Monthly Archives: May 2011

Buying a home with Redfin

My wife and I recently became first-time homeowners.  This was by far the largest and most considered purchase we have ever made, so it was important that we find a real estate agent who would make us both comfortable and ultimately help put us in a house we loved.

We used Redfin.com as our agency, who I had known about for many years as a local Seattle company trying to disrupt an industry with a lot of inefficiencies.  Having enjoyed working for another local company using technology and transparency like this, I was happy to give Redfin an opportunity and ended up being pleased with the result.  Because finding an agent can be a difficult but important step, I thought I’d outline in more detail the pros and cons of the approach we took for others in a similar situation:

Our situation –

  • Analytical and specific in our needs: Throughout the process of looking for a home we established a pretty long and detailed list of must haves and nice to haves (stored in a shared Excel Web App).  We ranked each home we toured against our parameters, leaving only the top performers in our consideration set.  This proved to be a great fit with Redfin, as much of the information we were looking for was listed on their website or could be identified with a quick tour of the home.
  • Not in a hurry: We loved the house we were renting while going through the process and were on a flexible lease, so we could afford to wait for the perfect home to show up.  This gave us the luxury of time, which might work better with a high volume agency like Redfin vs. an agent who is more reliant on single sales and could be pushy when their own bills come due.  This allowed us to be very specific with our search and to take as much time as we needed, which ultimately was over a year from the time we started looking.  All of the people we dealt with at Redfin were patient with us, more concerned with getting us in a home we love than getting their commission.

Pros –

  • Killer website: Because of factor #1 above, the search and listing information on Redfin’s website was a great fit for us.  We could search in our target areas and quickly identify if a house was a good fit with the listing information and the series of maps provided.  Since our list of factors was clear to us, but difficult to communicate to others, doing the search ourselves with a great website was far superior to relying on an agent’s interpretation.  Being empowered with so much information saved us from wasted trips and made us feel confident that nothing would fall through the cracks.  Because Redfin is a member of the MLS, we also noticed they had more up to date and accurate information than other real estate sites using different business models.
  • Cost: I had long felt it odd that real estate agents were paid on the basis of the sales price – is it really 5x as much work to transact a $1 million home as one that’s $200K?  While Redfin doesn’t address this inconsistency (likely due to regulations they have no control over), they do correct it somewhat by refunding ½ of their commission back to you.  Should rules permit, I would love to see them take this a step further and charge everyone a fixed amount and refund anything above that to the sellers.  Absent this, it is still a great deal and a huge advantage over agents who charge twice as much for what is ultimately the same outcome.
  • Team approach: With Redfin you have a lead agent who negotiates deals, as well as field agents who show you homes and coordinators who do what the name implies.  This worked well as the team approach allows them to take advantage of individual’s strengths better than dealing with only 1 person.  Our favorite field agent, for example, does not need to learn the intricacies of real estate transactions, but was an expert on home inspections.  This allowed us to get deep into the basements of older homes where she could flag warning signs much earlier in the process.

Cons –

  • Ability to move as quickly to close a deal: Redfin is likely quicker than other agencies in getting you in to see homes due to their team approach.  However, once you see a home and want to move quickly to make an offer, this approach could have a disadvantage, as you will need to contact your lead agent to move ahead.  Had you been touring with your lead agent (i.e., rather than the field agent), you could get the process started immediately after leaving the tour without bringing in another party.  This didn’t cause us to miss out on a home, but we did have a few tense moments waiting for a call back after seeing homes that we really liked and knew would go quickly.

Ways to Improve –

  • Establish marketplace of vendors: We learned that you need not only an agent to close a house, but also an inspector and a mortgage broker (+ later a moving company and specialized inspectors should the need arise).  One home we considered buying required a remodel, so we also needed a contractor to provide an estimate on what it would cost to add a bathroom.  We had no idea how to find quality vendors and we were fortunate that Redfin was able to recommend people we really liked.  This helped me realize that Redfin has an advantage in the high number of deals they close as well and the transparent feedback they collect – they can see how these firms operate and can pass along leads more effectively than a traditional agency.  I would love to see them create an “app store” for this process where they have firms listed with reviews from customers.  This would highlight a key benefit from using Redfin that we only discovered once we were well into the process.
  • Enhance alerts with self-drawn maps: I really enjoyed setting alerts for when new homes entered the market or changed in status.  This is a benefit that Redfin enjoys from their status as a member of the MLS.  What I would enjoy even more is if I could draw smaller sub-areas and be alerted when homes in those areas change.  We weren’t focused on the Greenlake neighborhood, for example, but a few blocks of it had some homes we really liked where it would have been nice to receive notification if any of them went on the market.
  • HouseRank: With all of the data that Redfin is likely capturing (pageviews, searches, home tours, offers, etc.) they could come up with a proprietary algorithm that could help show which are the “hot” houses in a given market (their own version of PageRank).  This could be the default sorting feature when you do a search for a particular area and would be particularly helpful for people not as familiar with the local market.  Additionally, this feature would also be something that would be hard for competitors to match as it would take advantage of data in aggregate that only Redfin possesses.
  • House comparison tools: When we were looking at several homes, it would have been nice to have a tool that compared them side-by-side.  This would allow you to compare stats like square footage, $ per square foot, # of bedrooms and bathrooms, etc. without looking at them one at a time.  This is a tool that websites like Bestbuy.com have been using for a long time with items like digital cameras, and I would love to see Redfin add this to their website.

Taking all of this into consideration, I could not be happier with my choice of Redfin.  We ended up getting the best house we saw in a multiple offer situation due to an aggressive strategy recommended to us by our lead agent, all within 48 hours of the home going on the market.  If Redfin is in your market, I strongly recommend you take a look.