Is Redfin bad? What to know about selling with Redfin

If you’re looking to buy or sell a home, you’re probably familiar with the likes of Zillow and Redfin. These real estate powerhouses have revolutionized the way homes are bought and sold by leveraging technology to make searching for homes and agents as easy as opening an app on your smartphone. But what’s it like to actually sell a house with one of these companies?

The online real estate brokerage Redfin has been in operation since 2004. They’re headquartered in Seattle, Washington and service 95 markets in the United States and Canada. If you’re interested in selling with Redfin, you may be surprised to find that their business model isn’t that different from traditional real estate, and their discount brokerage fee comes with some caveats.

How does Redfin work?

Glenn Kelman, the CEO of Redfin, infamously declared that “Real estate, by far, is the most screwed up industry in America,” in a 2007 interview. While his original vision for the online brokerage was to revolutionize real estate like Amazon did for ecommerce, the reality is that sellers who work with Redfin have an experience relatively comparable to traditional real estate.

Home sellers who work with Redfin can connect with local real estate agents through their online platform. These agents work with a team of other real estate professionals to list and market the property in exchange for a discounted commission.

Sellers can choose from a variety of services to prepare their home for sale:

• Redfin Full Service: This service connects home sellers with local agents who charge a discount 1% listing fee (as opposed to the typical 3%), although minimum fees do apply. Sellers also get premium placement on Redfin.com, free professional photographs and a 3D walkthrough for their listing.
• Concierge Service: Sellers who choose this service can work with Redfin to make high-value improvements to their home before listing on the market. Sellers pay no cash upfront and only pay for improvements once their house sells.
• Redfin Open Book: Open Book is a reviews site for service providers like handymen, stagers, lenders, and more — similar to Home Advisor, Angi, or Fixer. Sellers can use Open Book to connect with top reviewed service providers in their area.
• Redfin Premier: Redfin boasts over $6 billion in luxury home sales, and Redfin Premier is their white-glove service for these homes (as defined by properties worth more than $1 million in select markets). If you qualify for Redfin Premier, you’ll work with their highest performing agents and receive best-in-class marketing.

In November 2022, Redfin retired their iBuyer business, RedfinNow.

Redfin vs. traditional real estate agents: What’s the difference?

In traditional real estate, your agent is your point person for everything. At Redfin, though, sellers work with a team of representatives who share the responsibility of answering sellers’ questions. This model can both be effective and frustrating for sellers — it may be nice to speak with a specialist for every question you have, but it also forgoes the opportunity to build trust and rapport.

Additionally, traditional agents typically work on commission — meaning, they are paid a percentage of the home sale price. At Redfin, agents are salaried and paid a transaction bonus. The 1% commission that Redfin charges doesn’t go to the agent but to the company to cover the costs of operating.

Redfin agents handle up to three times as many transactions as a traditional agent, which can mean less attention and less personalized service. For confident sellers who have several home sale transactions under their belts, this may be less of an issue. But for most home sellers who want to ensure that they’re getting the most out of their home sale, they may want to consider a traditional agent they can interact with one-on-one for a more personalized experience.

How much does Redfin cost?

Redfin advertises a 1% listing fee, but terms apply. To qualify for the 1% listing fee, home sellers also need to buy a house with Redfin within 365 days of closing on their Redfin listing. If you’re not buying and selling a home at the same time through Redfin, then the listing fee increases to 1.5%.

Additionally, sellers are also responsible for paying buyer’s agents commissions, which typically range from 2.5% to 3% of the final sale. 

Redfin’s hidden fees

While Redfin advertises a flat discount commission rate, there’s a catch: minimum fees apply. These minimums can range between $2,000 to $7,000, depending on the market. For home sellers listing less expensive homes, these hidden fees might mean that it’s more expensive to list with Redfin than a traditional agent.

For example, let’s say the sale price of your home is $500,000. Redfin’s standard 1% brokers fee (assuming you plan on buying a home with Redfin within 365 days of selling your home) for this property would be $5,000. If you live in a market with a $7,000 minimum brokerage fee, you would end up paying a commission closer to 1.4%, instead of Redfin’s promised 1%.

Is Redfin legit?

Yes, Redfin is a legitimate online brokerage that has been in business for nearly 20 years. They reach more than 47 million monthly users, and reported 76,680 real estate transactions in 2021. The company went public in July of 2017 and is traded on NASDAQ.

Where can you find Redfin reviews?

If you're interested in working with Redfin, consider reading through customer reviews. These can help you decide which services, if any, are best for you. You can find reviews on the following sites:

• Better Business Bureau: While Redfin is not BBB accredited, there are still reviews of their services. Many express unhappiness with Redfin’s agents, citing poor communication and false promises. It’s important to note that while the sentiment of these reviews may be negative, they account for a small percentage of the tens of thousands of customers Redfin serves every year.
• Consumer Affairs: Many of Redfin’s reviews on Consumer Affairs report frustration with the agents. Some describe agents disappearing, while others say their agents were too pushy, or exerted undue pressure. The positive reviews highlight the ease of Redfin’s app and dashboard.
• Trustpilot: With so many negative reviews, you may be wondering “Why is Redfin bad?” These reviews highlight the retired Redfin Now service, which offered sellers an instant cash offer on their home, as the source of many customer’s ire. However, many reviews also praise Redfin’s online technology and resources.

Why is Redfin bad?

With so many negative reviews, many prospective homebuyers and sellers may question whether working with Redfin is worth it. It’s important to remember that Redfin is a legitimate brokerage who serves tens of thousands of customers every year, and just because they didn't work for one homeowner or buyer doesn't mean it won't benefit your situation.

Redfin isn’t necessarily bad, but it certainly isn't right for everyone. It can be a good option for those who are willing to read the small print — and make themselves aware of all the fees they might encounter — and don’t need the guidance of a dedicated agent for their home sale.

What are alternatives to Redfin?

If you’re looking for a cheaper alternative to selling your home, you may consider an open listing. In this non-exclusive agreement an agent will list the property, but any agent or broker may win the commission by securing a buyer for the property — including the seller. Although an uncommon practice, it can be an effective way to save money on the commission for sellers who have a buyer in mind.

However, an open listing won’t be right for every seller. And if you’re more interested in leveraging online technology to make the most of your home sale while maximizing your home’s value with expert-recommended improvements, you may consider working with Orchard.

Redfin vs Orchard

At Orchard, we cover your listing prep and home maintenance, saving you over $1,800. Our concierge service will also help you make repairs and improvements on your home to ensure that it sells for top dollar.

But those are just the basics. Our specialty is helping you buy and sell at the same time. With our Move First. you can unlock the equity in your current home to become a non-contingent cash buyer for your next home. Once you’re settled in your new home, we’ll take care of showing and selling your old one.

Interested in learning more about how Orchard works? Get started with a free home valuation.