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I'm thinking about buying a house. This would be my first purchase. I'm intrigued with a company like Redfin because their agents are paid by salary rather than commission, which means there's no conflict of interest in the negotiating process.
Any opinions on the pros and cons of using Redfin versus a traditional real estate agent? I obviously want the pay the lowest price possible, and I can't figure out how a traditional agent can truly be on my side in this respect.
A traditional agent is on your side in this respect for a couple of reasons. First, they legally (if you've hired them by signing a buyer's rep agreement) have a fiduciary duty to protect your interests even over their own.
Second, real estate is a referral business. If they don't do a good job for you, you won't refer the next one, two, three people you know who want to buy or sell a house to them, nor will you list your house with them when you sell it. So, in that respect, getting the best price for you is in their best interests long-term.
Third, most agents, all the claims on here to the contrary, are simply people just like you who are doing the best job they can at their chosen profession. They're not out to cheat anybody; in fact, just the opposite, they're in the field because they like to help people. (They're certainly not in it for the big bucks!) As such, they're going to do their best to represent your interests.
, they're in the field because they like to help people. (They're certainly not in it for the big bucks!) As such, they're going to do their best to represent your interests.
That help?
While I agree with most of what you say in this post, THL, I think it's at least a little disingenuous or niave to suggest that people are in this business ONLY to help people, and not to make money. I know that I, for one, chose this business, this profession, because of the possibility it afforded me to make a good living. I like that I get paid for what I accomplish, not for the number of hours I spend in the office, and I like that if I am good at what I do and successful doing it, I can make a great deal of money. That doesn't mean that I don't want to help my clients, that doesn't mean that I put my interests over theirs, but I think it's only fair for us to acknowledge that at least some of us are in it to make a good, and I do mean GOOD, living. If it were JUST about helping people, there are manny other careers we could choose that provide more direct & recognizable help without all the hassle & stress.
Well, it's about helping people and, of course, about the houses!
My point, though, was that if an agent isn't about helping people, they're not going to do as well in real estate as those agents who are. (Based solely on my personal observations of the people that I know who are doing well in real estate. And not.) It's simply that kind of industry. If you don't like to help people, they're going to recognize it, you're not going to do as good a job, and you're not going to get the referrals.
I'm thinking about buying a house. This would be my first purchase. I'm intrigued with a company like Redfin because their agents are paid by salary rather than commission, which means there's no conflict of interest in the negotiating process.
Any opinions on the pros and cons of using Redfin versus a traditional real estate agent? I obviously want the pay the lowest price possible, and I can't figure out how a traditional agent can truly be on my side in this respect.
I too am intrigued......... It has been my experience that folks guaranteed a salary tend to perform at an average level...........not all but many. Afterall, they do not earn extra money by being exceptional and I assume by having a greater number of clients using them rather then other agents. One must experience existing totally on earned commission dollars to understand the underlying drive often absent in salaried workers. The willingness to go the extra mile 'cause if you do not get the sale, you do not eat! An exceptional agent motivated to close will not compromise [ of course there are always exceptions to the rule] their ethics. Negative news travels faster then positive and the next check very well depends on the competence, ethics, and lots of good news from past clients. I am intrigued by the number of folks who equate reward for exceptional service as necessarily tainted.....................each agent is a small business that must do the right thing to survive...........no bailouts here!
Last edited by OCNYISHOME; 12-12-2008 at 02:41 PM..
I too am intrigued......... It has been my experience that folks guaranteed a salary tend to perform at an average level.
My understanding is that the agents are paid a commission/bonus based on the review that their client gives them after the transaction is complete, so they do have motivation to perform.
My understanding is that the agents are paid a commission/bonus based on the review that their client gives them after the transaction is complete, so they do have motivation to perform.
Sooooooooo.....does that mean the same negotiation traits that caused the concern in the commissioned agent also exist in the salaried agent as a result of the bonus dollars?
Sooooooooo.....does that mean the same negotiation traits that caused the concern in the commissioned agent also exist in the salaried agent as a result of the bonus dollars?
Well, nooooooooo... because a traditional agent's entire income is usually based on the selling price of the home; the Redfin agent's commission is not.
Well, nooooooooo... because a traditional agent's entire income is usually based on the selling price of the home; the Redfin agent's commission is not.
As an average buyer's agent in this area, an agents gross dollars would be 1% or 50% of the 2.0% offered by the listing Brokerage. A $300,000 sale would be $3,000 before expenses, franchise fees, etc. a higher sale of $320,000= $3,200...at 280,000.....$2800 a few hundred dollars that most agents would feel hardly worth the ethical lapse required to ignore the best interest of their client or the resulting negative word of mouth that wold deter future clients. Given the current average sale price of $276,000...........even less likely. I earn a higher split as do others but still think you are overly concerned by this possibility...eliminate significant incentive and you still get less. The greater the reward/the greater the effort........ Does Redfin charge less then traditional brokers for their services? Do you know the average gross salary of their agent's. It has been my impression, just anecdotal, that salaried agents are often those unable to hold up in the commission competition..........but I could be wrong.
Well, nooooooooo... because a traditional agent's entire income is usually based on the selling price of the home; the Redfin agent's commission is not.
But it does mean that their goal could be, might not be, to get you in a home as quickly as possible and move on to the next client since they only get paid per transaction?
Honestly, I'm a traditional agent by model, progressive by nature. For your first transaction sit down with at least 3 agents and ask what they will do for you as a buyers agent. Hire the best one regardless of model and don't worry about compensation. After you've bought a home or 3 if you want to explore the low service model like a red fin, then go for it.
For now, just worry about hiring the best agent regardless of model. Don't worry about agent money in the transaction. 3% of a couple, or even 10k, doesn't put much extra money in an agents pocket (maybe $200 per extra 10k you spend). Good agents will go to bat for you because if you're happy you could refer friends and family for you.
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