Compare Redfin and Opendoor
For Sellers
For Sellers
For Sellers
For Buyers
For Buyers
Answer: Redfin is a full-service real estate agent and a referral fee network while Opendoor is a direct home cash buyer that buys select homes off-market with cash offers and resells them at a profit to homebuyers
Buying and Selling with Redfin
WARNING: Unlawful Kickbacks, Broker-to-Broker Collusion, False Marketing, Wire Fraud, Price Fixing.
Redfin) is a broker-to-broker collusion scheme, where "partner agents" unlawfully agree to pay massive kickbacks to receive your information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, 12 C.F.R. § 1024.14. As a consumer, you will always significantly overpay for Realtor commissions subject to hidden kickbacks and pay-to-play steering promoted in this scheme.
United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies.
Be smart; do not allow your information to be "sold as a lead" to a double-dealing Realtor in exchange for massive commission kickbacks paid from your future home sale, or your future home purchase.
A multi-state broker, a full-service company rebates buyer's part of the commission it receives, where allowed, and provides listing savings to sellers. In some cases, this company acts as an Internet referral fee network where it is unable to provide real estate services.
Redfin Pricing
Redfin offers listing savings to sellers (1% to 1.5% listing fee) and commission refunds to buyers where allowed by State law (21% rebate approximate.). Redfin works with about 3,100 Partner Agents in regions where it has no direct representation in exchange for a 30% referral fees.
Listing Services
- MLS Listing
- Zillow, Trulia, etc. Listing
- Accept and Deliver All Offers and Counteroffers
- Hold Open Houses
- Professional Photography
- Professional Floor Plans
- Yard Signage Installation
- Spare Key Lock-box Installation
- Schedule Inspection Services
- Schedule Private Showings
- Closing Duties
- Home Cleaning (Optional)
- Home Painting (Optional)
- Home Staging (Optional)
- Landscaping (Optional)
Buyer's Agent Services
- Find the Property
- Accept and Deliver All Offers and Counteroffers
- Recommend Other Professionals
- Attend Inspection Services
- Schedule Private Showings
- Negotiate Needed Repairs
- Closing Duties
Redfin Editor's Review:
Redfin is one of the largest real estate agents in the United States that offers service of a traditional agent with a competitive commission. It is important to separate Redfin services into three distinct categories: a real estate agent, a referral network and a direct cash buyer.
This review is focused on its operations as a real estate agent and a referral network. RedfinNow is further segregated into its own category because it operates as an investor and not a professional agent service model built to represent consumers.
Redfin went public in 2017 with an IPO that has raised $138 million and have thus saved consumers millions in commissions over typical rates offered by traditional real estate brokers. However, Redfin’s operations as a referral network result in an inefficiency known as reverse competition and possible price fixing. Such practice may result in lower quality of service and higher commissions due to added fees.
Agent Listings
Redfin Agents are salaried employees who are also paid bonuses based on client feedback and are not motivated by commissions. Redfin Agent Listing includes posting home on the MLS and MLS Aggregator services, professional photos, 3D tour and all typical services offered by a traditional real estate agent.
Redfin gives sellers access to a well-designed dashboard to track buyers viewing your home and other communication features.
Where Redfin cannot directly serve consumers, the company relies on a referral network of approximately 3,100 independent agents at other brokerages. Approximately 40% of all real estate transactions originated by Redfin are executed by this referral network.
Referral agents pay 30% of their commission back to Redfin when they close a transaction. Once Redfin refers a customer to a Partner Agent, that agent, not Redfin, represents the customer from the initial meeting through closing. In the past, Redfin had actively dictated that Partner Agent commission listing rates are set at 1.5%, or that Partner Agents issue rebates set at 15% to buyers (15% went to Redfin as a kickback.) Redfin has since revised this policy because it violates antitrust law.
In the United States, all independent brokerage fees are always negotiable and each real estate agent establishes its own policy for a fee structure, amount of commissions, and the sharing of any listing commissions.
Price fixing is prohibited by antitrust legislation. To fix, control, recommend, suggest or maintain commission rates or fees for other agents' services is an improper practice. Redfin Corporation has recently stopped such blatant price fixing strategy, where a statement on the company’s website now reads: "Since Partner Agents aren't employed by Redfin, we can't guarantee our 1%–1.5% listing fee or offer a Redfin Refund for customers who work with a Partner Agent." This statement means not only that Redfin "can't guarantee" these savings, but also that consumers shouldn't expect to receive savings from a Partner Agent.
Redfin still heavily engages in market-allocation and consumer brokering practices in their efforts to earn referral fees, instead of actually providing representation services. In 2019 Redfin has made a massive move by allowing with RE/MAX brokerage to participate as Partner Agents, where consumers are "sold as leads" to RE/MAX brokers for 25% cut of their commission.
Consumers a highly likely to overpay for listing commissions and receive little or no refund using Redfin Partner Program, when buying or selling a home, because the added 30% referral fee makes it impossible for Partner Agents to negotiate a fair market rate.
By utilizing Partner Agents, consumers are not just getting nothing, but are being subjected to thousands and sometimes tens of thousands in useless fees paid for the privilege of getting connected to a random agent.
Redfin Partner Program is one of the worst consumer brokering programs in the market because it implies that consumers will get a lower listing rate, or a refund from the Partner Agent shown on the Redfin website, but due to price fixing antitrust law this is not true.
Consumers should absolutely avoid using Redfin Partner Program agents.
Concierge Service
In November 2017 Redfin has launched a program called Concierge Service in select areas that offer home sellers added benefits of coordinating, supervising and paying for services such as deep cleaning, painting, staging, and landscaping in exchange for a 2% listing fee.
Where does Redfin operate?
Buying and Selling with Opendoor
Opendoor is a multi-state VC-backed real estate investor that operates across highly specific locations. Where available Opendoor mainly focuses on homogenous homes built after 1960 with a value between $125,000 and $500,000.
In determining the offer, Opendoor discounts from the estimated retail value after home is fully renovated.
Opendoor Pricing
Opendoor makes money with a difference between buying and selling each home. This difference is a combination of fees and home value appreciation between what Opendoor buys and seller each home for. Sellers can expect to receive 80%-85% of their home value from this type of sale after any fees, cost of the minor repairs, and resale.
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
Opendoor Editor's Review:
Opendoor will buy a home at a price that is below market value due to necessary repairs, renovation, and other factors. After Opendoor buys the home, it renovates and resells it for a profit to other buyers or companies that rent homes to qualified tenants. With low offer price, comes a convenience of an all-cash closing when selling a home. Opendoor claims to provide convenience, speed, and certainty of a fast sale. Dubbed as an iBuyer, Opendoor makes an offer on a house within days or hours, but this offer is highly conditional. Each offer Opendoor makes is just an estimate until it makes a home inspection.
At the inspection, Opendoor will often find reasons to lower its original offer when it finds items that need repair or if it has made a mistake in its original valuation. When the company is unable to make an offer, it simply redirects consumers to a random real estate agent in exchange for an undisclosed referral fee. Opendoor offers fast home sales, but these are typically accompanied by higher fees (starting at 6% and rising to 12% for more risky properties.)
Opendoor only makes offers to select homes in select regions. Opendoor claims that it provides market offers, but we find this not be true. Search for past Opendoor transactions makes it clear that company also makes money with home appreciation difference (typical appreciation of 5.5% to 12.5%) between what it buys houses for and what it sells them for in addition to service fees. The main disadvantage of using Opendoor is high losses in homeowners' equity.
Opendoor is a "heavy" model, backed by a large amount of VC capital ready to buy homes in all-cash transactions. As any real estate investor, Opendoor is susceptible to losing money in any given transaction. This model is susceptible to a number of risk factors, high operational costs and a continued need for higher-than-average Return on Investment (ROI) with each flip. Opendoor is not legally bound to represent consumers, its main legal obligation is to its shareholders.
Opendoor's fast transaction and easy move-out experience typically come at an extremely high price because this model incurs "double" transaction costs during the purchase, holding period, rehab work and final sale that includes real estate agent fees. Opendoor pays real estate agent commissions like any other buyer and seller of real estate, so these costs must be accounted for in the company's fee structure. The facts continue to point against Opendoor’s claims that it offers fair value for the houses it buys.
Moreover, because most homes in the United States are financed, homeowners own only partial net equity in their home. Banks receive the same amount of the remaining mortgage sum regardless of how any given home is sold, whereas only homeowners' net equity is lost in transaction fees paid to Opendoor.
Typically Opendoor uses the following factors when determining the offer: existing condition of the home including repairs needed, time it will take to finish needed repairs, value of a home compared to other comparable homes in the area, real estate commission required to resell, costs associated with maintaining a home during repairs, including taxes, payments, insurance, utilities and homeowner dues.
Today, there are a number of highly qualified real estate agents who offer competitive listing rates and flat fee listings across the United States. Unless a situation absolutely requires a quick sale, Geodoma recommends that consumers first consider using a licensed real estate agent working on competitive terms to properly list their homes on the open market before turning to Opendoor option.
Some real estate agents are now offering Concierge services that include painting, landscaping, and other services that help consumers place their home on the open market without upfront costs and high loss to home equity.
Conflicting Incentives for Consumers
Opendoor, when it acts as a real estate investor, further offers 1% of the purchase price back at closing to work with an Opendoor Home Advisor to buy an Opendoor home. According to the company, Opendoor must not be obligated to pay any buyer's agent commissions for this promotion to apply. Having to require such terms limits consumer's ability to use an independent buyer's agent in a transaction. In effect, Opendoor offers a buyer an incentive to forgo independent representation in exchange for a 1% discount. Consumers should never be financially incentivized by a real estate investor to limit their representation when buying real estate from them.
In contradiction to this incentive, Opendoor Terms of Service directly state that: "in making you an Opendoor Offer, Opendoor is not acting as your real estate agent or broker. Opendoor is merely acting as, or on behalf of, a purchaser of real estate. As a seller, you have the right, and it is your responsibility, to independently evaluate and decide whether to accept the Opendoor Offer."
Company further states: "Buyer represents that she has had ample opportunity to obtain legal and other professional counsel of its choosing and that it is relying solely on its own independent judgment and that of its own professional consultants, if any, in entering into the purchase contract and purchasing the property."
From one side, Opendoor offers consumers an incentive in an exchange for "not being obligated to pay any buyer's agent commissions," but from another, requires buyers to "represent that they have had an ample opportunity to obtain legal and other professional counsel." These two propositions contradict each other.
Conflicting Incentives for Listing Agents
Further, Opendoor improperly offers financial incentives to listing agents to help convince consumers to take lower-priced offers from the company, instead of listing homes on the open market. iBuyer offers, accounting for fees and reduced market value, are systematically the most expensive way to transfer ownership.
In this scheme, a listing agent is offered a financial incentive from Opendoor to bring their client to the company for a pre-market offer. No real estate investor (iBuyer) should be able to offer any financial incentive to a third-party representative to persuade consumers to accept their low offers. By offering a fixed financial incentive (currently set as 1% fee of the whole transaction) to listing agents upon acceptance of an Opendoor offer, the company acts to create a conflict of interest between a listing agent and their (present, or potential) client.
A listing agent, in this case, has to choose between having to properly represent a consumer to sell thier home in the open market subject to a competitively negotiated commission, or getting a quick pre-fixed "incentive cash" for handing them off to Opendoor.
Opendoor can change this incentive amount at any time. Today, the company offers 1% incentive of the entire home sale to the listing agent, tomorrow, the company decides to set this incentive at 2%, 3%, 4%, 5% or some other pre-fixed amount, as it likes.
Such incentives are a form of price-fixing and directly affect listing agents' ability to work with their clients on fair terms. Further, these incentives remove listing agents' and consumers' abilities to negotiate home sale representation fees (listing commissions) in a competitive setting.
Opendoor Brokerage
Opendoor is a parent company of Opendoor Brokerage, but they are two distinctly different legal propositions. Opendoor is a real estate investor (iBuyer) and Opendoor Brokerage is a licensed real estate broker. For this reason, Geodoma maintains two separate reviews for these entities. All user reviews and the editor's review for Opendoor Brokerage are located here.