There are many options for homeowners to sell their homes. These include selling by owner, hiring a traditional full-service real estate broker, or hiring a discount broker. In recent years, several ‘website-based’ brokers have surfaced to offer yet another option. Companies such as Redfin, Reali, and REX are the top online real estate brokers. All three claim to disrupt the real estate industry by offering the same service as a traditional broker for a flat fee or extremely reduced commission. Of course, there are some caveats to those claims. This is my comprehensive review of REX Real Estate Exchange.
What is REX Real Estate Exchange?
REX is a real estate broker licensed in AZ, CA, CO, DC, FL, GA, IL, MA, MD, NV, NY, NJ, NC, OR, PA, TX, VT, and VA. It offers its buyer and seller services mostly in and around the major markets in these states. With no physical offices in these states, REX is considered a “virtual broker”. It hires local licensed real estate agents to represent them in these markets.
Listing Real Estate Service Offered by REX
This virtual broker separates itself from other brokers by offering real estate services without participating with the Multiple Listing Service. By keeping its listings off of the MLS, REX attempts to save the home seller from paying a commission to a buyer’s agent. Instead, REX relies on other forms of marketing in order to find a buyer that is not already represented. Per its website, REX provides ‘MLS-less’ service to home sellers for a commission equal to 2% of the sales price.
Professional photography and video tours are included with that 2%. After viewing about 50 REX listings, I have only positive things to say about the quality of the photos and video. Open houses are offered as well.
REX markets homes for sale by using mostly digital methods. If you list with REX, your home will be featured on its website. It will also be listed on Zillow.com and Trulia.com. Other online platforms that REX markets include Facebook, Instagram, Google, and Bing. Outside of digital marketing, direct mail campaigns are also implemented.
REX charges a commission equal to 2% of the sales price. If the home sells for less than $450,000, the minimum fee is $9,000. So if your home is not worth $450k, you are going to be paying more than 2%. In cases where a buyer already has an agent, the buyer’s agent will expect to receive a commission. This changes the dynamic a bit. Who is going to pay the commission to the buyer’s agent? REX advises that the buyer would be responsible to pay the commission to their agent. The challenge with this is that buyers are not usually prepared for this expense. In most cases, the buyer’s agent commission must be financed. The issue with this is that it can affect the bottom line for the seller.
If the buyer wishes to finance their agent’s commission, they would have to add that amount to the final purchase price. Let’s say the buyer is going to offer their agent a 2% commission on a home they are buying for 500,000. They would now have to add $10,000 to the purchase price, making it $510,000. No big deal right? Well, it’s not that simple. If the home only appraises for $500,000, the extra $10,000 will have to be covered by either the buyer or the seller. Often, it is the seller that covers this amount from their bottom line. This means that represented buyers will not be able to offer top dollar for REX listings.
The ideal situation for homeowners listing with REX is to sell to a buyer that is not represented by another agent. REX would represent the buyer, therefore saving the seller from paying an average 2% to 3% commission.
Marketing Claims by REX
In my Review of REX, I noticed they make some big promises to prospective sellers. The targeted message is that they will save you paying 3% to 4% more in commission while providing the same service as a traditional Realtor. The virtual broker minimizes the benefits of the Multiple Listing Service and implies that traditional agents rely solely on MLS as their marketing efforts. REX also claims to have proprietary marketing techniques that traditional agents do not use. The only specific information REX provides about its marketing methods is this statement from its website: “We actively market your home to those buyers across a broad range of targeted channels like Zillow, Trulia, Google, Facebook, Instagram, Bing, as well as in print.”
REX Track Record
I took a look at how REX listings performed in several Southern California cities. On the surface, the numbers don’t look bad. Generally speaking, their listings stay on the market on average 15 days longer than those of brokers using the MLS. The sales prices of REX listings are comparable in most markets, but those numbers don’t reflect what the seller is netting. Many, if not most of the sales prices are inflated by money the seller is crediting to the buyer’s real estate agent. The truth is that a lot of the buyers purchasing REX listings are already represented by an agent. Subsequently, buyers are financing their agent’s commission by adding it to the offer price and then asking the seller to credit it to the buyer agent at closing. This makes the final sales price misleading.
In higher-priced markets, the disparity is even greater. Typically, higher-priced homes are more challenging to sell due to the smaller pool of qualified buyers. By not listing with the MLS, REX is reducing that pool of buyers even more. REX listings in these high-end markets are selling for tens of thousands of dollars less than other comparable homes listed by local agents.
It is clear that selling your home with REX will save you money on commissions. The flip side is that your home will take longer to sell and you will net less money than it would if you work with a traditional broker.
The Real Benefits of the Multiple Listing Service (MLS)
REX downplays the benefits of the MLS. The truth is that about 80% of home buyers are represented by a Realtor. The MLS is an online hub that gives real estate agents access to homes for sale that may fit their client’s wants and needs. If a home is not listed on the MLS, that agent may never see it, thus, they will never tell their buyer clients about it. If a buyer is not searching for homes on Zillow or Trulia, they may never know about a REX listing.
Another major benefit of the MLS is the shared data feed they provide. This feed is automatically syndicated to thousands of local, national, and international websites that feature homes for sale. The online exposure for homes listing on the MLS is massive. With one click, a for sale listing is fed directly to thousands of local real estate agents and potential buyers.
In the end, more buyers equal more opportunities for multiple-offer situations and bidding wars. It also equates to selling faster.
The Value of a Traditional Realtor
Beyond the benefits of the MLS, working with a local Realtor provides so much value to home sellers. Traditional agents offer the same marketing methods touted by REX. They will provide professional photos and video. They will market your home on social media, search engines, and thousands of real estate websites. A traditional real estate agent is also going to market your home directly to their personal and professional databases. Open houses are one more way that a local agent will market your home. All of this exposure helps homes sell faster and for the most money possible.
Complaints and Bad Reviews for REX Real Estate Exchange
Any real estate broker or agent is bound to receive a bad review at some point. It is just the nature of the beast. REX has more than its share of bad online reviews. What’s most troubling is the context of these reviews. I found that many of the negative reviews are asserting similar issues. The common theme is poor execution and failure to meet expectations. Many reviewers also claim that they felt pressured to list their homes below value. Another common complaint is the lack of communication. In fairness, there are plenty of good reviews as well. I suggest you check them out for yourself. Here are the Google reviews.
Conclusion of my Review of REX Real Estate Exchange
This virtual broker provides another viable option for real estate sellers. Although viable, this option is not good for everyone, nor is it good for all markets. REX seems to be a good option for sellers that have the luxury of time. If you don’t need to sell quickly, this broker model may work for you. REX is definitely a broker for those homeowners wanting to save on commission. Unfortunately, there may be a financial tradeoff when it comes to the bottom line.
If you need to sell your home, I advise that you consider all options. Do your research. Ask your friends, family, and co-workers to refer you to a good local agent. You should interview no less than 3 agents when deciding who is best to help you with selling your home. It is going to come down to what works best for you and your specific situation. It might just come down to a ‘gut feeling’.
If you are in Southern California and would like to meet with one of our experienced local agents, give us a call at 310-379-4444.