The best part is that most realtors are simply baffled by this. I constantly get the retort that “it doesn’t cost you anything to use an agent”—as if it were impossible to negotiate away the commission. Also, I get the further benefit of being able to use a RE attorney if I choose (for $900), and they will actually have no financial disincentive in looking out for my best interests.

Buyers agents are toast!

Additionally, I believe Redfin’s buying agents (incented by customer service metrics and not commission) will have the effect of longer DOMs and lower offer prices. Without salespeople (aka, realtors) pushing to close deals, this is only natural, and it’s a very good thing for real estate.

Also, lowering the cost of buying and selling homes will make the housing market more liquid, especially in the condo market. In the LONG TERM, there may be an overall bump up in sales volume if Redfin’s model become popular. (At this point, it’s still a tiny outfit.)

With a downturn and lower sales volumes, clearly Redfin will be hurt a bit. However, as buyers and sellers become more frugal, this will probably help Redfin (even though I’m sure traditional realtors will drop their pants and cut their commission costs to 2% on the buy side). So I would guess Redfin will be helped more by the downturn than traditional realtors and do fine. They can use scale to lower costs anf offer more features over time (eg, home warrantees, educational materials & analytics, etc). And on the buy-side, they really fix the currently broken model whene the buyer’s realtor just wants to the buyer to close.

A 33 year-old salesman is planning on tossing $2.5 million on a house in Queen Anne.

$420/sq. ft. average for a home in Queen Anne.

Recent articles trumpeting (falsely) local rental increases.

Median prices rising to the point where only 10% of the region can afford the median home.

Everything that spews from David Lereah’s mouth.

CPI (aka “headline inflation”) excluding energy, home prices, health care, food, or anything else that would raise the CPI above 2%.

I think “pornographic” is a good description all right.

Funny, but that’s a $/sqft I can only dream of for a good suburb. Around here, you’re looking at $750-1000 for something comporable–and the houses aren’t built as well as my hometown in WA. Can I say you’re all lucky to be spared some of the BS we around the SFBay endure?

Right– that 33yo “exec” must make serious coin–to jump on that home with a fixed rate. My guess is he’s taking the ARM/IO route. Still, why are people looking at homes when the market is clearly poised for a correction?

I bet we’re going to see a lot more info products for the house consumer that will help erode price premiums–and eventually those inflated transaction costs.

How are they paid? Not completely by commission I’m assuming?

FYI, I went to a “networking mixer” at “the canal” (next to ballard locks) last night. The event was attended by at least 6 area chamber of commerce groups and there were a tremendous amount of people there.

I didn’t bump into a single person in real estate or mortgage lending. A guy selling beepers was just as annoying however.

Redfin has a viable business model, but is experiencing fierce resistance from the traditional modeled real estate firms.

The idea of a buyer who is bringing the money to the table in the first place so that all parties get paid, receiving a rebate to the tune of several grand is a powerful incentive. The testimonials from their satisfied clients say it all.

If Redfin’s roots start to grow deeper in the market, they have a real chance in putting pressure on the existing commission structure.