High Quality
Open the downloaded document, and select print from the file menu (PDF reader required).
The Redfin Advantage: Year Two
A Comprehensive Analysis of Redfin's Second Year of Real Estate E-Commerce
March 24, 2008
Table of Contents
The Redfin Advantage: Year Two ............................................................. 1A Comprehensive Analysis of Redfin's Second Year ................................. 1of Real Estate E-Commerce ................................................................. 1Executive Summary .............................................................................. 3Overview of Redfin ................................................................................ 4Methodology ........................................................................................ 5Economics ........................................................................................... 7Transaction Volume ............................................................................ 7Commission Refund ........................................................................... 7Negotiating Advantage ...................................................................... 8Discussion ........................................................................................ 9Customer Satisfaction ..........................................................................10Demographics .................................................................................... 11Why Redfin (And Why Not) ...................................................................12Appendix A: San Mateo County, California ..............................................14Appendix B: How to Replicate the MLS Reports .......................................16NWMLS ........................................................................................... 16SFARMLS ....................................................................................... 17MLS Listings Inc. .............................................................................. 18
Redfin Direct for BuyersPage 2 of 19
Executive Summary
Across three counties in Seattle and the San Francisco Bay Area, MLS data show that Redfin customers over the past twelve months paid on average 1.015% below homes’ asking price, while customers of other brokerages paid 0.087% below asking price. This difference in negotiating results saved Redfincustomers in these areas nearly 1% of the home’s final price,for an average savings of $5,048. In addition, Redfin refunded each of these customers an average of $10,520 in commissions.Of the 1,263 Redfin customers surveyed by Redfin in all theareas it serves, 95% reported that they would recommend Redfin to a friend.
A year ago, Redfin published the results of our first year as an e-commerceservice for buying homes. This was the first time a national real estatebrokerage had published a comprehensive data-driven approach to determinewhether it got better results for its customers. To measure its negotiatingperformance, Redfin used Multiple Listing Service (MLS) records to comparea listing's asking price to the final price that the buyer paid, segmentingbuyers by brokerage to determine how Redfin buyers fared in negotiationscompared to buyers working with other brokers.We found that, between February 6, 2006 and February 5, 2007, Redfinbuyers on average got a better price on their home than buyers who usedother brokerages. The difference between Redfin's average and the industryaverage was 0.893% of the home price, for an average savings of $4,420.Aside from a correction that affected the outcome by an average of $54 perclient, already incorporated into the numbers above, other brokers were ableto validate this result. Combined with Redfin's average commission refund,Redfin buyers saved an average of $14,080. Redfin buyers were also happywith the service: 95% said they would recommend Redfin to a friend.We just completed our second year as an online real estate brokerage anddid the same analysis, spanning February 6, 2007 to February 5, 2008. Sincewe had served two markets for a full year, we also expanded our analysis toinclude the San Francisco Bay Area. We found that Redfin customers in boththe San Francisco Bay Area and Seattle paid less on average than home-buyers who used other brokerages, and 95% of our customers were satisfiedwith our service. The Redfin Advantage was larger, as a percentage and as anabsolute amount.
•
Across the three counties included in this study, King County,Washington, and San Francisco and Santa Clara counties in California,Redfin buyers paid on average 0.928% less for their home than buyerswho used other brokerages. This negotiating advantage saved ourbuyers an average of $5,048.
Redfin Direct for BuyersPage 3 of 19
Add a Comment