Redfin, Seattle’s real estate website and national brokerage firm, is lowering its listing fee to 1% from 1.5% in selected cities around the country. This means that instead of paying traditional brokerages a standard 6% total commission, sellers who choose Redfin as their listing agent will now pay a 4% total commission.
The total commission breakdown is as follows…
1. Redfin sellers now pay 1% to Redfin listing agents and 3% to a buyer’s agent for a total commission of 4% when a home is sold.
2. Traditional brokerages now pay 3% to their listing agent and 3% to the buyer’s agent for a total commission of 6% when a home is sold.
Already in Seattle, Chicago, Denver, Baltimore, Washington DC and San Diego, this 1% fee “…is saving sellers money and that really makes a difference,” said Redfin CEO Glenn Kelman.” For example, a Redfin seller would save some $7,500 for the sale of a $500,000 home.
Traditional brokerages balk at Redfin’s fee structure saying that low cost brokerages deliver low cost service. Redfin counters that statement with Alina Ptaszynski’s, its spokeswoman, words, “We’re delivering the same level of service…we would argue a higher level of service than other agents…we combine the full range of traditional services with superior technology that allows (our agents) to sell homes for more dollars, faster and at a higher success rate than traditional agents.”
The number of Redfin’s brokerage listings doubled from Q1 2016 to Q2 2017 according to Redfin’s Ptaszynski. In Washington DC, where Redfin instituted its 1% listing fee in October 2014, market share has tripled.
Redfin partially offsets its 1% fee by lowering another of its inducement programs, buyer’s rebates.