Redfin Saves You Money on a Home Sale

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I’m about to put my house on the market and I keep seeing signs for Redfin. How does it work, and would it attract as many buyers as a listing by a traditional agent? --M.S., Washington, D.C.

7 Reasons Your House Is Still on the Market

Redfin started in Seattle a decade ago. Since then, the real estate brokerage has expanded into 83 markets, covering most major U.S. cities.

The biggest attraction for sellers is the lower cost: Rather than paying the standard 3% commission to the selling agent, Redfin sellers pay 1.5%—or 1% in some metropolitan areas, such as Washington, D.C. (Sellers usually still pay an additional 3% commission to the buyer’s agent.) A reduction of 1.5% from 3% can save the seller $6,000 on a $400,000 home. Buyers who use a Redfin agent receive a refund at closing based on the home’s list price. The average refund is about $4,000, but the calculation varies by location and price. Buyers can see the amount they’d get back on a home on Redfin.com (even if the home is not listed by a Redfin agent). Redfin agents receive a salary and health benefits (the commission goes to the company), plus a bonus based on sales and customer reviews.

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Home listings appear on the multiple listing service (MLS) and sites such as Zillow and Trulia, as they would with a traditional agent. They also appear on Redfin’s website, which includes commentary from Redfin agents about homes they have toured, details about the outcome of offers on the homes they represent, and information about how to schedule tours online. Redfin agents can notify potential buyers when your house hits the market, when the price drops or when an offer is about to be accepted.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.