We’ve read all the hubbub about Redfin. What to believe? Well, my former law partner, now a best selling author, always went to the original sources before sitting down to write. So we did the same. We went to Redfin and looked around. We looked under the hood (Terms of Use) and kicked the tires. We found some answers but also a lot of questions.
For starters, we can see the consumer appeal of Redfin. A 2/3 commission refund is an automatic attention grabber. Plus there’s a 100% money back guarantee. So far, so good. But…
We discovered in the TOS (Info sharing/reselling section) that Redfin, with your permission or request, shares your information with “affiliated companies and persons“. We don’t know exactly who these “affiliates” are but they could be leads for which Redfin gets paid. No problem with that but how does a buyer give permission? We hope the permission is not implied in any way because you ought to know who may be sending you an unsolicited email and maybe you’d want to opt out of this info sharing/reselling arrangement. We’d like to learn more about these affiliates & exactly how this information sharing/reselling works before making any judgment. Does Redfin have have contracts with affiliates to “name names & email addresses”? Other websites do this too, that’s one reason you get alot of junk mail & emails.
Also, the TOS state that if you have a dispute with Redfin, you give up your right to a trial. If you think you got screwed because Redfin negotiated a price for a house with snakes in the basement, you can’t tell it to the judge or jury. By using Redfin you MUST go to binding arbitration and tell it to an arbitrator. That may rub some people the wrong way. A jury may not be your peers, but they are everyday people, most of whom would not appreciate snakes in the basement. An arbitrator is likely a lawyer and we’re not too sure of their opinion of snakes (sorry, it’s a line we couldn’t pass up). Many websites have arbitration clauses so it’s not unusual, but you should we aware. The good part is that if you win your case, Redfin must pay your legal fees. The flip side is that if they win, you pay their legal fees. This is untypical of the American judicial system but some prefer the loser paying the legal fees. Just be sure you have a great case and pick the most expensive (& best) lawyer you can find.
We also have a problem with the 100% guarantee—you need to invoke it within 5 days of closing. Is this enough time to find a reason to be unhappy? (I’m still unpacking the boxes). Also will the refund act as an accord and satisfaction or acceptance by you of this remedy? If you do get a refund be sure to endorse the check “without prejudice or waiver of any rights or remedies” just to be sure. In fact, endorse the rebate check this way as well.
In our opinion, what’s most troubling is if Redfin negotiates a price as a buyer representative without seeing the home in question. That’s too zillowy for our taste. As your agent, will Redfin be at a negotiating disadvantage not knowing the property flaws and negative unzillowables? That difference can be more than the rebate you’re getting. Can they be as effective an advocate protecting your rights as an agent who has seen and walked the property? As an attorney arguing my client’s case, I need to know everything I can about the case. In the case of a house purchase, you must go beyond knowing the number of beds and baths and the zestimate. If Redfin did everything a traditional broker did and gave the rebate, we’d be hard pressed to fault that model from a buyer’s perspective. That would be as revolutionary as a ‘59 caddie’s tail fins.
Still, we respect that Redfin gives a consumer choice. But all meaningful choice requires full knowledge. Always read the Terms of Service and ask about any downsides to the service. Consumers are smart enough to know if they are getting a lemon. And word travels fast on the information superhighway.
One final point: We would wonder if Redfin brokers are being shut out or denied access to listings by traditional brokers who are not legally required to do business with them, putting buyers at a disadvantage. Redfin’s Glenn Kelman’s testimony before the Congressional Subcommittee on Housing & Community Opportunity mentioned losing access to listings because of resistence to their business model. As a buyer that hurts me as well.
This leads us to a very interesting question that we will entertain in another post.
