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Real estate site Redfin files for IPO

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Re: Real estate site Redfin files for IPO

#211

Post by gist »

dragonwriter wrote: post #202
bhandziuk wrote: post #197

Earlier quoted context omitted.

You're right it was my first house. I do believe it is sometimes more complicated. But is the value of a realtor's time to me, as a buyer or seller, really several hundred dollars per hour? Is buying a 600k house really twice as difficult a transaction than a 300k house? Why are they not paid a flat fee?

Seller's agents aren't paid a flat fee to align their interest with that of the seller; they want the deal to close at the highest price possible. Why buyer's agents are paid on sale-price-commission is, OTOH, a real question.

> Why buyer's agents are paid on sale-price-commission is

Once again buyer's agents are a large part of the equation. They have to drive around the actual buyers and waste time showing properties with nothing to show for it often.

So the way it works is the people who actually buy (or sell) make more money to compensate for people that do not buy.

Re: Real estate site Redfin files for IPO

#212

Post by rgbrgb »

boulos wrote: post #194
rgbrgb wrote: post #59

Earlier quoted context omitted.

With Open Listings we started flat fee on the buy side but had a couple problems. First, it was very hard to communicate the value prop to customers. We went to market with something like "we refund the buyer's commission minus our flat fee". This brought up all kinds of questions and often buyers thought we were more expensive than realtors. Saying that we're 50% the price of a traditional realtor ended up being a m…

Aha! I knew I wasn't crazy... I had told multiple people that Open Listings was the true incarnation of "this should be a fixed fee, not percent of transaction" only to be proven wrong by your current pricing page. Maybe like Vanguard you could do a sliding scale as the home price goes up? That is, instead of doing 50% off at all points (and I know you're focused on CA, but bear with me) you could increase the discou…

That's a cool idea. Our long term vision is definitely to get transaction costs approaching 0 so that home ownership becomes more accessible.

> Did different portions of California respond differently to your pricing?

As a young startup the sample size was pretty small, but I didn't see a regional difference. I'd say the mentality split was more experienced vs first time homebuyers. Experienced deal seekers understood commissions and were already looking for hacks around using a full-price agent (e.g. getting their own license, going direct to the seller), but the FTHBs often thought it was an additional fee. However, our product naturally attracted more of the latter group and as a team it's just easier to get excited about helping young families become homeowners than helping millionaires save 100k. That said, we didn't really see a dip in the deal seeker audience when we switched the pricing (it's still very competitive).

Re: Real estate site Redfin files for IPO

#213

Post by 1024core »

I like Redfin, but I have a couple of qualms with it:

1. They will tag a house as "hot" arbitrarily. The cynic in me thinks this tag is for sale.

2. They tend to hide information. I've seen houses come on the market, not sell for weeks, go out and then come back in the market for a lower price. But their "history" section does not list "price reduced"; they just pretend like the previous listing never existed. For example, the house at 110 Steiner Street ( https://www.google.com/search?q=110+Steiner+Street&ie=utf-8&... ). It came on the market, and now is nowhere to be found. But when it does come back on the market, they will completely erase the history of this house not having been sold.

3. They allow you to filter with other criteria, but Walkscore is not one of them. I have given them feedback several times, but no response.

Re: Real estate site Redfin files for IPO

#214

Post by jasode »

GFischer wrote: post #190
jasode wrote: post #129

Earlier quoted context omitted.

>why should the process of selling a house require "expertise"? At a fundamental level, one could say sellers don't require outside expertise to sell a home. Real estate agents are optional. There is a concept called "for sale by owner" which is a strategy some homeowners use. They can list the house on their own (not on MLS though), vet potential buyers, coordinate the showing of the home (appointments and/or open h…

The real economic question is whether they can keep charging 6% commissions as the internet evolves That's the point. In pre-internet ages, there was a huge information imbalance that kind of validated that 6% (also, there wasn't such a ridiculous housing bubble). Someone mentioned a real estate agent making 1250 dollars/hour. I would be willing to jump whatever hoops were needed to make that kind of money if I were…

>That's the point.

Well, the percentage is only part of the point. Some commenters in this thread are truly perplexed why the agents even _exist_.

They exist because sellers want them to exist. I'm saying it's naive to think that a new revolutionary website with a slick UI/UX would make agents obsolete. Agents may make less money (e.g. forces of free market lowers their median income from $45k to $20k) but the agents won't go away. If you have a population of people that don't want to do something (hassle work of selling) and a segment of population willing to specialize in relieving that hassle, then boom, you inevitably end up with agents. A new website or smartphone app doesn't remove the desires for that business relationship.

>Someone mentioned a real estate agent making 1250 dollars/hour.

Most agents don't make much money[1]. (Median is ~$45k.) There are a handful of superstar agents selling multi-million dollar mansions but most agents are selling more modest properties.

[1] https://www.google.com/search?q=average+real+estate+agent+in...

Re: Real estate site Redfin files for IPO

#215

Post by rokhayakebe »

rgbrgb wrote: post #59
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?

With Open Listings we started flat fee on the buy side but had a couple problems. First, it was very hard to communicate the value prop to customers. We went to market with something like "we refund the buyer's commission minus our flat fee". This brought up all kinds of questions and often buyers thought we were more expensive than realtors. Saying that we're 50% the price of a traditional realtor ended up being a m…

Assuming an efficient market, a flat fee kind of caps your addressable market because you can only compete with ads at a certain price point

Unless you plan to be in business for the next 7-10 years and instead invest heavily in building a brand around your value proposition. So short term you make less, however long term when you have made the other guys irrelevant you own most of entire market.

Re: Real estate site Redfin files for IPO

#216

Post by haberman »

I'm closing literally today on a house I bought through Redfin. It's my third Redfin buying experience. Redfin for buying is great. Their website makes it easy to look for properties and get alerts when properties you might like go on the market. No need to pay a realtor to do that part.

I'm still not using Redfin for selling. When you sell, you're paying for a salesman, and a salesman can make a big difference on how much you sell for, IMO. Redfin will save you 2%, so the question you have to ask yourself is: will a traditional agent make me 2% or more, compared with Redfin? I think the answer is yes, they likely can.

Re: Real estate site Redfin files for IPO

#217

Post by kevincennis »

I had a positive experience with Redfin, but honestly feel like even with the refund check, I still overpayed for their contribution.

I shopped online, went to open houses on my own, and Redfin basically just contacted the seller on my behalf to present an offer. I'd be shocked if my agent did more than a few hours total work over the entire duration of the sale – though I liked him a lot, and he was super responsive the few times I needed him.

Re: Real estate site Redfin files for IPO

#218

Post by just4themoney »

abawany wrote: post #121
Balgair wrote: post #104

Earlier quoted context omitted.

They usually come from City Councils, county boards, school levies, HOAs, insurance requirements on page 192.PGP.168, etc. that are changing all the time. Depending on where you are in the US, it really can be that bad very quickly. Ever buy a house? The contract you sign is literally thousands of pages of legalese that may or may not contradict everything else in it. The Real Estate Agents (REAs) give you 'cover' an…

In the 10 or so real estate deals that I have done over the past few years, I have to say that the realtor (even the exceptionally good ones) never pointed out any of the nuances of the perils related to the entities you mentioned above. In all cases, it was me, due to bad past experiences with HOAs for example, who was proactively demanding that I be given the HOA restrictions before making the contract; there were…

> start the homeowner's insurance purchase/quotes during the option period to ensure that any related surprises here will enable you to walk away during the option period than trying to deal with killing the deal with the much-higher earnest money amount at stake.

Wow, this is great advice and something I would never think of doing.

Re: Real estate site Redfin files for IPO

#219

Post by foolfoolz »

soperj wrote: post #205
foolfoolz wrote: post #201

Earlier quoted context omitted.

after I bought a house with an excellent agent I can't imagine how you can't use an agent. at least for your first house it's awesome. pictures online are no substitute for going in person. the agents main value is being correct in paperwork and knowing the neighborhood. I think they are a great tool but not a replacement. great agents are very useful

Do agents even write up most of the paperwork? I was under the impression that they just contract that out to a lawyer.

my agent walked me through the entire 150+ page offer and I asked a lot of questions, they knew. they found errors with me during escrow signing. they were with Alain pinel so I'm betting there's corporate help available but she really knew her stuff

Re: Real estate site Redfin files for IPO

#220

Post by kevincennis »

_m8fo wrote: post #108

I'm very interested in why many people believe a realtor should receive a percentage of the home's sale price as compensation but not the: - inspector (arguably a good one is more useful than realtor by pointing out foundation problems and other issues that can cost 10s of thousands) - attorney (again, arguably more useful. they can point out clauses and things like flood zone, unpermitted work, liens on the property…

Am I misunderstanding your point about the lender?

They obviously get paid a percentage of the loan value rather than the home's sale price, but presumably those are fairly well correlated.

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