Tag Archives: tracy suttles

How to Buy a House Using Redfin: Purchasing a Home Using an Online Brokerage with Commission Refund

The following is a guest post from Houston, Texas real estate developer and entrepreneur Tracy Suttles.

Redfin, the first major online real estate brokerage, was founded in 2002. The company first began to offer homes for sale online in 2006, using a business model that particularly benefits consumers. According to their corporate website, the brokerage has completed more than $1.5 billion in home sales and has been favorably reviewed by 97% of customers who ranked the company (redfin.com).

This unusual real estate company was profiled on NPR Marketplace. However, here we provide calculations that demonstrate when dealing with Redfin makes the best financial sense, as well as a general description of how this brokerage works.

What Makes Redfin Unique

The major difference between Redfin and other real estate companies is how agents are paid. In many brokerages, buyer’s agents are paid by commission. That is, the real estate agent who helps a potential buyer find their new home is paid a percentage of the purchase price of the house. Usually, the sellers are responsible for paying the commission.

Redfin agents, in contrast, receive a salary. Therefore, the commission paid by the seller’s agent is not given to the buyer’s agent (a Redfin agent). Instead, in major metropolitan areas, the brokerage keeps 50% of the commission and refunds 50% of the commission to the buyer (however, the minimum fee the company charges a seller is $5500). This rebate is not taxable, and, in some cases, the rebate money can be applied to closing costs on the new house (redfin.com).

According to redfin.com, the company has refunded almost $100 million as of 2017.

Why Buy a New Home Using Redfin

Redfin’s commission rebate policy is very attractive and can help homebuyers save a significant amount of money; the exact sum saved depends on the price of the house purchased (see below). In addition, their online database gives potential buyers access to extensive data (Multiple Listing Service, or MLS listings) about properties for sale — including tax records, whether a property has been re-listed, and previous sale prices — that are usually only available to real estate agents.

Home buyers use the database to identify properties they are interested in, and can schedule private showings online. When a potential buyer is ready to make an offer on a home, the buyer chooses a Redfin agent who then guides the offer process. This business model has been very successful because, according to the company website, “When you come to Redfin having already done your research, our agents can focus on serving you, not selling you”.

Why Redfin May Not Be the Best Option

Although Redfin agents generally have excellent customer service ratings, according to the company’s website, they are by definition more ‘hands-off’ during the first stages of a potential buyer’s search for a new home. In fact, much of the background work involved in finding a suitable house, such as identifying comparable properties in a single neighborhood, is completed by the buyer, not the agent. The fact that Redfin’s well-organized, detailed real estate database is accessible by buyers makes this possible.

Therefore, a potential buyer may not have any contact with the online brokerage’s agent until the buyer wishes to make an offer on a property. Buyers who want guidance in all parts of their search for a new home may choose a more traditional real estate brokerage.

Calculating the Redfin Commission Refund: Will a Buyer Always Get a Rebate?

The brokerage’s website states that “clients who buy and sell through a Redfin agent can save $20,000 in commissions”. However, it is important to note that the amount of money a client may save will depend on:

  • Location: In major metropolitan areas such as Boston and San Francisco, Redfin gives 50% of the commission paid by the sellers to the buyers. However, in other locations, they refund just 15% of the commission. In addition, the typical commission paid by the sellers varies. For example, in Boston the typical commission is 2.5% (of the purchase price of the house), while in many other areas the typical commission is 3%.
  • Home Price: Redfin sets a minimum fee of $5500. How does this affect the commission rebate? Suppose a house in the Boston area is sold for $360,000. In Boston, a typical commission is 2.5%. Therefore, the commission Redfin receives from the sellers for this house would be $9000. Because of their minimum fee, the brokerage will keep $5500 of the commission and give just $3500 to the buyers. Clearly, the more expensive the house, the larger the commission rebate.

Based on this data, will a client always receive a commission rebate from working with Redfin? Not always. For example, if Redfin keeps $5500 as a minimum fee, then buying with this company would not yield a rebate if the house was bought for $220,000 in a region with a typical 2.5% commission, or approximately $183,000 in a region with a typical 3% commission, because $5500 would equal the entire commission.

Online Brokerage a Good Choice for Hands-On, Motivated Home Buyers

Redfin is an excellent choice for home buyers interested in taking a hands-on approach to finding a new home. The 50% of commission rebate model gives home buyers a powerful incentive to work with this innovative brokerage. The very high customer satisfaction enjoyed by Redfin speaks to the professionalism of their agents and the overall success of their business model. However, not everyone who buys a house using this online brokerage may save a significant amount of money through the commission rebate.

How To Sell Your Home Using Feng Shui: How Ancient Chinese Philosophy Could Increase Property Sales

The following post is a guest post from Houston, Texas area real estate developer and entrepreneur Tracy Suttles. Tracy can be best contacted for questions, comments and concerns on Twitter at @tracydsuttles.

However, economic problems aside, the reason that some houses are struggling to sell could be down to other reasons. Homeowners with “for sale” signs at the moment might benefit from putting into practice some of the principles of feng shui in their properties. Perhaps the energy in the house is being blocked in some way? – the principles of feng shui could help address this balance enabling a vendor to sell their home more easily.

What is Feng Shui?

Feng shui or “foong shway” as it is pronounced in Mandarin, means “wind, water”. It is an ancient Chinese philosophy based on the relationship between humans and the environment. Underlying the practice of feng shui is the belief that we and the environment we inhabit are sustained by an invisible yet tangible energy known as “chi”.

A devotee of feng shui must observe the flow of “chi” and recognise the areas in which energy has become trapped or where too much has gathered in order to create space for “chi” to move freely. If “chi” is allowed to stagnate it can have a negative effect on our fortunes. By freeing this energy we can enhance all areas of our lives, from our homes and relationships to our wealth and good fortune.

Do The Sellers Really Want To Move to a New House?

According to the principles of feng shui, if a house owner is struggling to sell their home this may have occurred because there is a blockage of energy somewhere in the house, which is putting off potential buyers . Homeowners need to ask themselves whether, deep down they are reluctant to move house.

By harbouring doubts about moving home owners may be unknowingly creating an energetic lock which could block the sale of the property. It’s inevitable that house owners will feel emotionally attached to their home, especially if they have lived in the same house for a long number of years. However If they really want to make that sale they need to move on in order to encourage the positive flows of energy within their property.

Bring Positive Energy Into Specific Areas Around The Home

Sellers need to get feng shui savvy, and using a compass focus on the following areas in the house:

  • North West: This area represents helpful or supportive people. This should facilitate deal making, especially your estate agents’ ability to make a sale. Put grey objects or objects featuring the number 6 in this area.
  • South East: This area represents wealth and prosperity. By placing chimes or crystal here – anything that moves light or sound – this can help the estate agent work better for you.
  • South: This area represents fame, fortune, celebrity and attention. Use fiery objects which are red or feature the number 9. Make sure the area is clean and decluttered. Doing this will remove any potential buyers’ fears that there may be hidden problems with the property.
  • East: The east represents prosperity, harmony and family life. Find a wooden object, something green or an object featuring the number 3 and place it here in order to attract buyers.

Even if the person selling a property does not believe in the principles of feng shui , in the current recession it may be worth giving it a try. Sellers may feel that feng shui is simply superstition but it is worth remembering that successful property developers have to take seriously the beliefs of their target market. Many new property developments have houses which omit the number 13 since people in the west think it’s’ unlucky.

In a similar way someone from China would be unlikely to make an offer on a house if it is number 4, as 4 sounds like “death” in Chinese. One London Builder recently omitted numbers 4, 13, 14 and 24 from their new apartments – so they were obviously taking no chances!

For a good general introduction to the principles of feng shui read “The Complete Idiot’s Guide To Feng Shui” by Elizabeth Moran, Val Biktashev, Joseph Yu, in paperback, Alpha Books