The other day, I received a call from someone who wanted help buying a condo downtown. He had been reading my blog and felt that I had a good grasp on the market and knew what I was talking about. That was the good news. The bad news was that he had been looking at Redfin’s site and saw that they offer a cash rebate when you work with them. The question was, is it better to work with me (who he felt had superior market knowledge and experience), or a Redfin agent (who would presumably save him money).
So the challenge began. I told him I’d think about what I could do and why I thought I’d be the better choice and that I’d call him back. Since he (let’s call him Bob) was looking to buy downtown, I decided to see what the competition was doing downtown. I found out that Redfin has four main offices in the US (none of which are in SD). I then did a search to see how many sales all the Redfin agents had in downtown San Diego over the last six months. It turns out that there were only 3 sales in which Redfin agents had represented a buyer in the downtown market. Three sales total for all the Redfin agents. The three sales were split between two agents. In the last 12 months, there were only 4 Redfin sales (again, only looking at buyer representation). Looking at my own production, I had five buyer sales in the last six months and nine in the last 12 months (only counting downtown sales and no listings).
Needless to say, I thought this was a good thing to mention to Bob in pointing out why I might be the better, more experienced choice. Next I looked at the sales prices versus the list prices of all the aforementioned sales. What I found was that the Redfin agents had a 96% sales price vs list price (SP/LP) average. I thought that was pretty good – 4% of the asking price. After I looked at my sales, I learned that my average SP/LP was 93% – 7% off the list price. This was also good news for me.
Next, I ran the numbers for Bob’s potential purchase. Based on a $700K purchase price (which is what he was looking for), a Redfin agent would in theory be able to negotiate a sales price of $672K (96% of the list price). In theory, I would be able to get a sales price of $651K (93% of the list price) – or a $21,000 savings for Bob. Even after Redfin’s buyer rebate (roughly 1% of the purchase price), I would still be saving him $14,000. Obviously this was all hypothetical, but I was happy with my findings.
In addition to these savings, I knew all of the listing agents who had the properties Bob wanted to see. I had worked with many of the agents before and have great rapport with all of them. I’m not sure if the Redfin agents do or not, but I can at least say I do. To bring this long story to an end, I’m happy to say that I was able to convince Bob to work with me. Contrary to what Redfin’s website says, in this case, I seemed to be the more knowledgeable, experienced and capable agent. And just for the record, all my files are paperless and available to clients online.
I’m by no means claiming that I’m the best agent or that I can do the impossible. However, I can say that when it comes to downtown, Redfin has virtually zero experience (only six Redfin buyer sales in the last 24 months – split amongst four different agents). Maybe these agents are great, maybe they’re not. All I can say is that they have not sold much real estate in downtown San Diego and that it may not be worth it for buyers to use a discount real estate agent. And thanks Bob for having faith in me.
If you have any questions, please contact Denny Oh at 858-243-2092 [email protected]