The Redfin Advantage
After a year of enabling people to buy and sell real estate online we had our real estate and math gurus sit down and crunch the numbers. The results and whitepaper are available at, http://redfin.com/advantage:
- Redfin King County customers paid on average 99.329% of the listing price while buyers with other brokerages paid 100.233% of listing price for a difference of .904%, for an average savings of $4,474;
- The total Redfin Advantage, combining the negotiating advantage and an average Washington commission refund of 1.952%, was 2.856%. The total savings for an average Washington customer was $14,134;
- 170 customers in King County bought a home through Redfin, 200 across Washington state;
- 64% of Redfin’s buyers said Redfin was better or much better than a traditional agent;
- 95% would recommend Redfin to a friend; in the most recent survey, the percentage was 97%;
- 48% of Redfin buyers work in high technology;
- 90% are under 45;
- 37% are first-time home-buyers, a number that has doubled over the course of the year;
- 49% come through word of mouth; less than 2% through ads;
- 57% report that a seller’s agent offered to represent both buyer and seller;
- 42% describe touring listings as their most important concern, despite a new free home-tour program from Redfin.
Of course Glenn has more on the blog, A Year’s Numbers Come in From the MLS: Redfin Agents Negotiate Better and the Seattle Times ran an article about us this weekend, Redfin revolution: In competitive real-estate industry, Redfin model is working and Redfin by the numbers. The LA Times also mentioned this weekend, Attention discount shoppers: Find a home online and save.
I suspect our agents are going to be busy this week!
Posts and articles about this elsewhere:
- Freakonomics, More data on real estate agents
- Future of Real Estate Marketing, Redfin Agents More Effective?
- Inman, Redfin claims low-cost model is working
- SF Curbed, Redfin: Anno Numero Uno
- Purple Vision, the real estate process under attack
- Marlow Harris, Has Redfin jumped the shark?
- Real Estate Technology Blog, Who’s the best negotiator? and can you base it on Real Estate Data?
- Transparent RE, Redfin Validates its Negotiation Capabilities with MLS Statistics
- Greg Swann,Thinking skeptically to rain on Redfin.com’s parade . . . Go team!
- John Cook, Redfin issues detailed report
February 26th, 2007 at 8:34 pm
That data is lame, all the redfin listed houses I see are available forever, so it is obvious that they are going to sell lower than the asking price.
What is the average time on the market for a redfin listed home?
I would guess > 60 days
February 26th, 2007 at 10:13 pm
The data referenced there is when Redfin is acting as the buyers agent and not the sellers agent. I’ll have to look into the average days on market number when we are the selling agent.
February 26th, 2007 at 10:47 pm
“I suspect our agents are going to be busy this week!”
Do you mean blogging, or working with clients?
I’ll give you this, Redfin is good at creating buzzz
February 26th, 2007 at 11:55 pm
Thanks, we do what we can with limited resources.
…I meant that our real estate operations team would be busy working with clients answering questions, showing homes, negotiating, closing deals, etc.
It’s really only Rob, Glenn, Eric, Cynthia and I that are the obsessive blog followers. Of those people Rob’s the only agent.
February 27th, 2007 at 12:16 am
Thinking skeptically to rain on Redfin.com’s parade . . ….
I’m not a Jesuit, but I play one on BloodhoundBlog. The real truth is, I’m a roll-your-own Jesuit, more auto-didact than anything. I didn’t have Brian Brady’s inestimable advantage of having had the gift of reason literally poun…
February 27th, 2007 at 12:21 am
Matt:
I’d be intrigued about the garden variety Redfin agent’s negotiating expertise in a rising market, like Manhattan. Will your agent’s’ careful counsel work in that type of market also? Dave’s comment suggests that Redfin agents are ignorant to pricing expertise.
February 27th, 2007 at 12:26 am
Seattle has been a rising market for as long as Redfin has been doing business here and as we’ve shown our negotiating expertise works.
I don’t really get Dave’s comment since the paper is focused on our buying agent abilities, not selling so I don’t see how it suggests are agents are ignorant.
February 27th, 2007 at 12:33 am
>Seattle has been a rising market for as long as Redfin has been doing business here
Thanks, Matt. You answered my question perfectly. I’ll be looking forward to your California results
February 27th, 2007 at 4:08 pm
“In the same way that independent agents are innovating online, I can imagine a time in the not-so-distant future when online brokerage firms take competitive advantage of their user-produced content by sharing it with the people who created it. I can also imagine that there would be a fee for this service.”
February 27th, 2007 at 4:37 pm
I don’t think we would charge a fee for providing users access to user-produced content. Much like we don’t charge a fee today for providing users access to data which is very expensive for us to acquire (parcel outlines.)
It’s our goal to build the best damn MLS search site on the Internet. Charging for access to certain parts of the site/data would hinder our success in doing that.
February 27th, 2007 at 5:39 pm
Hi Matt- Thanks for the reply. First off, I don’t mean to be critical, I think you guys are doing a great job and I look forward to your success. Rather, I’m digging at the user content that all this technology affords—the bits that companies like Redfin and ZipRealty use to runt their business. The Redfin Advantage paper is a good start. While most of the reaction to the Advantage paper is challenging your numbers, I’m more interested in the ways that user-produced content has yet to be leveraged.
Consider realtor blogs (I’m thinking individual agents rather than agency blogs). The kind of information that is being published would historically only be available through direct contact with the agent—and with the potential for representation. Technology and competitive pressures would seem to be two prime motivators of this recent (past year or two) openness.
The difference between http://realestate.mattgoyer.com and urbnlivn.com is a good example of what I’m talking about. Whereas this blog is ultimately part of the Redfin service, urbnlivn is part of a marketplace for openness. Soon a young startup will emerge using the Redfin model (assuming that Redfin succeeds in the big game). However, in order to be competitive this new startup will have to offer a competitive advantage. That advantage, I predict, will be in the form of information that their competitors would prefer not to share.
Once again, I think Redfin is doing a great job. My motive here is to reflect on the possibilities. And frankly, the fee is not an issue. I’d be willing to pay–-through exclusive contract or a different fee structure–for the opportunity to level the playing field a bit more. Check out my blog post for more background.
Cheers,
Cosmo Seattle
December 25th, 2007 at 12:46 pm
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