Finds $5,048 Average Negotiating Advantage, $10,520 Average Commission Refund,
95% Customer Satisfaction
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.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070426/SFTH054LOGO)
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 $15,568.
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 of $13,635.
-- The average commission refund was $14,402, 1.727 percent of the final
sales price.
-- 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
$9,354.
-- 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
of $2,490.
-- 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 statistically
significant.
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 price.
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.
About Redfin
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
Cynthia Pang of Redfin Corporation, +1-206-859-2834, cynthia.pang@redfin.com
