Sun
A public apology
Posted by Marlow Harris under Real Estate
[3] Comments
I was scolded by Glenn Kelman in the comments of my last post for attacking Redfin’s integrity, and I wanted to apologize if I gave the impression that Redfin’s calculations were incorrect. If you read the last post carefully, I did concede that their calculations were probably accurate, but I did not agree with their assumptions based on the calculations and I offered conflicting data from the NWMLS contradicting their numbers.
They claimed that Redfin King County customers paid on average 99.329% of the listing price, but now, Kevin Boer found a miscalculation, so they actually were incorrect, however slightly. To their credit, Redfin was quick to issue a public apology and explain their methodology. In the meantime, the NWMLS has pulled some charts from their 2006 analysis, so now the accuracy of the NWMLS statistics are called into question, which could again impact the year-end stats.
It appears that Redfin is comparing their 126 residential sales to the 27,216 residential transactions that occurred in the same time frame. That being a ½ of 1% compared to the whole, it may be too small to have any statistical weight.
As others have pointed out, if you look at all the offices that had a sale during the time frame that Redfin is using you will find that 951 offices had a selling side transaction. If you ordered those 951 offices by list price/sale price ratio you would see that Redfin falls in at 351 from the top. That means that approximately 1/3 of all companies that sold properties during that time frame had a better list price to sale price ratio for their buyers then Redfin did.
Further investigation shows that 50% of Redfin’s sales sold for 100% of list price or above
So, though Redfin’s basic figures are correct, what they call their “Redfin Advantage” is not quite what it seems.
There may be more interesting statistics available if the NWMLS releases new or updated numbers for 2006.
Greg Tracy has more about the “Redfin Advantage” with some interesting questions and Greg Swann has his own doubts, questions, answers and postulatons.
So, again, sorry if there was any misunderstanding. But I’ll let the statistics stand for themselves.
Tell me what you want me to prove and I’ll find a data set and a methodology that proves it.
It is very interesting to go through Redfin’s website and see all of the smoke and mirrors, and the outright misrepresentations. And the recent Seattle Times article on them was an unfortunate regurgitation of their press releases. Just a few examples from that article and the Redfin website, and comparing it to reality:
1) Redfin fee for listing is “$2,000″. The author apparently fell for that soundbite misdirection too, since it is actually 3% + $2,000, and they hide that fact very well on their website until someone gets down to the nitty gritty.
2) They claim to do a CMA yet acknowledge that they won’t even go to the listed home. That’s not a professional CMA, that’s effectively a mindless broad Zillow Zestimate.
3) They specifically state that traditional agents do not do Internet Marketing. That is so obviously false that it doesn’t need further explanation.
4) Open Houses: on one side of their mouth they specifically state “Yes” that they do them, and then they show that they actually just list it on their website and they do not actually do them. As mentioned, they also do not show the home to prospective buyers.
5) Actual cost is $3,000, not $2,000, if payment is made at closing instead of upfront, though this is again buried in the details (and similarly not mentioned in the article, for instance).
I have no problem at all with honorable discount brokers such as ZipRealty that use the MLS within its expectations and agreements, but I do have a problem with Redfin’s unilateral decisions to make listing agents do their work for them, yet they get the accolades while sitting in their paper processing plant abusing the time of hard working agents elsewhere.
No need to apologize to Glenn, Marlow.
“That means that approximately 1/3 of all companies that sold properties during that time frame had a better list price to sale price ratio for their buyers then Redfin did.”
So again, fledgling Redfin beat out 2/3 of all companies on their list/sale price ratio. And then they gave thier customers a 2% rebate on top of that. But this being presented as a negative for Redfin. Thats doubleplusgood interpretation.