Apr 5, 2023
Redfin is a popular real estate brokerage firm that operates in the United States. One of the unique features of Redfin is its buyer refund program, which has revolutionized the real estate industry. In this article, we will take a closer look at the Redfin Buyer Refund program, its history, how it works and recent changes to the program.
What is the Redfin Buyer Refund?
The Redfin Buyer Refund began a program that provides buyers with a refund on a portion of the commission paid to the real estate agent. Typically, when a buyer purchases a home, they pay a commission fee to the real estate agent who helped them find the property. This buyer commission fee is typically around 3% of the purchase price.
With the Redfin Buyer Refund program, buyers can receive a refund of up to 20% of the commission paid to the Redfin agent who helped them purchase the home.
History of Redfin Buyer Refund
The Redfin Buyer Refund program was introduced in 2007 as a way to differentiate Redfin from other real estate brokerage firms. Redfin's founder, Glenn Kelman, wanted to create a brokerage firm that put the customer first and provided transparency in the real estate transaction process and help consumers save money versus using traditional Realtors. The Redfin Buyer Refund program was one of the ways that Kelman achieved this goal.
Initially, the Redfin Buyer Refund program was only available in certain states where the laws allowed for rebates on real estate commissions. However, in 2019, Redfin expanded the program nationwide, making it available to buyers in all 50 states.
How Redfin Buyer Refund Works
The Redfin Buyer Refund program works by giving buyers a refund on a portion of the commission paid to the Redfin agent who helped them purchase the home. The amount of the refund varies depending on the purchase price of the home and the commission paid to the Redfin agent.
Here's how the program works:
- The buyer contacts a Redfin agent and begins the home-buying process.
- The Redfin agent helps the buyer find a home and assists with the negotiation process.
- Once the buyer purchases the home, the Redfin agent receives a commission fee from the seller's agent.
- The buyer could receive a refund on a portion of the commission paid to the Redfin agent, which is typically around 1% to 1.5% of the purchase price.
- The refund is paid directly to the buyer's account, typically within a few days of the transaction closing.
For example, if a buyer purchases a home for $500,000 with the help of a Redfin agent, the commission fee paid to the Redfin agent would be around $15,000 (3% of the purchase price). With the Redfin Buyer Refund program, the buyer would receive a refund of up to 20% of the commission paid to the Redfin agent, which would be around $3,000. This refund would be paid directly to the buyer on the settlement statement at the time of closing.
(Update) Changes to the Redfin Buyer Refund
In late 2022, Redfin discontinued their buyer rebate. Currently, their model provides a rebate of the listing commission when you buy and sell with the company.
You can sell with Redfin for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing.
When you sell first with Redfin instead of using a traditional brokerage, they will initially charge a 1.5% listing fee and then send you a check for the 0.5% difference after you buy your next home with Redfin.
Alternatives to the Redfin Refund
SimpleShowing is a newer real estate brokerage firm that operates in select markets throughout the United States. Since 2018, they have offered a program called the "SimpleShowing Cash Back Refund" which provides buyers with a cash back refund of up to 1% of the purchase price of the home. The rebate is paid directly to the buyer when the transaction closes.
One of the unique features of SimpleShowing is their use of technology to streamline the home-buying process. They offer online scheduling of home showings, making it easy for buyers to view properties on their own schedule.
Overall, SimpleShowing's buyer refund program provides buyers with a way to save money on their home purchase while also benefiting from a streamlined, technology-driven home-buying process.