For Online Brokerage, A New Twist on Tradition
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Saturday, March 17, 2007
SEATTLE -- If it's true that revolutions are built one person at a time, then Scott Davis is a revolutionary.
However, he prefers to think of himself as a doting new father -- which is why when his wife, Shufen, was expecting last fall, he began searching for a home where they could raise their son, Hunter.
The revolutionary part is the real estate company the Davises chose to help them buy their first house: Seattle upstart Redfin.
Redfin is part of a growing group of young companies around the country that are using the Internet to challenge the traditional real estate brokerage structure.
Its site gives buyers the tools to research neighborhoods, find a house (and lots of information about it, such as how long it's been for sale) and make an offer, all over the Internet.
A Redfin agent, whom buyers don't necessarily meet, then helps them refine the offer and negotiates it on their behalf.
The payoff: Redfin-represented buyers get a rebate for doing much of what real estate agents traditionally consider their work. Sellers who use Redfin pay a flat $2,000 fee, rather than the customary 6 percent sales commission.
"I'm used to doing all my own research already," reasoned Davis, a 38-year-old Microsoft marketing manager. "If I'm going on holiday, I search the Internet for airfare, for the cheapest hotel rooms. So when searching for a house we were okay doing that, and Redfin made it easy."
Their Redfin agent helped them shave $12,000 off the $440,000 asking price for a Woodinville, Wash., house. The agent even negotiated the home's couch into the deal.
The final flourish was receiving Redfin's $9,000 rebate, which the couple used to pay closing costs. That amount, based on the sale price of the home, represented a portion of the commission Redfin earned for representing the couple.
"If ever there was one thing that I needed as a tipping point, that was it," Davis said.
In the year since it began its crusade to revolutionize the way real estate companies operate, Redfin has caused concern, bordering on backlash, within the highly competitive real estate industry as it demonstrated that its model can work.
