Redfin Real Estate

Redfin Real Estate arrives in New Jersey

A few months ago – Redfin (a Realty company) “arrived” in New Jersey.

In a nutshell (from what we gathered), Redfin is an “agency” that claims to use cutting-edge technology – in conjunction with razor-thin commissions for both buyers and sellers (1.5% or less). The “de facto” standard in the Real Estate industry for eons was in the neighborhood of 5-6%.

Read more about Redfin below – and find out when Redfin New Jersey’s “launch party” in Hoboken this Wednesday, May 20th over at Teak (as well as hear our initial thoughts about this new “trend.”)

Redfin New Jersey Hoboken NJ Launch Party

What is Redfin exactly?

“Redfin has arrived in the Garden State, serving homebuyers and sellers from Cape May to Morristown and along the shoreline to South New Jersey. People can now work with local Redfin agents to buy and sell homes in New Jersey and can use the Redfin online and mobile tools to search homes on the market.

Redfin combines superior service and cutting-edge technology to revolutionize the home-buying and selling process. Our technology empowers both our agents and customers with information and tools that make buying and selling a home more efficient, less stressful and more fun.

Redfin real estate agents focus solely on delivering top-notch service while helping clients buy or sell homes. This efficiency, powered by the best in technology, also enables Redfin to pass savings on to our clients. Someone who buys a $500,000 home with a Redfin agent in New Jersey would receive a refund of over $5,000 at closing. Instead of the typical 2.5-3 percent commission, Redfin charges sellers a 1.5 percent fee. This means someone selling a $500,000 home with a Redfin agent would save between $5,000 and $7,500.”

Redfin Hoboken Launch Party

Redfin NJ Launch Party in Hoboken

Celebrate the arrival of Redfin at our launch party in Hoboken. Enjoy drinks and appetizers at Teak on the Hudson while you mingle with Redfin Agents and other local real estate professionals and learn all about buying and selling with Redfin.

  • When: Wednesday, May 20 fron 6:30 – 8:30 p.m.
  • Where: Teak on the Hudson (16 Hudson Place)

Were the commissions too high?

Or a better question is “what does all this mean?” –

For one, we’re fans of capitalism. You know, supply, demand, market prices and so on. What we’re not fans of is market manipulation, monopoly and price-fixing.

Were Realtor commissions way too high for way too long? I don’t know that answer. They always had a relatively fixed rate – and often did the same amount of work selling (someone else’s) multi-million dollar property than they did selling (someone else’s) $250k property. That fact alone, I probably wouldn’t think it’s right (unless I was one of those “platinum” agents).

Another thing – it’s sort of like how it is in many “industries” (like art, music) – you kind of have to “pay your dues” to work up the ladder. Newbies never get a shot at the “big time.”

Is Real Estate a monopoly of sorts?

You ever think about why there are such odd things such as the “MLS?” Especially in today’s information age?

Why are so few people “FSBO” (for sale by owner?) I think it’s around 10% or so. Why can’t everyone sell their property that way? Is it too much work? Does the Realtor honestly EARN a five-figure paycheck each time they schlep to properties to “give a tour?” Could anyone be an “agent?”

Taking a big-picture look at this whole industry leads one to believe that something is not right. We shouldn’t be left with a short-list of places to trade property. Or be inundated with regulations and other complicated conditions (what boils down to “minutiae in order to control others.”)

Now what Redfin appears to be doing is trying to go National – getting a “cut” from a very broad scope of transactions. Does that equate to the “Walmart” of Real Estate? Walmart has countless stores and make less per transaction than other places, but they also pay their people less and make up for it in SHEER VOLUME. Cui Bono in this case? Someone at Redfin will be getting very rich. Not their agents, that’s for sure.

We’ve spoken with those in favor of traditional Realtors – who say they’re indispensable BECAUSE of the overly-complicated nature of a Real Estate transaction (read: zoning laws, liability, encumbrances, titles, taxes, occupancy certificates and more). Perhaps that is accurate. But you’d have to dig deeper into the “system” to find out why simple property ownership needs to be so complex.

Are we against Redfin? Not particularly. Real Estate is an odd industry for sure. And I still can’t get over how or why any “agent” needs to be involved with a simple exchange of property. Sure, it’s more than just buying a car – but it does not have to be complicated. Let’s remove those complications – and try to streamline how property is exchanged.

(But we still think “agents” of some degree will always be around – as long as the complex nature of Real Estate exists. Because some folks don’t want to become educated, nor do they want to make the time. Oh well!)

Here’s a video from Redfin if you want to see how they’re marketing themselves:

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I hope they make it but suspect won’t. Others have tried and failed. In a town like Hoboken where real estate has double or tripled in the past 10-15 years why should the realtors fees also escalate at the same rate? They did not sit through a million dollar gut renovation and all it’s frustrations, but they profit from it. In my experience once the buyer/seller agree on a price the realtor’s value is almost non-existent, as the real heavy lifting is done by the bank’s loan agent,lawyers, home inspectors, etc. It’s funny how the realtor always has a last minute emergency on the day of the home inspection or closing. They add zero value to this step anyway, but this non-revenue generating activity is conveniently missed. I think if the buyer and seller split this fee you would see it disappear, but since only the seller is paying the buyer likes the handholding and insincere caring and attention they get from the realtor. With many deals over 3M now in town should the real estate fee really be 150-250K? What people should start doing when interviewing realtors is demand a cap of X. On 3M make it say 50K take it or leave. Someone will take the listing and it will make it onto the MLS listings for all the see. If another agent refuses to take their clients to their dream house because they are not making enough commission then they will be exposed and ex-agents. Just like… Read more »