SEATTLE, March 25 /PRNewswire/ -- Online real estate broker Redfin
Corporation today published an analysis of the last 12 months' public real
estate records in Seattle and the San Francisco Bay Area that shows its
buyers and their Redfin agents negotiated a better price than buyers who
used other brokerages. Redfin's average negotiating advantage was $5,048.
The company also reported a 95 percent customer satisfaction rate for users
of its home-buying service, and an average commission refund of $10,520.
As the real estate downturn has increased pressure on all brokers to
negotiate prices, this year's report documents a larger Redfin advantage
over other brokers. This negotiating advantage is consistent across
different Redfin agents and different counties, and in markets that were
healthy and slumping alike. Redfin first published this report at this time
last year, to measure the result of its first year serving Seattle as an
online real estate brokerage. For the new report, Redfin had been in two
markets for a full year, both of which had a statistically significant
number of Redfin transactions.
"Why do Redfin customers consistently tend to negotiate a better price,
in different markets and different market conditions?" said Redfin CEO
Glenn Kelman. "Last year, we concluded it was because of our agents, whom
we pay bonuses based on customer satisfaction rather than commissions.
Others argued that it was because of our deal-savvy customers, who benefit
from Redfin's transparency to take a more active role in the deal. Today,
we think it's both: great agents paid to focus on customer satisfaction and
more-engaged customers. Statisticians call this selection bias. We call it
a partnership. Customers have more skin in the game, so they are a huge
asset in our efforts to negotiate a good result."
The original report, The Redfin Advantage, was the first data-driven
analysis of broker performance in the industry. To measure its negotiating
performance, Redfin used Multiple Listing Service (MLS) records to compare
a listing's asking price to the final price that the buyer paid, segmenting
buyers by brokerage to determine how Redfin buyers fared in negotiations
compared to buyers working with other brokers. Based on the date of
Redfin's original launch in February 2006, the period under consideration
this year was Feb. 6, 2007 to Feb. 5, 2008.
Because the records and methodology were available to others and the
results were widely discussed, last year's report was validated by other
brokers, with one correction made of .01%, for a difference of $54. Redfin
also estimated its average commission refund over and above the negotiating
savings, for a total savings in this year's report of $15,568. Both reports
are available at http://www.redfin.com/advantage.
95% Customer Satisfaction
Redfin also released results of more than 1,200 customer-satisfaction
surveys from customers who signed an offer with Redfin in 2007, regardless
of whether the offer was successful. Redfin's customer-satisfaction rate
across all the markets it serves was 95 percent. In addition, 72 percent
said Redfin was better or much better than a traditional agent. The company
also found that the demographic profile of Redfin customers has become more
diverse: this year 33 percent of Redfin's potential buyers worked in
technology compared to 48 percent last year.
The Redfin Advantage Saves Buyers More Than $5,000
Redfin buyers paid on average 0.928 percent less than the average
homebuyer over the same time period, saving an average of $5,048. This is
up from $4,420 last year. The total Redfin Advantage, combining the average
negotiating advantage and the average commission refund of 1.934 percent,
was 2.862 percent. The total savings for the average Redfin customer was
San Francisco Sees Highest Negotiating Advantage, Savings
Redfin home buyers in San Francisco County paid on average 100.771
percent of the listing price, while buyers with other brokerages paid
102.406 percent. The 1.635 percent difference represents an average savings
-- The average commission refund was $14,402, 1.727 percent of the final
-- The total Redfin Advantage was 3.362 percent, for an average total
savings of $28,037.
Santa Clara Receives Biggest Commission Refund
The average commission refund for Redfin home buyers in Santa Clara
County was $16,107, 1.858 percent of the final sales price.
-- Redfin Santa Clara buyers paid on average 98.755 percent of the
listing price, while buyers who used other brokerages paid 99.834
percent. The 1.079 percent difference represents an average savings of
-- The total Redfin Advantage was 2.937 percent, for an average total
savings of $25,461.
Seattle Gets Largest Commission Refund, as a Percentage of Sale Price
King County's Redfin home buyers received an average commission refund
of 1.954 percent of the final sales price, representing $9,772.
-- Redfin King County buyers paid on average 98.885 percent of the
listing price, while buyers who used other brokerages paid 99.383
percent. The difference of 0.498 percent represents an average savings
-- The total Redfin Advantage was 2.452 percent, for an average total
savings of $12,262.
About the Study and Customer Survey
For this study, Redfin looked at the two markets in which the company
has offered its home-buying service for at least one full year since Feb.
6, 2007: the San Francisco Bay Area and Seattle area. Redfin compared the
final-sale price to the list price at the time of sale for all condominiums
and residential houses sold between Feb. 6, 2007 and Feb. 5, 2008.
The analyses presented in this report incorporated information from
Redfin's financial records of 537 home-buyer refunds in California and
Washington state, excluding customers who received a complete refund as
part of Redfin's satisfaction guarantee or employee home-buying program.
The report also analyzed data from three MLSs: San Francisco Multiple
Listing Service, MLS Listings Inc. and Northwest Multiple Listing Service.
Redfin reported results from counties where the observed results were
The company did not investigate whether there is a Redfin Advantage for
people who sold homes through Redfin. This is because comparing the
final-sale price to the listing price at time of sale is not a useful
metric since the seller's agent has a major role in setting the listing
The customer survey data is comprised of 1,263 responses from all
markets where Redfin offered service in 2007. Redfin sends out
customer-satisfaction surveys to all customers whom signed an offer,
regardless of whether the offer is successful. The full analysis is
available at http://www.redfin.com/advantage, including instructions on how
to re-create the data set.
Redfin (http://www.redfin.com) is the real estate industry's first
online brokerage, currently available in Greater Boston; the San Francisco
Bay Area; Greater Seattle; Southern California, including Los Angeles,
Orange County and San Diego; and the Washington, D.C area, including
Baltimore. By combining maps, listings, tax records and analytics, Redfin
has become one of the most popular brokerage sites. Customers who use
Redfin.com to buy or sell properties earn a refund of most of the
commission traditionally due their broker, and get full support in
paperwork, offer presentation, negotiations and closing. Redfin has one of
the highest customer satisfaction rates in the industry, and is the only
brokerage with a 100-percent-customer-satisfaction guarantee. To give the
Redfin service a try, visit http://www.redfin.com; to keep track of our
daring exploits via our blog, go to blog.redfin.com.
SOURCE Redfin Corporation