A burgeoning national real estate brokerage hopes to make a name for itself in the Twin Cities by giving buyers and sellers a break on those commission fees that can add tens of thousands of dollars to the cost of selling a home.

Seattle-based Redfin announced Tuesday that it is setting up shop in the Minneapolis-St. Paul market, with the hope of gaining a foothold in a region dominated by some of the nation's most venerable real estate firms, including Coldwell Banker Burnet, Edina Realty and Re/Max Results. The Twin Cities will be the company's 23rd major metro market, with the nearest being Chicago.

"When we looked at growing our Midwestern presence beyond Chicago, Minneapolis-St. Paul was the natural next step," said Scott Nagel, Redfin's president of real estate operations. "It's a major urban area with a large, tech-savvy population, solid job growth and strong real estate demand."

Unlike traditional brokerages that can charge a total commission of up to 7 percent of the sales price, Redfin offers sellers a discount by paying agents fixed salaries and bonuses based on customer satisfaction surveys from its clients.

Redfin, founded in 2002 by a software entrepreneur who saw an opportunity to upend the conventional brokerage model, said its approach has evolved over the years. The company said it has saved buyers and sellers more than $175 million in real estate fees nationwide, while providing full listing services, pricing and staging advice, and professional photography. The agent also helps negotiate the transaction and closing. For someone selling a $500,000 home, the savings might total about $9,000. Home buyers, meanwhile, can qualify for rebates from Redfin.

Chris Prescott, a veteran Twin Cities agent and real estate trainer, was recently hired to manage its local operations and recruit new agents. "I am very excited about the opportunity to change the way real estate is done and make it better for buyers, sellers and agents."

Prescott has worked in the industry more than 20 years and was most recently a partner in a local company that created marketing and social media programs for 200-plus local and national real estate agents. "When I heard that Redfin was coming to Minnesota, I knew that I had to be part of their mission to change real estate here in the Twin Cities."

Though the company only went public with its plans on Tuesday, it has been working behind the scenes to establish relationships with several Twin Cities-based "referral partner agents" who work for other brokerages but act as local experts when a buyer or seller — usually from another part of the country — wants to buy or sell a house through Redfin.

One of those agents is Tom Mecky, a local sales agent who knows the challenges such a model faces in this market. Before the recession, he co-founded WebDigs, a Twin Cities-based company inspired by Redfin's tech-focused, discount brokerage model. WebDigs struggled to make significant inroads into the market and became a casualty of the housing crash, Mecky said.

"I think it's great that they're coming into this market — Redfin adds another dynamic to the marketplace," he said. "But Minnesota is very different from other markets in that we have three big brands with 75 percent market share."

Greg Mason, president and CEO of Edina-based Edina Realty Home Services, agrees. He said that healthy competition is never a bad thing for businesses or consumers because it forces the establishment to do better.

"It drives us all to deliver the best customer experience and the most competitive tools," he said. "We welcome a new player into the market."

Still, he believes that to succeed in this market, agents will always gravitate to those brokerages that offer a more compelling financial incentive.

"With a commission-based business model such as ours, agents only get paid if they perform," said Mason. "And top talent isn't attracted or motivated by an income ceiling."

Jim Buchta • 612-673-7376