With the explosion of online e-commerce businesses, it’s no surprise that real estate is following the trend. Building a relationship with a traditional realtor has many benefits that outweigh choosing an online real estate agency like Redfin in Denver, Colorado.
What is Redfin?
Redfin is an online real estate agency based out of Seattle, Washington. It is a discount brokerage because they charge a 1-1.5% listing fee and a lower commission price for buyers. Redfin has been around since the mid-2000s but recently went public in 2017. Redfin offers its online tools and services for buyers and sellers to essentially DIY the real estate experience.
How do they make money?
The flat fee that Redfin charges for clients to list their homes is the bulk of how they make their money. Depending on the area, sellers should expect to pay $4,500 - $5,000, which is influenced by the house price, to list their homes on Redfin. If an agent doesn’t represent the buyer, Redfin charges an additional 1% of the sale price of the house. There are also various additional fees that they charge, including title and settlement services, licensing and analytics fees, and their marketing services. Redfin agents are paid a salary plus bonus when they close a sale, and listing agents don’t make any bonuses.
The differences between traditional Realtors and Redfin in Denver Colorado
One of the most notable differences between Redfin in Denver and traditional realtors in Denver is the service. A traditional realtor is your realtor, and they find out your must-haves and dislikes during the home buying or selling process. They are dedicated to helping you buy or sell your home. They work to find listings in your desired areas that fit your budget on their own, and not through an automated system.
Redfin does have full-service agents on staff available. Still, they are difficult to get ahold of and typically aren’t available like a traditional realtor is. They also provide you with a different showing agent every time you see a house, one you’ve likely never met before, who won’t know what you’re looking for like a dedicated realtor would.
The payment structure is entirely different between Redfin agents and traditional realtors. While realtors typically get paid strictly on a commission basis, Redfin agents get paid a salary plus a bonus if they close a sale. A traditional realtor may be more motivated to sell your home or help you find a home to buy because they only make a living through selling. They tend to go the extra mile for their clients, to make the home buying experience a success every time, which is not a luxury that you get with Redfin.
A traditional realtor offers a little more flexibility in terms of contracts. Redfin’s contracts are all standard, and their fees are standardized across the company. There is no room for negotiation here. A traditional realtor can create a customized contract if needed, depending on the situation.
Many discount brokerages have a long list of clients for every available realtor, so the service is not going to be as personal. Customers of Redfin have made mention that it had been challenging to get a hold of their agent and that they were not that involved in the process. A traditional realtor likely only has a couple of clients at a time so that they can give you their undivided attention.
Another downside of discount brokerages like Redfin is that they often attract up-and-coming or inexperienced agents, so the level of expertise may not be up to your standard. Finding an experienced realtor in the Denver area is not hard to do, as many of them have many years of experience. With that experience tends to bring extra’s that a Redfin agent wouldn’t offer. For sellers, an experienced traditional realtor will have tips and tricks for marketing your home to have it sell faster. For buyers, they may have access to a network of people who know of homes that meet your requirements, and they know how to research the neighborhoods you like.
You pay less with Redfin, but you do all of the work yourself, whereas a great traditional realtor will do the job and be successful. Using Redfin is more of a transaction, where using a realtor is a customer experience, whether you’re a buyer or a seller. You are hiring a professional for a reason, let them perform the services that will make a sale or purchase successful.
Most traditional realtors have a specialty area that they like to work in, that they know like the back of their hand. It’s relatively easy to research and find a realtor that is suited to the neighborhoods you want to purchase it, or that you’re selling in. This is important if you want to know all the details of your potential new neighborhoods. Your Redfin agent isn’t the agent you meet with during any of the showings or open houses, so the neighborhood expertise goes out the window.
Why is a traditional Realtor better?
While Redfin may cost a little less than traditional realtor fees, they also come with less value. Redfin has an impersonal experience and a touch-and-go business model, whereas a conventional realtor is the opposite.
A traditional realtor will likely be able to offer little marketing extras. They will have access to great photographers that are proven to be successful. They probably have proven marketing strategies that they have utilized in the past to sell homes that they will use for you as well. They can maximize your listing’s exposure. In contrast, with Redfin, everyone is offered the same things, the same exposure, and the same process.
Since buying or selling your home is a big decision and a big purchase, spending the extra money on a traditional realtor is a good idea. A professional who is an expert and can find you the ideal home is a better partner than an online discount brokerage. It’s not the type of purchase with which you would expect to cut costs, and typically, you get what you pay for in these situations.
Many users of Redfin don’t recommend using them. Their lack of follow-up and involvement can leave customers feeling a bit stuck in the process. Meeting a new agent every time you view a house can be frustrating since you have to explain what you're looking for each time. Visiting multiple open houses with your realtor is not always a fun experience for everyone, but it gives them essential insight every time you point out something you don’t like or would change. They take that information into consideration when researching new listings for you.
You and your realtor are essentially like partners. You both want to find a house you’re going to love, and they will put in the work to help you find something you may not have otherwise considered. Especially if you’re a first-time home buyer in Denver, the experience you will have with a traditional realtor will be invaluable.
Sticking with Tradition
Buying your Denver home is likely the biggest purchase you’re going to make in your lifetime. You want to be able to trust an expert to help you get the best price, facilitate an easy process, and a great experience. Hands-on attention is always better for communication, getting you exactly what you want within your budget. They also offer flexibility in their contracts, and they can be creative in their methods. They are paid when they sell your home or sell you a home, which is an excellent incentive. Nothing beats a motivated traditional real estate agent that is ready to earn their commission by providing you with an excellent experience.