Looking to buy a $460,000 home in Kirkland or Redmond? Or perhaps you have a $440,000 home to sell in Sammamish? If you are considering Redfin as your agent, apparently your price point is not profitable enough for them to help you buy or sell a home. While you may happily use their website, they are going to send your business to one of their partner agents at RE/MAX or Keller Williams.
When you can & can’t use a Redfin agent
Redfin has agents who service most neighborhoods around the Seattle area. If your price point is too low or if they are too busy, they are going to refer you to an agent who doesn’t work for Redfin. These are agents who work for a traditional brokerage like RE/MAX or Coldwell Banker that pay Redfin a referral fee for the client lead.
You can drill down on each Seattle-area neighborhood to see what the minimum home price is before a real Redfin agent will help you. I grabbed this one for homes in Redmond where it says that you have to spend $470,000 before a Redfin agent will help you.
Redfin minimum home prices by the numbers
I gathered up all of their minimum home prices for each city and neighborhood and then compared them to all of the home sales in each neighborhood during the last year to see how much (or little) of the market that Redfin agents actually serve.
|Minimum home Price||% of market that Redfin does NOT serve|
|Beacon Hill||$ 300,000||64%|
|Burien, Tukwila & Des Moines||$ 300,000||81%|
|Capitol Hill||$ 220,000||24%|
|Capitol Hill (North) & Montlake||$ 220,000||0%|
|Carnation & Duvall||$ 470,000||82%|
|Cedar Park||$ 300,000||15%|
|Central District||$ 220,000||8%|
|Columbia City & Seward Park||$ 220,000||15%|
|Edmonds & Lynnwood||$ 400,000||82%|
|Green Lake||$ 250,000||9%|
|Hunts & Yarrow Point||$ 350,000||0%|
|Kenmore & Bothell||$ 400,000||69%|
|Kent & Auburn||$ 350,000||89%|
|Lake Forest Park||$ 250,000||34%|
|Madison Park, Madrona & Leschi||$ 220,000||4%|
|Maple Leaf||$ 300,000||21%|
|Maple Valley to Enumclaw||$ 350,000||78%|
|Matthews Beach||$ 300,000||6%|
|Mercer Island||$ 350,000||10%|
|Mill Creek & Snohomish||$ 400,000||71%|
|Monroe & Lake Stevens||$ 400,000||94%|
|Mt. Baker||$ 220,000||4%|
|Muilteo & Everett||$ 400,000||88%|
|North Beach & Broadview||$ 250,000||7%|
|Phinney Ridge||$ 250,000||11%|
|Queen Anne||$ 300,000||29%|
|Ravenna – Bryant||$ 300,000||9%|
|Snoqualmie, Fall City & North Bend||$ 449,000||65%|
|South Lake Union & Eastlake||$ 300,000||31%|
|Tacoma & Federal Way||$ 295,000||84%|
|Victory Heights||$ 300,000||17%|
|View Ridge||$ 300,000||2%|
|West Seattle||$ 300,000||41%|
There is some serious cherry picking going on here for the most profitable home buyers and sellers. (Remember, real estate agents get paid a % of the sale price.) If you live in one of the urban neighborhoods like Capitol Hill or Phinney Ridge or a tony neighborhood like Laurelhurst or Madison Park, chances are pretty good a Redfin agent will be willing to help. In places like Issaquah, Redmond & Kirkland, they will only help on 40-55% of the homes out there. Kenmore & Bothell get even worse, where they help only the richest 31% of folks in the area. In farther flung regions like Kent, Auburn, Tukwila or Tacoma, they’ll help the top 10-15% and send everyone else to a non-Redfin agent.
I’ve been watching these numbers over the past weeks and strangely they keep going up, sometimes dramatically. On May 20, if you wanted to buy a $400,000 home in Kirkland, a Redfin agent would have helped. Today it needs to be $470,000. Redmond & Sammamish got similarly large increases in the minimum price, as did many other locales.
Have the bean counters got in the way of Redfin’s “consumer-friendly” business?
Redfin has taken a big chunk of venture capital to get their business going around the country – $46.8M to be precise. They also have a stated goal of going public, possibly by next year. The looming IPO certainly puts pressure on growing their revenue numbers, and it is clear that the financial engineering around their minimum home prices is designed to limit the use of their human resources (agents) to only the most profitable deals.
What is stunning is how they are willing to forgo helping vast numbers of home buyers & sellers in the Seattle metro area to go after only the richest buyers & sellers. Sure, every real estate agent would love to only have clients spending more than $500,000, but someone buying a $450,000 home in Kirkland or Redmond or $395,000 in Kenmore or Bothell is not exactly chump change. Even the highfalutin brokerages in town have agents willing to help across these lower price points.
Our agents have done a fair number of deals with Redfin agents, and they do have some good agents. I’m surprised that Glenn Kelman doesn’t become a “raging monster” because they have to limit their services so severely to middle-class and upper-middle class folks. I would assume that many home buyers or sellers out there would be offended to learn that they don’t qualify to use a Redfin agent. Perhaps the lure of the most profitable deals is simply too great in the face of a looming IPO, or perhaps they are simply playing out a plan to gradually exit the business of being real estate agents so they can focus on technology and their website. If their agents are so great, they should find a way for more folks to actually be able to use them.
Savvy consumers should contact agents directly
If you are in one of the many areas or price ranges where Redfin is going to refer you to one of their partner agents, you might as well go direct to the other brokerage and skip the referral fees altogether. (Heck, you’re on our blog, so you could check out findwell as well.) If you contact the agent directly at Keller Williams, RE/MAX, Coldwell Banker, etc., they won’t have to pay 15% of their commission to Redfin and will likely give you a better deal in the process. Just take their name and brokerage name and search for them on the web.