Discount and flat-fee real estate arena
As promised in my last post, today’s discussion focuses on some of the big companies in the discount and flat-fee real estate arena in the Sacramento area, plus a couple of companies that will purchase your home outright.
The salient point concerning all these companies, excluding Zillow, is that they have to generate volume and lots of it for their business plan to work. With this in mind, the employed agents need to work on several deals at a time to earn a wage. This necessity will affect response time and dedication to their clients. The hyper number of transactions could create an environment of errors or miss-steps. Their rebuttal–we use technology to safeguard against this from occurring. Not sure we are there yet, nor sure our customers want agents as less focused bit-players to such a significant transaction.
Redfin
1-1.5% listing commission. 1% if you purchase a home within the last 365 days using a Redfin agent. 1.5% if you list with Redfin without a previous purchase. You will receive a check for the .5% difference sometime in the future should you purchase your next home with Redfin. The minimum commission for the Sacramento area is $3,500.
For this fee, they provide photography and will list the property in the local MLS.
They claim that buyers will receive, on average $1,700 towards closing cost. Their website does not state how the refund is calculated. The two caveats are 1) Refunds will only be considered after Redfin receives at least 1% of the purchase price or $6,500, whichever is greater. 2) Refunds need the approval of the buyer’s lender.
Redfin has ventured into a program of purchasing homes. Their CEO does not anticipate many homeowners accepting their offer. So this seems to be a lead generating tool for Redfin —”if you don’t want to accept the offer, let us sell your home the traditional way,” by a Redfin agent.
Purplebricks
UPDATE: On July 3, 2019 Purplebricks announced that they will cease operations in the United States by the end of this calendar year.
Purplebricks is a flat fee brokerage. In our area, the listing fee is $4,950. For this fee, they provide photography and will list the property in the local MLS.
For buyers, they no longer provide a rebate/refund.
The latest news concerning Purplebricks is that they are discontinuing service in Australia and re-evaluating continuing their U.S. business. This comes about with the release of their most recent earnings report. They are doing very well in Britain and Canada, however performing poorly in Australia and the U.S. So we will have to wait for any future news relating to the U.S. market.
Reali
They are a new player in our area.
Reali wants to represent the seller and the buyer for the same transaction.
Reali charges a flat fee: $2,450 fee for homes selling for less than $250,000; $4,950 fee for homes selling between $250,000-$750,000; and $9,950 for homes selling above $750,000.
Reali provides photography of your home, local MLS listing as well as Virtual staging (VS is controversial in the industry as it can be misleading to buyers).
The agent that obtains the listing from you may not be the agent that walks the transaction from start to finish. A team concept is used, resulting in various individuals performing required functions/steps.
They currently provide a rebate to buyers who use their agents.
The rebate to buyers provides similar savings as with sellers.
For homes up to $250,000—commission$ minus $2,450 = buyer’s rebate
$250,000-$750,000—commission$ minus $4950 = buyer’s rebate
Above $750,000—commission$ minus $9,950 = buyer’s rebate
Rexhomes
Opened up for business in the Sacramento area the first part of the 2019.
Rexhomes has taken a non-traditional path to selling real estate.
Using predictive analysis computer applications to determine who might want to sell their home, the company directs electronic advertising towards those Individuals.
The fee for listing your home is 2%. This includes photography.
Your home is NOT listed on the local MLS with NO commission offered or given to a buyer’s broker. The buyers are responsible for paying their agent’s commission.
Listings are found on the Rexhomes website and the search engines they directly feed such as Zillow and Trulia. In the current traditional listing world, the local Sacramento MLS will feed listing information to a multitude of websites; individual brokers do not have to perform this task.
Rexhomes prefers buyers use a Rexhomes’ in-house agent to purchase a Rexhomes listing, that way they control all aspects of the transaction. I believe their success will require them becoming a dual agent for the majority of their transactions. In today’s environment, buyers will not accept the idea of paying their agent out-of-pocket monies for services rendered.
Buyer’s agents using the MLS to search for homes will not see any Rexhomes’ listings.
Rexhomes is using on-line technology to perform as many functions as possible: scheduling visits, applying for loans, and submitting offers.
Opendoor
Opendoor is part of the “ibuyer” contingent of real estate brokerages.
Their mission is to purchase homes “as-is” for what they call fair market value. For the privilege of selling your house to them, a fee of 6-10% is accessed. The actual fee charged will be market and price point specific. The average, as reported in various real estate publications, is around 8%.
If you accept their offer, an inspector walks thru the home while accessing repairs that need to be performed for re-marketing the home by Opendoor. These repair costs will be deducted from the initial offer price, thus arriving at a settlement price.
The seller can request a closing date up to 60 days from the time of the settlement price agreement.
In this situation, the bottom line is the convenience of a hassle-free sale juxtaposed to the possible increase of in-pocket cash of a traditional agent assisted sale.
Zillow
The reason Zillow is on this list is the fact that they are also wading into the “ibuyers” waters.
Honestly, I am very cynical about their business direction.
Until recently, their website would display agents as Premier Agents, who would receive buyer/seller info from Zillow as a lead. The lead was not vetted and may or may not be legitimate. Agents pay Zillow a handsome sum for “Premier Agent” designation advertising.
Now, they have created a system to offer sellers the option of having their home purchased by Zillow. Usually, within 24 hours, Zillow will present an initial offer that the seller can accept or reject. Zillow discounts their purchase offer between 10-15% of “market value.” They don’t use the word fee or commission. Sells can choose a closing date up to 90 days from acceptance of the offer.
Regardless of what decision is made by the seller, Zillow now has a vetted lead, someone interested in selling.
Quite possibly Zillow may purchase the home for resale. But if the offer is rejected anywhere in the process, Zillow will pass that lead to an agent who will pay a hefty referral fee to Zillow should a transaction close. Zillow receives dollars either way, with minimal effort expended.
This is a fair warning for those entertaining asking Zillow for an offer on their home.
There you have it, a summary of the players in the discount and flat-fee real estate arena currently in Sacramento. Customer service is not their forte, just the volume of transaction closings. The aim is to hire as few agents as possible while taking as much of the available fees/commission for themselves. Understand, their business models concentrate on their success, while clients are a means of fulfillment.
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