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.
Redfin isn’t being denied access to listings, and neither are their buyers. Most homes have keyboxes that a Redfin agent can access and those who don’t, a Redfin agent can very easily call the Seller and make an appointment to view the house with their Buyers. Redfin even offers 1/2 day showings of homes to Buyers for $250.00, and Buyers can spend that time looking at homes on their own schedule.
This cry of denied access is just a straw man Redfin is using as “proof” that they’re somehow being discriminated against or that “traditional real estate” is unfair or against innovation. They’re using this as ammunition in their battle against the MLS’s and to show the DOJ that there is some sort of monopoly.
Instead of playing by the rules, they want to change the rules to fit their own business model.
Remember the Trump theory, any publicity is good publicity, even things negative. Lets pretend they are the shallow box and ignore them. Lar
Good comments on Redfin. We may extend the guarantee, though my sense is that it may take months before you determine if you really like your house, whereas you know the day the deal closes whether we represented you well on negotiations and closing. Our main job is to represent our customers well in those areas.
The only reason we even added a term limit is that we can’t recognize revenue on a deal until the guarantee expires. If a customer were unhappy for a valid reason months afterwards, we would probably make an exception to our policy and refund his or her money regardless, but we still need a reasonable policy.
As for the privacy of our data, that is simply a problem in our legal boilerplate, a holdover from the days when Redfin was just starting. We don’t sell names to anyone without the consumer’s permission; sometimes though when a consumer seems like a better fit for a traditional agent, we’ll ask the consumer about working with someone like that and then, with permission, pass his or her details on. Your concern is nonetheless valid. We’ll change the boilerplate to give customers’ more comfort on this issue.
Thanks for the thoughtful review of our service!
Thank you for your comments Glenn. Consumers will appreciate your efforts to modify your TOS for their benefit. After all, it’s always been about the consumer and our industry’s service to them.
Also, congratulations on your wedding.
Come on, the buyer agents have similar TOS too. In fact, my friend working in a title company told me that most of the papers you sign at closing are disclaimers to cover the buyer agent’s ass.
I am not that concern with sharing info because most sites reserve that right, and I use my Safeway cards to get my $.50 discount
NO one is going to buy a home without seeing it. Buyers can see the home during open house, which listing agents hold every weekend in this market. Also all the listings are on MLS/Realtor.com so denying access to Redfin is useless.
Using an agent or Redfin, the risk of getting hit by a truck is the same.
Yes, every contract must be read for the fine print and TOS. Agreed, they are similar, but not always the same. I don’t know if all of them make you give up your right to a trial. And redfin promotes the guarantee but you only get 5 days to use it. That may not be enough time.
But fundamentally, we agree with you that buyers have the right to chose. That’s the democratic way. We just want to give them more info so they chose wisely. Thanks for the thoughtful comment Simon. Would you be interested in taking the mike and contributing a post?
how?
Send it to us by email to: elatedclients(at)sellsiusrealestate(dot)com
& we’ll put it up
see this link
http://blog.sellsiusrealestate.com/?p=1944
Sour grapes, guys. I love redfin. I used them to buy my first house, and if they didn’t exist, I wouldn’t have bought anything at all, unless I’d managed to find a house for sale by owner that I liked. Why? Because I refuse to enter into a business relationship with someone (an agent) whose sole interest is to get me to buy high and buy quickly. It’s an outdated, ridiculous system, and it’s doomed.
Martin,
We support consumer choice. So if you did well with Redfin excellent. No sour grapes on our end, unless we’re making wine.
No one, including an agent, can make you do anything– as you prove—you just go somewhere else.
The system you talk about is the traditional 6% or so system. It works in some cases but maybe not all. In lower priced homes the agent doesn’t make that much. There are other models, like redfin, that will succeed if they work to the consumer’s benefit.
Martin,
You apparently have never heard of exclusive buyer agency. These agents never take listings, and their primary objective is to negotiate the lowest price possible for their buyers. On the other hand, Redfin also takes listings, so if a Redfin buyer wants to buy a property that is listed with them, then Redfin (the company, aka. “designated broker”) becomes the Dual Agent–which is a conflict of interest–because a seller expects their agent to get the highest price possible for their property, and a buyer expects their agent to get the lowest price possible. When one company has two agents working on opposite sides of the same transaction, these commitments are conflicting.
This is why Dual Agents are required by law in most states to remain neutral to both parties, meaning, neither side receives the level of service they originally expected. Neither side is well-served. Although Redfin claims that they don’t allow dual representation, if a Redfin buyer purchases a property from a Redfin seller, this is dual agency–no matter how you try to dress it. They are not being completely honest with the public.
Redfin would like the public to believe that all agents (outside of theirs) are evil and that they always want buyers to pay the highest price for properties. This is simply untrue propaganda.