I often swing by the Redfin site for a quick browse. The site itself is a suite of rich color (Google map colors), fun text (you maven, you), and simple navigation. Honestly, the site has managed to bring itself forward into conversational sweetness, the same way it made its search functionality into an offer making meaty goodness machine. I give many nods to Matt Goyer & the team at Redfin for their willingness to humanize their site and realize their market cannot just be techs excited about the use of Ajax. I mean, come on; most home buyers and sellers simply know a pretty site when they see one, and will certainly manage to find their way into a forum that directly answers their question- congrats on the forum success!
Again, I like to think of the Redfin site as an inspirational tool, I really do enjoy the permission I get when reading how they engage their consumer- use of PDFs, Images, incredibly fantastic use of copy, as well as the video? Video? I admit it’s been a month or so since I’ve really looked at the buy page, but this morning, I saw the video… As I sipped my cafe con leche, I watched this crazy insane video of baked to golden brown real estate perfection, admiring the imagery, use of human hands atop the drawn images, the marketing, the lay out, as well as the pace of the video- it was a marvel… until…
Now, maybe its just me, and my lack of IRS skillz (yes, with a z)- but it seemed to me that I may have witnessed a huge… I’ll just call it a mistake and offer the benefit of the doubt. What is the alledged mistake? Well, I am so glad you asked- Redfin promises its usual 2/3 rebate on a $500,000 house- this is utterly warm and toasty for the wallets of would-be Redfinnians. But the part that flew by at the speed of light was the part where the narrator says in regards to the rebate, “it’s tax FREE”. Whoa, it is? What!? I mean, unless Redfin is picking up the tax tab on the ten grand out of their five grand? Wow! Wouldn’t that be ubberly brilliant for the consumer! Way to go Red… wait, I smell a to good to be true.
I am updating this post because I found the IRS ruling regarding rebates or refunds at settlement to a Redfin client. Redfindid file with the IRS and request information regarding information and claims it feels the reply from the IRS was unambiguous to state that a rebate and or refund was not taxable income, however, this is one client and leads to this larger issue:
From Redfin: “Because you can only petition the IRS on your own behalf, not that of others, we could not ask the IRS to rule on the tax situation of each of our clients, only on whether we were obligated to report our refund as income. The IRS was also careful to say that a ruling on Redfin’s commission refund could not be used as a precedent for other brokerage’s commission refunds (though we don’t see why not).”
The mistake I was referring to in the video is simple, we are not in the business to practice law, or IRS policy, why would we ever state that something is tax free if we cannot guarantee that it is completely. My point is simply that it is dangerous to promise something that is absolutely out of our control. The quote above only makes my point- seek the advice of a tax professional- and in most cases, I would imagine your CPA will suggest you account for it and allow the IRS to sort out the details.