Did you know that Redfin has lost money every year since its roll out? How much longer can they lose money? To be honest I don’t know the answer. But one thing is clear, the recent announcement of “1% listing Fee” is truly a sign of the company is sinking. The reality is that Redfin was losing money in its old model, now they think by reducing its commissions more is going to help? This will affect their bottom line even more. Last year Redfin lost money, $15,000,000 on revenue of $370,000,000. If the Redfin model was working, and their customers were happy with the service, they would not need or want reduce their fees, would they? To me it is sending out a loud and clear message that Redfin is a sinking ship. Re-arranging the chairs on this Titanic is not going to save them.
Redfin has a market share of less than 1% (.71%) I believe that one of the reasons that the Redfin model does not work is the quality of their agents. It is interesting to me how they pound their chest on how they can save their client’s money on commissions but they never mention the values lost because of the agents lack of experience in negotiating. Most Redfin agents are not what I would call solid and knowledgeable agents. In fact, it is very much the opposite. why would an experience agent want to work for Redfin with such low commissions? I guess you get what you pay for.
Redfin came our recently with a new marketing campaign in certain parts of the country with “1% listing Fee” is deceptive just like much of their previous marketing. You will not be able to sell your condo for 1% on MLS. Redfin still needs to pay the buyer’s agent between 2%- 2.5%. So a more accurate and honest ad campaign would be a *3.5% Listing Fee” but that does not look as great to potential sellers as the 1% does.
Most savvy home sellers would prefer to pay a slightly higher fee for a quality agent that will spend more money to market their home then what Redfin will spend. They will also pay more for an agent that has experience in how to market the your condo, experience in negotiating and experience in getting things closed smoothly.
Saving money on commission, but losing on sale value isn’t going to help your bottom line. In the end its about net proceeds.
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