This is emblematic of the whole industry where the buyers agent makes more money the faster you buy a house and the more you pay for said house. Upside down.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by pizzy »

Luckywon wrote: Wed Oct 27, 2021 3:23 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm
Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm

Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
When an agent selling a $2 million home makes five times as much as an agent selling a $400,000 home, I'd think one of them must be getting overpaid or one of them must be getting underpaid (or both true).
Should all % of sales commission based jobs (medical equipment, pharmaceutical, advertising, etc) be switched to flat rate? Seems silly, but maybe not.

Lots of people in tech here. What about bonuses? Make them all flat?
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Luckywon
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Luckywon »

pizzy wrote: Wed Oct 27, 2021 3:29 pm
Luckywon wrote: Wed Oct 27, 2021 3:23 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm

A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
When an agent selling a $2 million home makes five times as much as an agent selling a $400,000 home, I'd think one of them must be getting overpaid or one of them must be getting underpaid (or both true).
Should all % of sales commission based jobs (medical equipment, pharmaceutical, advertising, etc) be switched to flat rate? Seems silly, but maybe not.

Lots of people in tech here. What about bonuses? Make them all flat?
Perhaps the discriminator should be how well the commission is working to incentivize a person? I'm not sure how well it works in a real estate transaction.
Last edited by Luckywon on Wed Oct 27, 2021 3:45 pm, edited 2 times in total.
skierincolorado
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by skierincolorado »

Luckywon wrote: Wed Oct 27, 2021 3:23 pm
pizzy wrote: Wed Oct 27, 2021 3:02 pm
skierincolorado wrote: Wed Oct 27, 2021 2:58 pm
pizzy wrote: Tue Oct 26, 2021 5:28 pm
Funletter2020 wrote: Tue Oct 26, 2021 5:00 pm

Yes, I believe the commission for the buyer's agent is decided by the seller. But I have heard folks can negotiate with their realtor (the person who would be representing us) for a percent to be refunded to us upon closing. So if our agent stands to earn say 3%, they would agree to give us say .5% or 1% of that back at closing. This appears to be what Redfin automatically does. I can't imagine Redfin's realtors are significantly less useful than a standard realtor we'd find randomly online to warrant us not using them and saving potentially $3K to $6K, but maybe I'm wrong??
A good buyer's agent at a respected brokerage would never do this and the brokerage would never allow it. Do you give kickbacks at your job?
Agents are overpaid. It’s simply the market correcting itself.
What other jobs do you think this about?
When an agent selling a $2 million home makes five times as much as an agent selling a $400,000 home, I'd think one of them must be getting overpaid or one of them must be getting underpaid (or both true).
That’s what impressed me so much about the trelora model. A flat fee. I’m sure some costs go up and the level of service for a 2m house should be higher, but there is no way it is 5x.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by Cigarman »

I sold my house through a realtor and the buyer used Redfin. Not sure how much the buyers agent helped them find the house (I am in NC, buyer was in CA) but the Redfin agent was very active in preparing the offer and negotiating the price post inspection. All in all I had no complaints with the process.
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illumination
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by illumination »

I'm looking forward to some disruption to the traditional model. Hopefully one of these services gains traction, its absurd we pay 6% for a home transaction. It reminds me of the era before companies like Schwab came along and it cost consumer in todays' dollars like $600 in commission to buy stock or a mutual fund.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by corpgator »

I've bought and sold houses with redfin. I also used Trelora before they dropped most of their refund. I say go with whoever is going to get you the max amount of refund on the buy side. You're going to do most of the work anyway, so might as well save if you can.
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Re: 1st time homebuyer: negotitate realtor fees? Buy with Redfin or traditional agent?

Post by EnerJi »

pizzy wrote: Wed Oct 27, 2021 3:02 pm What other jobs do you think this about?
Doctors and lawyers for one. Even hair stylists, basically anyone who has set up a licensing cartel to artificially restrict supply and thus artificially raise income.
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