Redfin is responding to a brand new startup that’s hoping to upend the way people search for and buy homes by providing a flat-fee service.
On August 29, TechCrunch reported {that a} startup referred to as Landian had emerged from stealth to supply homebuyers a technique to tour and make provides on properties by a flat-fee service, relatively than paying commissions.
That firm was co-founded by Josh Sitzer, who sued the Nationwide Affiliation of Realtors (NAR) in a landmark case over agent commissions. Below the ensuing settlement, the NAR agreed to pay $418 million in damages and to abolish the Participation Rule, which required sell-side brokers to make a proposal of compensation to purchaser brokers. That and different rule adjustments are anticipated to rework the true property market.
Redfin is skeptical in regards to the flat-fee mannequin, though it described Landian as “a brother in arms, keen like us to provide customers a greater deal.” The 18-year-old firm as soon as tried an analogous mannequin, and explains why it didn’t work:
“After we tried this earlier than in a fiercely aggressive housing market, we struggled to win on behalf of shoppers the offer-writing agent hadn’t met, for listings that agent hadn’t seen,” a spokesperson mentioned. “We additionally discovered that when prospects wish to name on the experience of 1 particular person, morning, midday, and evening, it’s important to pay that particular person very, very effectively. For now, we imagine we will supply homebuyers the perfect worth by utilizing Redfin.com to get rid of the only largest price of being an agent, which is discovering prospects, and by pairing the trade’s greatest brokers with lending and title providers.”
Redfin factors out that it fees commissions as little as 1% to house sellers and as little as 2% to homebuyers, and claims to have saved its prospects $1.6 billion in charges.
“In contrast to Landian, we don’t cost for excursions or require prospects to rent an agent sight unseen,” a spokesperson mentioned.
Redfin went on to say that it “might experiment once more” with a flat-fee itemized service. However it’s cautious.
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