From Glenn Roberts at the Inman Blog, the announcement by Redfin's Glenn Kelman marking their first year, that its agents were able to negotiate better prices for its buyers than traditional ones. The margin's slim, but still around $4.4K per transaction, which can buy a really nice refrigerator. And even the guys at Freakonomics don't get it:
...the home buyer that seeks out a discount broker is cheaper and more savvy than the typical home buyer to begin with. It is possible (although there is no direct evidence to support such a claim) that these homebuyers could have made even better deals if they had worked with a full-service agent.Which strikes us as gratuitous slamming since traditional agents don't give rebates on their fees. Freakonomics advocates flat-rate fees for real estate services, but confuses Redfin- an online broker- with discount brokers. [The comments on Freakonomics are always worth a read; so are the results upon entering realtors in the blog's search box.] Unlike conventional real estate agents, Redfin agents are salaried and stakeholders. There's no pressure on them to pump the sale price higher. The built-in conflict of interest inherent in real estate is that the higher the sale price, the more the buyer's and seller's agents both make, with all the hypothetical collusion that kind of situation invites.
· Redfin: The First Year [Glenn Roberts/Inman Blog]
· Redfin San Francisco [Redfin]
· More Data on Real Estate Agents [Freakonomics]