The 1 percent listing fee is getting a test ride in California by real estate website and brokerage Redfin. The company claims it could save home sellers hundreds of dollars in commission costs.
According to the company, it debuted the reduced listing fee in San Diego in the spring. The 1 percent fee has been tested in several other markets, including Seattle, Denver and the Washington, D.C., area.
According to Redfin spokeswoman Alina Ptaszynski, the reduced fee is possible because of the website’s emphasis on technology and a different real estate agent model.
“We’re delivering the same level of service — we would argue higher level of service,” she said.
Generally, Redfin charges a 1.5 percent listing fee in the more than 75 markets where it operates.
Frequently, low listing fees are associated with agencies that offer little to their clients. Redfin bristles at this, noting that its business model allows it to charge a lower fee and offer just as much as a traditional agency.
With options like Redfin, it may fall to clients to make sure they have done their due diligence when it comes to hiring an agent.
Michael Carunchio, president of the North San Diego County Association of Realtors, told the Los Angeles Times recently that it is vital for sellers to ask real estate agents exactly what work will go into their listing and how they will market it.
“A good local Realtor will not depend on the Internet to correctly price a property,” he said.
Redfin said the lower listing fee is being offered in San Diego is on a trial basis. However, there is no end date. It starting offering the rate in Washington, D.C., in 2014 and the rate is still available.
Also, while sellers pay Redfin 1 percent, they still are required to pay the buyer’s agent 3 percent.
The aggressive approach may be helping Redfin head into the black after going public in July.
The company, in its first earnigns report, posted strong revenue growth.
Redfin CEO Glenn Kelman said the company turned a profit of $4.3 million in the second quarter, though he added that “we expect to lose money for the full year.”
The company reported that visitors to redfin.com and Redfin’s mobile app jumped 43 percent year-over-year to more than 24 million monthly average visitors.