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Real estate site Redfin files for IPO

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Re: Real estate site Redfin files for IPO

#81

Post by jhulla »

Good for Redfin. Disruption in any business that charges 6% transaction fees is great.

Having said that, real estate transactions are complex beasts with many moving parts. A lot of this process can be scripted and templated. But there are many situations where it cannot. Buyers and sellers are under immense stress as they face very large financial and legal decisions. They don't understand the process, the terminology, the legal and financial consequences, etc. There are local regulations and conventions that differ from region to region. E.g: Check out the differences in who pays fees across counties: http://chicagotitletransfertax.com/

Good agents absolutely earn their fees when uncertainty and complexity arise. I suspect Redfin is seeking to carve out the part of the market that comprises straight-forward, template driven transactions.

Re: Real estate site Redfin files for IPO

#82

Post by hammock »

jhulla wrote: post #81

Good for Redfin. Disruption in any business that charges 6% transaction fees is great. Having said that, real estate transactions are complex beasts with many moving parts. A lot of this process can be scripted and templated. But there are many situations where it cannot. Buyers and sellers are under immense stress as they face very large financial and legal decisions. They don't understand the process, the terminolo…

>E.g: Check out the differences in who pays fees across counties: http://chicagotitletransfertax.com/

The complexities can be and already are structured in a table format? Seems like a job perfectly suited for a computer, not a human.

Re: Real estate site Redfin files for IPO

#83

Post by kazinator »

bduerst wrote: post #79
notadoc wrote: post #3

I'm still waiting for someone to completely eliminate the realtor and charge a reasonable flat fee ($1000?) to buy/sell a house and handle all the related details. Why do we need realtors at this point? Everyone finds houses themselves online nowadays. Why does anyone need to pay a whopper commission to some middle-man?

Back in the early 2000's, there was a realtor group that advertised a $900 flat fee for selling homes. Not sure what happened to them though - could have been a dot com bust.

If I were to guess: they probably went their separate ways to join the RE/Maxes, Coldwell Bankers and Century 21s of the world, where they could more than double their take for the same work.

Re: Real estate site Redfin files for IPO

#84

Post by dlp211 »

goshx wrote: post #41
rhodysurf wrote: post #7

Earlier quoted context omitted.

I used to think the same way, but then I bought my first house and my realtor was insanely helpful. The entire process is filled with random quagmires that I would have never known how to manage otherwise. Someone with more experience may be more able to go it alone obviously, but my realtor was invaluable.

Have you used TurboTax or an alternative to file your taxes? Would something like that, with step by step and explaining why's and how's not be enough for this purpose?

I think for stable markets; ie: markets where neither the buyer or seller has a distinct advantage; probably. But I just bought in a market where the sellers have a clear advantage and buyers are competing aggressively against one another. Houses in my market have an average listing time of 8 days, almost all with multiple offers, many with dozens of offers.

I thought my RE agent wasn't really worth what I knew I would be paying him until we actually went to make an offer. Their knowledge of our circumstance and the local market let us put together an offer that despite not being the highest offer, nor the most favorable closing (I used a VA loan which takes on average 50% longer to close), we still were able to come out on top. My agent helped us get an inspection on the property the day we saw it so that we could wave inspection contingency, knew that we needed to put up more than the standard earnest money to account for our weak closing position, and they were able to accurately predict what the house would appraise for so that we could ensure that we didn't overbid and waive the under appraisal contingency.

Re: Real estate site Redfin files for IPO

#85

Post by dgfgfdagasdfgfa »

jdross wrote: post #71
Danihan wrote: post #33

Earlier quoted context omitted.

Well, technically the brokers get most of that.

Many brokerages get nothing except a flat fee per transaction and a "desk fee". Some take nothing at all if you're a top producer and refer your clients to their title and mortgage operations. HomeSmart is the largest, I believe

Is this true in high-demand, low-supply markets? I've found the brokerages get much more greedy in these situations. See: Seattle, San Francisco, NYC.

Re: Real estate site Redfin files for IPO

#86

Post by dgfgfdagasdfgfa »

toomuchtodo wrote: post #16
notadoc wrote: post #3

I'm still waiting for someone to completely eliminate the realtor and charge a reasonable flat fee ($1000?) to buy/sell a house and handle all the related details. Why do we need realtors at this point? Everyone finds houses themselves online nowadays. Why does anyone need to pay a whopper commission to some middle-man?

"I'm still waiting for someone to completely eliminate the need for a software engineer and charge a reasonable flat fee to bolt together some libraries and handle all the related details. Why do we even need software engineers at this point? Everyone can find the libraries and open source tools they need online nowadays. Why does anyone need to pay a whopper paycheck to some middle-man?" You're paying for someone's…

Expertise at what, exactly? It's often incredibly difficult to assign any value to realtors except 'knowledge of market', which should be the easiest part to automate.

Re: Real estate site Redfin files for IPO

#87

Post by dpark »

vadym909 wrote: post #27
dpark wrote: post #15

Earlier quoted context omitted.

Cutting the fees in half.

cutting the fees by 25% actually. Redfin acts as the buyer or seller's broker and only gives you back half of their 3% commission. The other side's broker still gets their 3%. So you pay 4.5% instead of 6%.

That only accounts for the selling side, though. You also get a refund as a buyer and if you are buying and selling with Redfin (not uncommon), the savings are substantial.

They actually only charge 1% commission as the selling agent now, too, so vs a typical 6% combined commission, they save 33% for the seller. (Assuming just a sale)

Redfin doesn't seem to disclose how they calculate the refund anymore, though, so I'm not sure how much that works out to be. Seems to be around half a percent, so lower than it used to be.

All combined, it's close to half of the traditional fees that they either refund or don't collect.

Re: Real estate site Redfin files for IPO

#88

Post by dgfgfdagasdfgfa »

jasode wrote: post #61
ferentchak wrote: post #25

Earlier quoted context omitted.

I can see some of the expertise coming into play on the selling side. Can you give me a few examples of what kinds of value one gets while buying? From what I can tell the main service that my realtor offered when I buying my place was access to the MLS. We found the houses we wanted to look at and he gave us access. Dollars per hour he was doing very well working with me, although I might be an exception.

>Can you give me a few examples of what kinds of value one gets while buying? If a buyer is unfamiliar with the area (e.g. job relocation), a competent agent can point out the desirable & the unpublicized undesirable aspects of particular neighborhoods. The agent knows the area intimately and that knowledge can be worth paying for to avoid buying the wrong house. If I'm living in the same house for 20 years and I see…

Seems like an awful large price to pay for some low-quality, fear-mongering, dog whistling. Seems like a great way to encourage people to spend more than they want to!

Re: Real estate site Redfin files for IPO

#89

Post by jhulla »

hammock wrote: post #82
jhulla wrote: post #81

Good for Redfin. Disruption in any business that charges 6% transaction fees is great. Having said that, real estate transactions are complex beasts with many moving parts. A lot of this process can be scripted and templated. But there are many situations where it cannot. Buyers and sellers are under immense stress as they face very large financial and legal decisions. They don't understand the process, the terminolo…

>E.g: Check out the differences in who pays fees across counties: http://chicagotitletransfertax.com/ The complexities can be and already are structured in a table format? Seems like a job perfectly suited for a computer, not a human.

Sometimes transactions stick at the strangest places. For example, a buyer balks at paying a final $500 fee allotted to him because he has hit his financial stress limit - potentially killing the entire transaction.

Good agents are not just facilitating the transaction, but also acting as friends/confidants/therapists for buyers&sellers - helping them make responsible decisions. Good agents also come up with creative solutions to complete transactions - this pops up often in resolving inspection contingencies. Say there is some leakage discovered underneath a bathroom sink with some cabinetry damage. The buyer is getting cold feet. What do you do?

Re: Real estate site Redfin files for IPO

#90

Post by msielski »

dgfgfdagasdfgfa wrote: post #86
toomuchtodo wrote: post #16

Earlier quoted context omitted.

"I'm still waiting for someone to completely eliminate the need for a software engineer and charge a reasonable flat fee to bolt together some libraries and handle all the related details. Why do we even need software engineers at this point? Everyone can find the libraries and open source tools they need online nowadays. Why does anyone need to pay a whopper paycheck to some middle-man?" You're paying for someone's…

Expertise at what, exactly? It's often incredibly difficult to assign any value to realtors except 'knowledge of market', which should be the easiest part to automate.

Knowledge of process, not just market. Which, don't get me wrong should also be easy to automate.
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