Buy a Home: How You Save Money
The New York Times' personal finance columnist recently published a greatest-hits summary of his wealth-building advice. His first rule: "never pay a real estate agent a 6 percent commission."
We've made home-buying simpler and more efficient. That means we can refund 2/3rds of the commission paid to us by the seller, typically around $10,000.
As your buyer's agent, Redfin gets a fee for representing you called a commission. The seller pays this commission using the money you pay him for the home.
The typical commission is 3% or 2.5%. Instead of keeping the entire commission, Redfin refunds 2/3rds of the commission at closing. If the commission is 3%, you get 2% of the final price as a refund, and we keep 1% as our fee. If there are referral fees involved, such as in some corporate relocation programs, we still keep 1/3rd of the total commission.
The refund estimate on our site assumes that the seller is paying a buyer's agent commission of 3% for each listing, but actual commissions may vary. MLS rules don't let us put the actual commission online, but we can tell you what it is for a home if you're considering making an offer.
Our minimum fee is $4,000, which takes effect if our commission is less than $12,000.
Buying with Redfin, the Breakdown
You Save: $10,000 (2/3rds of 3%)
Redfin Keeps: $5,000 (1/3rd of 3%)
When you buy through Redfin, you get 2/3rds of the buyer agent's commission refunded to you at closing. On a $500,000 property with a traditional 6% commission, this comes out to $10,000.
The first exception: The seller offers a variable office commission, paying lower commissions if the seller's agent shows a buyer the property. Since this can affect your commission refund, Redfin identifies those cases before submitting your offer and fulfills the seller's requirements to get the full commission.
The second exception: With new construction, it is important to immediately identify Redfin as your broker. If you don't, an on-site salesperson may try to claim the commission, and you won't be able to get a commission refund from Redfin. Identifying Redfin as your broker does not obligate you to use us, but it does mean you can get a commission refund from Redfin if you end up using our service.
We'll help you figure out the best way to apply your refund. You can choose from any combination of three options:
- Apply it to closing costs: unless you specify otherwise, Redfin takes this option, so you pay less out of pocket for the home. Closing costs will vary depending on the lender, size of loan, home price and timing of the closing. The money in excess of closing costs will be refunded to you by check.
- Get a check for the whole amount: expect to get your check 7 - 10 days from the close of escrow. This option is subject to lender approval.
- Offer the seller part of the refund in exchange for a lower offer price: in this scenario, the seller gets the same amount of money in the end, but you end up paying less for the property. Because the price of the property is lower, the excise tax and other closing costs are also lower.
Regardless of how you get the commission refund, it is not taxable.
"Redfin gave us great service, from understanding how to make an offer to closing on the property."
Tyler Wilson-Hoss and Danielle Goldberg , Seattle, WA
