Comments on: First Freakonomics, Then the Redfin Advantage, Now An Academic Study Spanning Six Years

By: RealStats

RealStats — Fri, 28 Nov 2008 20:16:01 +0000

Statistics lie… and if you really want to lie use statistics.

Here’s what our San Francisco MLS says: Real statistics, NOT Redfin’s cook the books numbers. Odds less than 10% of getting a home sold at market.

2 years in SF, the real 7×7 San Francisco, not the entire Bay Area show:

10 Condo Sellers experienced in 2 years:
5 Expired or Withdrawn
4 Sold Below Asking
1 Actually sold for more $500 more to be exact.
(After 2/3 rebate returned – Sales netted Redfin a little more than $26k over 2 years.)

7 Home Sellers experienced in 2 years:
3 Expired or Withdrawn
2 Sold Below Asking
2 Sold Above Asking (3% and 5%)
(After 2/3 rebate returned – Sales netted Redfin less than $25k over 2 years.)

* All Refin sales as reported by the SF MLS 1/2006 – 10/2008.

50% failure rate is what real statistics say.
No ‘cook the books’ numbers here.

If I were a venture capitalist with money in Redfin, I’d be a jittery right now wondering if I’ll see any return on my VC $$$. $51,000 earned in SF pre-tax $$ over 2 years.

The market speaks…

BTW – Watched a buyer over pay by $40k, to get a 2/3 commission rebate. Now that’s determination!

By: Danaus Chang

Danaus Chang — Tue, 12 Jun 2007 19:33:23 +0000

Here's the study (just in case some of the readers wanted the details). http://www.faculty.econ.northwestern.edu/faculty/nevo/research/fsbo.pdf

By: Chris C

Chris C — Tue, 12 Jun 2007 17:52:23 +0000

hey hey… wait on the analysis busting… here are some facts I believe to be true. The days on market is a function of the price. If you overprice it, its going to be on the market longer… Who doesn’t want to test the market by going out high and seeing what the market will bear. Think of your last car sale… I’m guessing you had an overinflated opinion of what your car was worth and what you actually pocketed post sale was less money… Same with homes. 2nd part is that if it is priced correctly and in the MLS it will sell with no additional advertising…. lets be realistic here, there is no crazy secret sauce to marketing property anymore. Once its in the MLS, it is replicated to all the places that people shop for homes. (except perhaps in Madison… but then again what is the median price in Madison…)

By: EDYN Real Estate

EDYN Real Estate — Tue, 12 Jun 2007 02:33:26 +0000

Mattb- Huh? Redfin are agents also, you realize this right?

I am from Madison. We are liberal, progressive, stick-it-to-the-man-city. We love that we go against the grain. Robert Redford opened the first Sundance Theatre here in Madison because we are so progressive, and inthe midwest no less.

As far as the article, first, the market was crazy during the time that study was done. Second, a home that costs more will sell for me. If we looked at the numbers of someone who sold a Lexus on their own vs. a Kia dealership, what would be the most expensive car sold? How do you compare the data?
Third, many of the homes on that website are actually sold by a Realtor and many of the FSBO’s sold by a Realtor get added to the MLS data.

By: Max Bell

Max Bell — Fri, 08 Jun 2007 22:15:56 +0000

Off topic, but you guys need to set up an autoresponder for your job application addresses. Got the impression from the ‘How to get a job at Redfin’ posting that you had one set up.

By: Mattb

Mattb — Fri, 08 Jun 2007 15:08:59 +0000

I can’t wait to see how the agents try and beat you up on this one? should make for some entertaining reading. I for one am glad you’re pulling the covers off this industry and exposing agents for the fear mongers they are.

By: Dave Schappell

Dave Schappell — Fri, 08 Jun 2007 15:02:54 +0000

Go, Redfin! Love that you keep discovering stats, encouraging stats, and hammering away at the industry we’d all love to see 100% reworked!

I was discussing Redfin and real estate commissions with a friend the other night, and I said that I was pretty happy with my last home sale because I was able to get it down to a 4.5% commission. He immediately replied and said “that’s what’s so wrong — why are you even TALKING about % commissions?!? Why not negotiate a fixed fee and pay them extra if they exceed an agreed upon sales value?”

I agree with him, and that’s also why I’m a huge fan of what Redfin’s trying to do — you’re going after a market opportunity so enormous, and an ingrained philosophy that’s so off-base (because of the abuse that we’ve all been subjected to thoughout our lives), that the end result has the potential to be world-changing.

Onward!