There was an interesting piece in Seattle Magazine regarding FindWell, Redfin, and changes in the RE industry generally. As you may know, both FindWell and Redfin rely on a robust web presence (primarily a search engine) PLUS a deeply discounted commission (about one half back to a buyer) as their business model. As noted by the author, this “alternative” model has yet to revolutionize the industry as some thought would happen, in large part because, when push comes to shove, EVERYONE still relies on the commission, the only issue being how big.
Of course, WaLaw is certainly not “everyone.” We are the true game-changing model, in that we charge a flat fee for the transaction. Hey, we work hard for everybody, not just those buying a seven figure house. Why should we be paid so much more for an expensive transaction? We don’t think we should. Plus, as the article notes, a commisison creates an inherent conflict of interest, particularly from the buyer’s perspective. The buyer wants to pay as little as possible, but the agent gets paid based on the price so the agent has a disincentive to negotiate aggresively.
On top of that — and unmentioned in the article — what happens if the buyer decides to not close at the last minute? I think its safe to say that the vast majority of agents would encourage the buyer to close, because no close = no pay. On a flat fee model, the attorney is not invested in the outcome at all and is happy to go in whatever direction you want.
So if you want “new and improved” go with WaLaw, not one of those other “alternatives” that really aren’t all that different.
Tags: commission, findwell, redfin
This is Kevin from findwell. Thanks for mentioning the Seattle Magazine article. It is good to see other companies trying to innovate as real estate brokers.
While there are agents out there who may not negotiate aggressively or encourage a buyer to close so they can be paid, our company is not one of them. We exist solely for the benefit of our buyers and sellers, always putting their best interests ahead of our own. We take our responsibility to the client as our top priority, since that is what is required by real estate licensing law. We will negotiate aggressively on all transactions, and if it doesn’t work out, we move along to another property, sometimes months or a year later. Like you, we are happy to go in whatever direction you want. Unlike your model, we take the full risk for each transaction. There are no upfront fees and no fees at the end if you decide not to buy or sell.
There are pros and cons to each model, and we are glad to have other companies around trying to change the way real estate is bought and sold.
Thanks for the comment, Kevin! We too are big fans of ALL alternative models (although we think our model really is different, while all the others are just different spins on the same ol’ story — a commission at closing).
Also, I have to say: Is it really in your client’s interest to take “the full risk for each transaction”? You need to make a living, and by assuming that risk you also need to expect a premium if you are paid (that’s the whole point of any commission — you may not get paid every time but when you do it makes up for the times you didn’t).
For at least one type of client — somebody who knows they will buy a house, they’re just not sure which one yet — it seems to me that the client would prefer to assume that risk himself so as to reduce it and reduce the premium paid to you. In other words, if I know I’m going to buy, why should I agree to pay you that premium when the risk to you of not getting paid is so low? Instead, I would prefer to pay a much lower flat fee. Sure, if I change my mind I’m out the fee, but the odds of me changing my mind are slim (I know I’m going to buy, just not sure where). In any event, I assume the risk and thus need not pay the risk premium to you. But then again, I’m a well informed consumer. Our challenge is to create more of them.
Do you think the housing crisis is over and we have entered a new realty marketplace? I feel the economy wants to fully recover prior to we have adequate persons confident enought to purchase new homes. In this current market its hard to make a long term investment and burden oneself with much debt with as a lot uncertainty is in the air.