Redfin (where I work as a software engineer) is now open for business in Portland. This is now our 11th market, but it’s special — it’s the first market we’ve entered where state law prohibits us from passing savings to the home-buyer in the form of a rebate. In some cases we are allowed to apply some of this would-be rebate money to closing costs, and when that’s possible we will do it. But that may still leave some money on the table that we would like to refund to the buyer, but can’t. What to do? We decided that we will donate the rest of the money to one of four charities, buyer’s choice.
If you click to view the details of any home (for example 2320 NW Pinnacle Dr) you will see a link in the top right-hand corner that talks about these charities. Click it, and you’ll see this:
Notice that we give people a convenient way to contact their local representative and ask him/her to repeal the anti-rebate law. I’m really curious to see where this goes. Will there be a grass-roots movement strong enough to get the law changed? And if it happens in Portland, would it cause similar laws to be repealed more quickly elsewhere? If so, then Redfin will truly have achieved something tangible in our goal to change the real estate industry. It would be HUGE.
Now, if the Portland law is repealed, I’m also curious to see what happens next. Right now we try to save money for consumers, but where we can’t, we give money to charity. What’s not to like about that? But if the anti-rebate law is passed, presumably we would start giving consumers the option to keep all of the rebate for themselves (and skip the charities), and my guess is that most people will take that option. How would we all look then?? I guess we’ll deal with that problem when we get there.
I wonder what the original purpose of that law is? Must be some reason , I’d hope.
According to a blog post by our CEO, Glenn Kelman, on the main company blog (http://blog.redfin.com/blog/2010/02/redfin_expands_to_oregon_first_of_nine_states_that_outlaw_our_business_model.html) the argument is that shady real estate agents could lure customers into deals they really can’t afford by waving a rebate in their face. But this is a silly argument for at least two reasons: 1. The refunded money actually comes from the customer, 2. By giving a rebate the agent makes less money so what kind of incentive is that?
I took the time to contact my local rep, per Redfin’s recommendation. Below is the response I received.
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Dear Mr. __________,
Thank you for your e-mail. I deeply appreciate it when constituents take the time to share their views with me.
ORS Chapter 696 is meant to “create a healthy real estate market atmosphere for the public” and to “ensure that professional real estate activity in Oregon is conducted with high fiduciary standards.” In other words, ORS Chapter 696 assures Oregonians that they receive honest and ethical services from licensed real estate professionals. Any proposed changes to 696.290 or other portions of this statute will need to be carefully calibrated to ensure that Oregonians remain protected from unfair business practices.
However, I agree with you that we need to continue to take action to make housing more affordable in Oregon. During the 2009 legislative session I was proud to support House Bill 2436, an important affordable housing bill that provides aid to low-income families, seniors, and people with disabilities by directing funds to housing development, capacity building, and homeownership assistance to first-time homebuyers. HB 2436 passed both houses of the Legislature and was signed into law by Governor Kulongoski. A copy of this bill can be viewed online at http://www.leg.state.or.us/09reg/measpdf/hb2400.dir/hb2436.en.pdf.
Please be assured that I will keep your comments in mind during the 2011 Session. I welcome further comments at any time.
Sincerely,
Chris Garrett