Redfin Takes a Bite Out of Realtor’s Commissions

Redfin is another example of the Internet's destructive effect on low-value intermediation. It's an online brokerage service that kicks back 2/3 of the agent's 3% commission to the seller. (I suppose the buyer's agent still gets the usual 3%? Why?)

[[Update: There's a much different and no doubt better explanation of how this works in the first comment below.]]

So far Redfin is only available in Baltimore, Boston, Los Angeles, Orange County, San Diego, San Francisco, Seattle, and Washington DC, but unless some states have Realtor-protective legislation banning kickbacks like this I think things like this should be everywhere soon.

Of course, it wouldn't shock me to learn we had a Realtor-protective law here in Florida, given the power of the Realtors. An example of their power is that the newspapers capitalize the “R”. They don't do that for “lawyers” or “attorneys”.

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2 Responses to Redfin Takes a Bite Out of Realtor’s Commissions

  1. elliottg says:

    You should probably correct your post. The 2/3 kickback is the buyer’s commission and not the seller’s. On the seller’s side, the commission is flat rate for $3000 upfront or $4000 at closing (California does not allow the upfront option). That means a typical 500k San Francisco home sold through Redfin on both sides would have a $9000 total commission vs. $30,000 for the full service 6%.

  2. paperwight says:

    Also, “Realtor” is a registered servicemark (and for minor uses, trademark) of the National Association of Realtors, and they defend it pretty aggressively, which is why it’s capitalized, I suspect.

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