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 Â½ 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.
So, again, sorry if there was any misunderstanding. But I’ll let the statistics stand for themselves.