I won't start flashing credentials... but let's just say I'm highly qualified to comment on this issue from more than one perspective.

Discount brokers tend to be idiots, usually with some type of personality disorder and are otherwise incompetent.

If you can deal with this, and you have a simple transaction, then by all means go for it. After all, if they were competent, their market price would be substantially higher.

You get what you pay for... and the cut-rate brokers come with cut-rate competence.

And yet I know someone who works at Redfin who's extremely competent. Generalizations are bad for you.

If they're competent why are they settling for 67% less than their colleagues?

Let me guess... they couldn't cop a lead if their life depended on it... so they depend on redfin to spoonfeed them?

That has been my real-world experience with 99 cent store brokerages.

I don't want to generalize or bash discount brokers. However, if you've done all the leg work, why should they get any commission? Deal directly with the listing agent. See if he will give up some commission and discount the Purchase Price by that amount. Or hire someone to be a Transaction Broker. All they do is paperwork. In my office, most agents will be a Transaction Broker for $1000.

They are settling for 67% less because of volume. I would question anyone's competence if they can't see that.

They are helping you act as the buyers agent. If I as an individual found a house myself (without RedFin) , the selling realtor would get the entire 6%. This way, 2% goes to me and 1% goes to RedFin.

I know this will scare some realtors, but I don't lose much sleep over it. Paying 6% of the transaction to realtors is ludicrous in my opinion.

www.ziprealty.com is good as well they also give you cash back when you buy from them, not as much as RedFin but anything back is good.

I know a little something about the business, and while it's another competitor in the market, I welcome what Redfin is doing. The real estate business is due for a consumer-friendly makeover....and the old boys in the business just don't get that! That's okay...they'll just have to go out of business when the likes of Redfin take over.

Is the 6% justified...absolutely...Realtors work hard for their clients. Most FSBO-types over-estimate their skills and just end up going back to a Realtor anyway.

Most of the posts here ignore that the laws vary by the state...you can't be a "transaction agent" in many states because of minimum services laws etc. Most states also place fiduciary responsibility on the agent...and as the buyer or seller, that's a very good thing...you have a qualified (in most cases) professional on your side so you can rest easy.

Despite what most consumers think, real estate transactions and laws are very complex...and you're much better working with someone who does it for a living instead of you moonlighting as a real estate person!

face it real estate monkeys: the market is changing. no longer will we be paying a percentage of sale price. it's simply ridiculous to say that a real estate agent gets $3k of commission for a $100k sale and $9k for a $300k sale. agents don't do more work for the extra money they make.

that and the housing market crash will really start things changing... flat fee sales will become more and more common. that means more money in your pocket and less in the agents pockets.

I had a buddy who was moving to Chicago. I told him to try to sell "by owner" for a bit first. He got a realtor instead. First day the sign was in the yard, someone stopped by and knocked on Rich's door. Rich showed them the place, they liked it, and bought it for the asking price. The realtor cleared $13.2k and didn't do anything other than put a sign in the yard. Hadn't even made it to MLS yet.

Worth is in they eye of the beholder I suppose. If its worth it to you, so be it. My parents have a lake house worth about a million. Is it worth 60K to have a realtor list it and find a buyer? Maybe, if they're in a rush.

If realtor's went with fixed price service, I would reconsider my view. But a percentage of the value of the sale would only be worth it if you really had to get rid of the property, IMO.

I put more value in the closing attorneys and the appraisors.

For anyone to say Realtors are not worth what they get paid is insane. What you guys do not see is how Realtors actually can save everyone more money, but no they see the 6% and think its too much money. I have been in this business for over 7 years now and every single time I had taken over a for sale by owner listing I ended up selling it faster and for a higher price, since everyone wanting to buy for sale by owner assumed they can lower the price and get a better deal. also agents who have experience really know their shit, so I give these poor online companies maybe about 1 year, I actually like that concept but there are so many other ways to get back money without an agent having to fork over his earned money. and everyone please support your local Realtors stop getting agents from other cities I mean would you drive 30 minutes for a big mac if there is a Mcd's 5 minutes away hell no.

@frankieman70: there is no way you can justify making $15k on the sale of a $500k home. i realize that people will and do still pay this, but the model of 3% is changing.

also, you seem to forget that the main advantage of realtors is the MLS system. add to that realtors don't like to show non-MLS listed houses (got to preserve the system!).

selling a house? use one of these discount brokers and/or do for sale by owner BUT REMEMBER to pay to have it listed on MLS. no way around that. yet...

Redfin realtors are glad to only take in the 1% because they don't have to be at every customer's beck and call to go see houses. It's not being spoonfed, it's a new way to do things. They just take care of the paperwork at the end, and you're set.

@forever_knight:

Actually, its 30,000 on a 500K home, because the listing agent gets 3% and the selling agent gets 3%. Agreed, no way to justify it.

If local realtors want my business, let them get me a better fee (fixed price!). When we pay an appraiser we don't pay a percentage, why should sales people be any different.

@Forever_Knight
We heard that spiel about discount brokers about 5 years ago and how they'd take over the market. Didn't happen. One company in San Diego (I Pay One) even bought the naming rights to the Sports Arena and went under after only a couple of years. Flash in the pan.
If you reckon Real Estate Agents are sooooo expensive and don't do any more work for a $100k sale vs $300k sale then pay one by the hour. You'll get a shock about how much time they actually spend serving their clients. And remember the liability insurances they carry - I bet RedFin doesn't so when you buy with them you may have to carry the liability yourself . . . . . you get what you pay for, and sometimes peace of mind is worth a little extra.

Hopefully with the internet, the 6% fee will go the way of AOL service fees, long distance companies, and local Blockbusters movie rentals.

They will have to adjust to the market to survive. Realtors aren't useless, just overpriced, IMO.

60 Minutes had a story on Redfin a couple of months back. The angle was that the president and most of the employees are former real estate agents who felt dirty for taking money they didn't think they had earned.

While watching it I kept thinking that companies like this would help to add some fair competition for home buyers/sellers, only to see that the real estate lobbyists are working hard to push laws forbidding companies like Redfin to reimburse sellers, and many states had already done so...hence why they only service certain states.

"Peace of mind" is for people that don't "MIND that a broker got a PIECE of their money". There are still people paying rental fees for AT&T phones too.

@dieselbug: it takes time to turn the titanic. it will take a while, but the percentage days for realtors is coming to an end.

i'd agree that realtors work harder to get that extra cash from more expensive home sales. more commission = happy realtor! but they don't do more work. it's the same process to sell a $50k house as a $500k house.

how much do you (or other realtors) charge per hour? mine spent about 30 hours on me. by my account, my realtor made more than $150/hr from me.

@jeffjohnvol: They get a percentage to upsell you to a more expensive house, then have the lender "work something out." Our agent did that, but we stuck to our budget and then went with our own lender.