Archive for April, 2008
April 30, 2008
One Sunday morning last fall, my great friend Conan, a debonair former nose-tackle who often advises me to get in touch with my feminine side, called to ask about using our site. It took half an hour to convince someone who knows I would never lie to him in a million years to run a search on Redfin. And almost all that time was spent on one simple question: “do you have all the homes for sale?”
“Great question,” I said as real estate inventory has somehow become one of my favorite subjects, second only to “how popular I was in high school,” gossip, my many grudges, and what different drugs are like. “We have all the broker-listed homes for sale.”
“And that’s ALL the homes for sale?”
“Well, technically there’s always a few sold by the owner, without a broker. It’s called FSBO.”
“Yeah?” Conan said. “You don’t have those?”
“No.”
“Is that it?”
“And there’s also stuff in foreclosure, that’s been repo’d by the bank, before the bank has hired a broker to put it in the MLS.”
“Yeah?” Conan said. “Is THAT it?”
“And there’s always the possibility that you could sell your place to your cousin, without ever putting it on the market. We wouldn’t have that either.”
“So basically you’re saying you kind of suck,” Conan said. We had now come to very familiar ground in our 20-year friendship.
“Yeah,” I said. “But everyone else sucks too. Many suck worse.”
In the background, I could hear Conan typing in his first search.
A few minutes after our call ended, the U.S. real estate market collapsed, putting more inventory in a gray market of foreclosures. And we soon began working with I-don’t-have-an-office-number-just-a-cell-phone middle-men, data-scrapers and offshore aggregators to get our hands on every home for sale we could find, minus outdated garbage, copyrighted information, stuff that wasn’t really for sale, and teasers where consumers would have have to pay someone else for the address.
This culmination of this effort is the latest version of our site, live since 6 a.m. this morning, which has bank-owned foreclosures and for-sale-by-owner listings alongside all the listings from the Multiple Listing Service (MLS). It’s a little controversial, and lots of fun to play around with and of course we think it’s beautiful too.
Not that even now the new version of Redfin has all the homes for sale – we only had enough money to get data on foreclosures once the bank owns them, but not before, when they’re up for auction. For the markets we serve, we should have more real estate listings than anyone else. And the foreclosure data we do have is unique, because we give the foreclosures’ actual addresses and bank contact information, which other sites require you to pay for. Redfin is the only site we know of that aggregates bank-owned properties for free.
We’ve hit up more than 50 for-sale-by-owner sites for their inventory, with only two major gaps: Zillow and craigslist. Zillow is, we hope, coming soon. Someone offered us a craigslist feed, no questions asked. But when we emailed craigslist about it, Internet god Craig Newmark confirmed this was a violation of the terms of service. What was incredible about his reply was that it took exactly three minutes and it came from The Man Himself (Craig Newmark rocks).
On other fronts, we’ve fixed up our URLs for Google, and juiced up our MLS integration again, in both Boston and Southern California, so that we can get comprehensive inventory updates every 15 minutes (our only laggard MLS integration is now in Ventura County). While we were at it, we grabbed more open-house data, let people search for open houses, and upgraded our email notifications to tell people when their favorite listings change prices or sell. Next up, the data team is hoping to get photos of very-recent past sales.
But for now we’ve also made it more obvious how to search for data on past sales, a sweet feature that Redfin has always had but which no one ever knew about because it used to be hard to find. No longer! For the markets we serve, you can easily see what any home sold for between last week and 20 years ago (the lag is often more than a week, depending on how long it takes the transaction to record).
What does this all add up to? As our press release explains, the new version takes us deeper and deeper into Freakish Depth, which is our strategy to build the best real estate site by getting the best data. Because we’re a broker in the thick of doing deals, we have access to data as it’s being recorded. And unlike lead-generation sites, we want people to use Redfin to go all the way, getting everything they need to buy the home without having to talk to anyone or pay anything.
The strategy started in January with super-low-latency-MLS integration, bird’s-eye views, two new estimates, Excel integration, neighborhood boundaries and comparable listings. Then we got deeper with listing statistics, which analyzes where the traffic for a listing is coming from, and how inventory levels in the neighborhood have changed.
A gratifying subplot of all this is that the MLSs with whom we have sometimes jousted worked with us on this release. One MLS guided us on how we could show different types of inventory without violating the rules. And another provided the square footage data we’d been asking for. It’s still a delicate balance, sharing data among competitors, and working within a common set of rules to protect the different brokers’ clients.
Which makes us all the more careful not to screw things up. For years, we’ve wanted to add inventory to Redfin’s site, but have hesitated out of respect for the brokers who share their listing data with Redfin, many of whom have legitimate concerns about properties for sale directly from banks or owners. In the end what swayed us was:
a. the consumers who want above all else to see all the homes for sale,
b. the market, where in places like San Diego 40% of the sales have been foreclosure-related,
c. guidance from some of the MLSs we work with.
Hopefully, we’ve found a way to show consumers more information without causing any harm to other MLS members. We’re going to roll out flat-fee services in the next few weeks to work with buyers on for-sale-by-owner and foreclosure properties, but we won’t help anyone go around a listing broker if one has been hired.
Many thanks to all the engineers, product managers and customers – a San Francisco focus group talked us into buying the addresses for foreclosures — who came together to create this site. We worked awfully hard on it, some of us through occasionally daunting circumstances, and are anxious to see how you like it. We hope there aren’t too many bugs. And please, spread the word!
*PS: we may add auction properties in the future but in that case we would have to require users to pay an extra fee to see the address.
April 28, 2008
Most of us spend our lives trying to forget the world we had imagined for ourselves as children. But occasionally a single act is so transcendently shameless that it makes us feel happy and human again. For example: an indignant would-be competitor in Arizona just asked an online real estate forum for help getting his money back on an effort to clone Redfin.
My name is Ron Park and I have been working with a service provider, TechnoUSA, from Houston/India to create my real estate mash-up site. My project on getacoder.com was for a Redfin.com clone, in all functionalities and appearance. They were supposed to finish the site by January 25th, 2008 but yesterday, 4/24/08, I told them I’m through with them. The site is nowhere near being a Redfin clone, and they’ve just been problematic from the start. I have given this company a total of $10,500; and the amount of money I can possibly retrieve back with these credit card disputes is $8,500… the agreement was for a Redfin clone. [the emphasis is ours]
It is one thing to copy another site, another to copy it letter for letter, yet another to publicize matter-of-factly your efforts to clone it, and still yet another to feel wronged for what you have done.
To process Mr. Park’s refund, the credit card company is asking for “a letter from another reputable merchant or service provider supporting your claim.” So far, no one has come forward. In fact, we were gratified to see other folks leap to our defense. One respondent said you could never build Redfin.com for $10,000; the true cost is apparently closer to $40,000 (which is what one of our engineers costs over three months).
The clone site copies Redfin right down to the Sweet Digs link in the footer and the message we display while fetching listings. Reviewing the site, it’s hard not to wonder if the developers had ever heard of “search and replace”: many Tareu.com pages still encourage visitors to work with Redfin. But it was the one original element that turned out to be our favorite touch: “Copyright 2008 TAREU.COM.”
What’s amazing is that these guys aren’t even the first Redfin clones. That honor belongs to Allcheckdeals, an online brokerage in India run by naukri.com. Allcheckdeals copied Redfin right down to our graphics, albeit with a Groucho-Marx style disguise:
Here, courtesy of Sellsius blog, are the graphics Redfin was running at the time:
Many thanks to Morgan Carey, CEO of Real Estate Webmasters, for bringing this to our attention. Mr. Park participated in the Real Estate Webmasters’ forums but is not a Real Estate Webmasters customer.
April 25, 2008
On Monday, we looked at what makes a property hot in Boston, so we’re closing the week with a look at a market on the other coast: Los Angeles. The big question: will we see the same trends coast to coast?
We found there really are (hot) pockets of sunshine in the Los Angeles housing market, and this is not according to my trusty Magic 8-ball. We analyzed 2,364 real estate records for single-family listings in Los Angeles County, Calif. that entered the market between Oct. 1, 2007 and March 31, 2008, and sold.
We looked at the Los Angeles real estate market next because, well, you asked.
Here’s a rundown of the neighborhoods with the most listings that sold within seven days on the market; the numbers in parentheses calculate the hot properties as a percentage of the total houses that sold in those areas:
- Beverly Center, Miracle Mile: 12 (26%)
- Brentwood: 12 (27%)
- Los Angeles, Southwest: 10 (12%)
- Sunset Strip, Hollywood Hills West: 10 (11%)
- Westchester: 9 (17%)
For the areas where there were a significant number of hot properties, we compared the listings that sold in seven days or less with everything else that sold in those areas. Our goal was to develop a clear portrait of the hot property, so our buyers would know when they really had to hop to it. And here’s what we found:
- Beds and baths were the same for both types: there was no pattern in terms of bedrooms and bathrooms. Hot and “not” (not properties took more than eight days to sell) properties both had three bedrooms and two bathrooms. The coasts agree!
- Hot properties are bigger, slightly: The median square footage for hot properties was only slightly larger (.2%) than not properties, but the median lot size was 3% larger. Clearly, the LA sprawl doesn’t mean buyers get more space. Boston homebuyers got 13% larger lots with pretty similar sized homes – 1,669 square feet in Boston vs. 1,735 square feet in LA.
- Hot properties are newer: the median year built (1948) for hot properties was four years earlier than for the nots. Bostonians bought slightly older homes, but maybe that’s because most east coast homes are older?
Hot properties are expensive: it turns out that hot properties weren’t exactly priced to move. In fact, the median list price of hot properties ($1.1 million) was 16% higher. And the high price isn’t just because the houses are bigger: the median dollars per square foot was nearly 16% higher for hot properties ($633) as compared to the nots ($548). The median list price of Boston’s hot properties was $459,000 … you can get two for the price of one in Boston.
There wasn’t a huge difference in the days on market for the hot areas (43) and the entire Los Angeles market (45), but, on average, the hot properties sold in almost five days (Boston hot properties sold in about 4.5 days).
The bottom line is that hot properties are slightly bigger, newer and more expensive. There are distinct areas and house types where properties still sell fast, which continues to support our reason for doing this study in the first place — the real estate market isn’t really clinically depressed; it’s more of a split personality, with the good stuff selling fast, and the rest languishing.
Did you just buy a home in one of these neighborhoods? What was your experience?
Bonus link: The Wall Street Journal reports on the heartwarming side of the housing bust. [Warning: shameless Redfin plug] Read about a couple who escaped their 100-mile, LA-freeway commute.
April 24, 2008
Redfin reported on the Redfin Advantage last month, analyzing 65,242 records from the Multiple Listing Services that brokers use to share listing data in the Bay Area and Seattle. Our goal was to understand whether Redfin customers fared as well as customers of traditional brokers in their negotiations, so we compared the price our customers paid to the list price, and then compared what customers of other brokers paid too.
And we found that our customers fared better than the average, though we were careful this time to acknowledge that this may have been because our customers were more engaged in the negotiations, or because they were focused on properties more likely to sell at a discount to the list price. We reported that in San Francisco County, our customers’ negotiating advantage compared to the average was 1.635%; in Santa Clara County it was 1.079%; in Seattle it was .498%. The average difference was 1.07%.
But most of our deals came in Seattle where the difference was smaller. In table 3 of the white paper report, we calculated the weighted average of the negotiating advantage. We measured our buyers’ average final price as a percentage of list price, weighting the average according to the number of deals we had completed. We also measured the average final price as a percentage of the list price paid by other brokers’ customers, weighting the average according to the number of deals completed by those brokers. As the table in the report makes plain, we then subtracted one number from the other for a weighted average.
On a call earlier this week, a Windermere broker asked if we should calculate the weighted average differently. He was right to ask. The accurate way to calculate the weighted average is to calculate the difference between Redfin and other brokers, and weight it based on the number of deals Redfin completed in each market. We have adopted this approach, and are re-publishing the report, and changing our site. The new weighted average is lower than it was: .603%. The average for each market was always correct and remains the same.
Our goal was not to overstate the Redfin Advantage; we published the data for others to perform their own calculations, and we are issuing this correction though the broker had already said his question would remain private. We just notified every blogger we briefed or emailed about the Redfin Advantage, explaining the error.
Those of us who are computer scientists, statisticians and brokers deal in numbers every day, and we should know better. We checked and re-checked all the numbers for each market, but our statistics team did not validate the weighted average. The marketing team that prepared the report calculated and re-calculated the weighted average, but just did so by calculating two numbers — one for Redfin, one for the rest of the market — and then subtracting the two.
The Redfin Advantage is still an advantage, and it’s the same advantage that we reported for each market, but the weighted average was miscalculated. We are sorry for our mistake.
I know it has been a ragged week at Redfin. We hold ourselves to a higher standard than this, and apologize to everyone to whom we gave the wrong weighted average. Thanks to the Windermere broker for bringing this to our attention.
April 22, 2008
For no real reason, a San Diego Sweet Digs blogger attacked real estate broker Kris Berg today. The contract blogger, a usually kind person who deeply regrets the post, no longer works for Redfin because she violated the first rule of our culture, which is that everyone is respected. The charter of Sweet Digs is to write about local real estate, and to leave the shooting-yourself-in-the-foot-stuff to me.
The post makes me physically ill, not only because it seemed mean-spirited but because we know Kris Berg to be a wonderful person, a total pro and a darn good blogger. Worst of all, it deepens a brainless, destructive division between Redfin and our peers that has caused me great — this is the right word — anguish. We have already commented directly on the post, and Kris has already been gracious enough to accept our apology. So the rest of this post is an apology to everyone else in real estate, many of whom have reacted to more than just what we said about Kris last night. And because this is so hard to write, it’s also a list of small but important things we can’t apologize for too.
We all know that Redfin’s business model is different than yours: we try to get customers via our search site, we pay our agents salaries and customer-satisfaction bonuses, we want to put the escrow process online to avoid talking so much to our customers, and we refund part of our commission. This makes us freaks perhaps, or even fools if you like, but not an enemy.
Just because our model is different doesn’t mean that we think it’s universally better than the commission-based model. You have no idea how many times a day, every day, all night, we worry that we can’t make it work, usually right before we’re filled with euphoria at our prospects. We long ago imagined the party you’ll throw on our grave if we fail. But the reason we can’t give up on Redfin is that it’s what we would want for ourselves. Clearly, most consumers still prefer the traditional model. But some consumers have chosen our model too.
So that’s what we can’t apologize for: for who we are, for tinkering to make our model better (especially around tours, where it has been broken), for believing we can make it work. But we are sorry for our tone — I am sorry for my tone. What is most important to us is that Redfin’s (often ineffective) calls for reform stop ticking you off. Like you — and unlike the Zillows and Trulias whom you love (and whom we sometimes find ourselves admiring too) — we are real estate agents. We have a vested interest in making real estate better. We share our data via the MLS. We play by its rules. And we work together buying and selling homes.
The change we want is change everybody wants: that consumers can choose the services they pay for without fearing retribution, that they can access property information on their own. That’s it.
I don’t know how we’ve screwed things up so badly that our complaints about vandalized yard-signs or blocked offers have ticked you off. We should all denounce the one-in-a-zillion nut jobs who pull these stunts, because they make us all look bad, and it only takes one or two to terrify an entire market (#1 reason Redfin.com visitors don’t buy through us, 2 years straight: “fear of discrimination”).
It took us a while to realize how stupid it is for us to talk to the press about these incidents — nobody is ever punished, in even the slightest way, even when caught red-handed, and nobody else in real estate is outraged — but we’ll try harder to work out future incidents in private.
And, today’s blog post aside, there is reason to believe we can patch things up with everyone else. Last week, I finally told Greg Swann — he was so nice and gracious — that I was sorry for picking fights with him. Last month, an MLS decided to liberalize its data-sharing rules. Yesterday, a broker phoned to point out — privately, kindly — a possible error in one of our marketing claims (which we will correct if it’s wrong). And Kris Berg took my call today when 9 out of 10 people would have hung up in my face. Every week or so, I get a thank-you note from an agent about a deal we worked on together. How wonderful, how unnecessary and necessary, is that?
So maybe there’s hope that we can work things out. This isn’t a promise to be boring. But at least we can be civil. We weren’t today. We are sorry for the post about Kris Berg. We wanted to say to everyone else in real estate talking about this post that we hope there can be peace between us.
April 21, 2008
Redfin’s Chris Glew — Redfin Advantage essayist, Boston hockey fan and student of ancient Mexican turds — stopped another fur-flying meeting in its tracks last week with an arresting observation. He said that even in this slow real estate market, he could tell just by looking when a new listing was going to sell in a couple of days. “I see it all the time,” he said, to a now-quiet room.
Whereupon further fur flew. Someone said that the only common characteristic would be a fire-sale price. Others talked about school districts, sex offenders, safe neighborhoods. And then someone quoted the founder of modern surgery, a corpse-stealing pragmatist who challenged the French mania for grand medical theories: “why think when you can experiment?”
Why indeed!
So the Real Estate Scientist leapt into his white lab coat and began sorting through 9,212 real estate records: single-family listings in Suffolk County, Massachusetts that were sold between October 1, 2007 and March 31, 2008.
Why the Boston real estate market? Because our ex-hippie, oils-painting, die-for-the-customer, hired-all-his-cousins market manager — Alex Coon — laid it on the line, betting that such listings exist, even in the dead of the miserable Boston winter, and that most of them would be in Newton. He was right!
Here’s a rundown of the towns with the most listings that sold within seven days on the market; the numbers in parentheses calculate the hot properties as a percentage of the total houses that sold in those areas:
- Arlington: 18 (23%)
- Boston: 21 (7%)
- Brockton: 16 (8%)
- Haverhill: 11 (12%)
- Needham: 14 (20%)
- Newton: 27 (16%)
- Wellesley: 12 (14%)
But it’s not just the location of the listings. Even in these markets, the average days on market was 85 days. The average for the entire Boston area was 105. This suggests that at least one reason hot properties were hot was the property itself.
So for the areas where there were a significant number of hot properties, we compared the listings that sold in less than seven days with everything else in those areas. Our goal was to develop a clear portrait of the hot property, so our buyers would know when they really had to hop to it. And here’s what we found:
- Beds and baths were the same for both types: there was no pattern in terms of bedrooms and bathrooms. Hot properties and pariguayos (party-watchers, aka slow-to-sell properties) both had 3 bedrooms and 2 bathrooms.
- Hot properties are bigger: The median square footage for hot properties was 7% larger than the pariguayos. The median lot size was more than 13% larger. Maybe that seems obvious to you — bigger is often better — but when we began the analysis, we had imagined hot properties as cute little cottages.
- Hot properties are older: the median year built (1949) for hot properties was 29% earlier than for the pariguayos.
- Hot properties are expensive: it turns out that hot properties weren’t exactly priced to move. In fact, the median list price of hot properties ($459,000) was 78% higher than the pariguayos. And the high price isn’t just because the houses are bigger: the median dollars per square foot was nearly 40% higher for hot properties ($275) as compared to pariguayos.
The bottom line is that hot properties are bigger, older, and more expensive. That there are distinct areas and house types where properties still sell fast supports Chris’s notion that the real estate market isn’t really clinically depressed; it’s more of a split personality, with the good stuff selling fast, and the rest languishing.
You could take that theory a step further, and say one reason the market is bad is because the inventory is low-quality, first because some of the least appealing properties are being forced onto the market by foreclosure and second because lots of unappealing inventory is hanging out from the year before when the rate of new listings was higher. We’ll have to test that theory out on another day.
Bostonians, what do you think of these findings? Real estate watchers, what other markets would you like to see us analyze? Many thanks to Redfin’s Rick West for doing all the hard analytical work.
Bonus Link, from the Original Friend of Redfin: Washington Redskins cheerleaders stun massive Indian cricket crowd.
Also, since cycling season is about to begin, we are releasing some new footage of the Redfin cycling team on a training ride:
Photo: Shutterscript on Flickr.
April 17, 2008
Like the bad-news boyfriend you can’t cut loose of, Redfin has gotten mixed up with a lot of short sales lately, where a homeowner is selling a house for less than he owes on his mortgage. At our peak last month, half of our Orange County clients were involved in short sales.
Plenty of buyers who get involved in a short sale still aren’t really sure what a short sale is. And plenty of brokers don’t quite know what to do with them, because they can be so time-consuming and complex, and have such a dim probability of success. As the Sacramento Bee reports, the ten biggest lenders in California approved only 872 short sales in January 2008; short sales in that month represented only 5% of “lifeline solutions” for people in a mortgage jam. The CEO of a short-sale tracking service described the prospect of some short sales’ closing as “a scenario that is absolutely impossible.”
Not surprisingly, many brokers just tell clients that short-sale listings aren’t really for sale at all. Which isn’t far from the truth: as The Wall Street Journal reported this morning, of the 65 deals Redfin put together last quarter, only three seem likely to close (though we just had another come through last night, making it four).
Often the whole cycle is a big waste of everyone’s time, which is one reason price discovery has been fitful and real estate markets take so long to recover: rather than sorting through what can be sold and for how much, predatory buyers chase after illusory deals in a Kafkaesque process of slyness, mirage and bureaucratic apathy. The whole destructive cycle brings to mind what an Elizabethan poet once wrote about the expulsion of foreigners from England:
By this pattern
Not one of you should have lived an aged man,
For other ruffians as their fancies wrought
With selfsame hand, self reasons, and self right
Would shark on you, and men like ravenous fishes
Would feed on one another.
(The name Redfin, and our perilous existence in the real estate market, often make me think of this poem.)
Because buyers so often pursue short sales to their regret, the question of our short-sale policy has occasioned the usual agonizing debate at Redfin over what we owe consumers who want to take a run at a short sale, and how we choose with whom we can profitably work.
In the end we haggled out a short-sale policy that focuses our energies on the deals that have at least a modest chance of closing. Having worked up a policy, we thought we’d compare notes with other brokerages about whether we made the right choices, and see what consumers think too. But first the basics, which you can skip if you’re a short-sale hotshot…
OK, First Off, What is a Short Sale?
My favorite explanation of a short sale from the broker’s perspective is on the NAR site, and there’s a pretty decent explanation for consumers on About.com, which is better for once than Wikipedia’s take.
A short-sale listing is one where the seller still owns the property, but owes more money on his mortgage than he’ll get from selling the property. This means the bank has to agree to the final sale price. So if a seller still owes $400,000 on a house he’s selling for $375,000, he hopes the bank will eat the $25,000 loss, and both the bank and the seller can walk away from the house and its loan. If more than one bank holds a mortgage on the property, each bank has to approve the sale.
Short sale listings are different than foreclosures or bank-owned properties. If the home-owner can’t sell the home through a short sale, the bank moves in for a foreclosure to try to sell the home directly, often in an auction. If the auction fails to turn up a buyer willing to pay at least what the bank was owed on the home, the home becomes Real Estate Owned (REO), where the owner is the bank. The bank then typically sells the property through a real estate agent; these listings usually re-surface in the MLS. Redfin supports buyers pursuing some types of short-sale listings but not foreclosures. Redfin supports buyers of REO listings except in the Washington, D.C. area.
How Do You Know If a Listing is a Short Sale?
The average home-buyer may not realize that the property he’s trying to buy is a short sale. Most listing agents identify a listing as a short sale in the agent-only remarks of the Multiple Listing Service (MLS), which brokers use to share listing information. MLS rules nearly always prevent Redfin and others from publishing this information to the web, in part because it embarrasses the seller, in part because nobody really was clamoring for that information until recently. (At some point, we might build a short-sales detectomatic into Redfin, where we warn the buyer that the seller is likely underwater based on the date and amount of the last sale. But there would be some false positives.)
For now, if you as a consumer see a short-sale listing while on tour with Redfin, we’ll tell you about it on the spot. Otherwise, you can ask by emailing the property address to askanagent (at) redfin (dot) com, or we can also let you know once we begin preparing your offer.
But Wait, Can You Get a Good Deal On a Short Sale?
You can, up to a point. The seller just wants to get out of the house, so he’ll be happy to take any price the bank will approve. Such artificially low prices prompted Redfin developer Michael Smedberg to observe in a meeting yesterday that short sales not only lower prices but falsely lower prices: banks will reject deals priced lower than what they could sell the property for themselves in a foreclosure. The bank has even less motivation to accept a short sale if the seller had to buy mortgage insurance when first getting the loan, which now encourages the bank to wait for foreclosure.
How Long Does It Take?
Short sales can take several months, depending on how long the bank needs to evaluate your offer. Right now the banks are pretty backed up, so we’ve seen delays stretch out to four months in places like Orange County. What makes this worse is that most banks have been selling their loans to Wall Street investors (how we got into this mess in the first place), who may now become involved in the short-sale approval process.
While the bank and its investors mull over your short-sale offer, other buyers can submit a competing offer on that property. If the bank approves your offer, it will usually ask you to buy the property as-is, refusing to allocate any money to repair problems discovered by the inspection. You won’t discover the problems until pretty late in the process, because nobody wants to pay for an inspection until the bank green-lights a possible deal. A lot of times, the seller stops taking care of the property as it spirals toward foreclosure.
While Redfin normally works on only one offer at a time, short sales take so long that we let buyers take a run at other types of listings while the buyer waits for word from the bank. You can usually abandon a short-sale offer at any time.
What Types of Short Sales Does Redfin Support?
In many cases, Redfin will not be able to represent clients in a short sale. We’ve had plenty of clients, frustrated after months of waiting for bank approval, abandon their offers. For a short sale to have a realistic possibility of bank approval, the seller must meet several criteria, which we now insist on; this is the list that we’d like some feedback from other brokers about:
- Only one bank has to approve the sale: in other words, the seller has only one mortgage on the property. Many sellers in default will owe money on multiple mortgages to multiple banks, each of which has to approve the deal. In the line to be paid back first, one bank will be ahead of the other. In such cases, the second bank is likely to reject the deal because it’s the most likely to lose money.
- The bank has confirmed receipt of the preliminary paperwork: the seller has stopped paying his mortgage, received a notice of default and sent the bank’s loss mitigation department the following:
- a hardship letter and financial statements documenting the seller’s inability to pay his mortgage;
- a preliminary net sheet showing what the proceeds of a sale could be after taxes and fees; and
- a comparative market analysis (CMA) or an appraisal that establishes the home is being sold for a reasonable price.
- There are no liens on the property: the seller doesn’t owe anybody else the money he’ll get from selling his property. If the seller has other debts, those debtors may put a lien on the property which positions them first in line to get money from the sale of the property. In these cases, the bank will almost never allow a sale to go through. The listing agent and the seller may be able to arrange to pay these debts in other ways, but not using proceeds from the transaction.
- The listing agent has experience or training in short sales: the buyer’s ability to get the property will depend in large part on whether the listing agent can facilitate negotiations between the seller and the bank’s loss mitigation department. If the listing agent has no experience closing a short sale or training in this complicated process, the deal will likely take much longer and be much more likely to end unhappily. If the listing agent has neither the experience nor the training, Redfin will only work on the transaction if a short-sale service is involved to support the listing agent.
Anyway, those are our criteria. But other brokers must have thought about which short sales they’ll support and which they won’t, when representing buyer or seller; please let us know what you think. Of course, we’d love to hear from consumers too.
Bonus video, courtesy of a Friend of Redfin:
Photo credit: Timokuilder on Flickr.
April 7, 2008
Evan, one of several old roommates who still put me up on visits to San Francisco, is perhaps the most dignified person I know. He has the deep, resonant voice of a Jewish Darth Vader, and the oddly punctuated speech of Christopher Walken. He rarely blinks and when he does, it seems like an important decision. His smile is friendly but also somehow knowing.
So when I spied Evan scurrying across a rainy SOMA street last month, it was almost a relief. “Look at Evan,” I said to another roommate. “What’s he doing out in the rain?”
“Going to another open house,” the roommate replied. “Didn’t you hear? Evan’s a die-hard Redfin fanatic.” Then the next sentence made my heart stop. “He’s always trying to get into listings.”
That Evan might have to worry about how to tour a house he wanted to buy worried me. We knew already that our customers needed broader property access, and had thought out loud about different approaches to the problem (which also includes one of my favorite exchanges between commenters, about the difference between proctology and colo-rectal surgery), but seeing someone struggling in the wild was a fresh outrage all the same.
Now, at last, after several improvements to tours already, the outrage is over. Thanks to the crusading efforts of Michael Young (especially), Scott Nagel, Marcella Branniff, Ellie Wilkinson, Bryan Selner, Marni Buchanan, Josh Sanders and many others, Redfin is now offering a premium home-buying service, which lets our clients tour homes to their heart’s content. The name of the service is Redfin Select.
With Select, we take you on tour twice a week, every week, until you find a home. When you do, we give you a 50% commission refund, which is usually worth $7,500 on a $500,000 home.
The commission refund is a tad smaller than the 67% we offer the clients of our original online home-buying service, Redfin Direct. But 50% tax-free is by any measure a whopping check at closing, and scotching the anxiety about how you get into a property is , for many clients, priceless. Now you have no excuse not to buy through Redfin…
Clients can enroll in Select by signing up for a home tour and getting the forms from the field agent; you can also get the forms by emailing select (at) redfin (dot) com. The forms don’t obligate you to work with Redfin, but they do help us remember who gets 50% and who gets 67% back at closing. And since Redfin Direct itself offers two free tours (and the ability to buy more at $250 a pop) there’s no need to decide between Select or Direct until after the first two tours.
As you may have surmised already, this isn’t an official launch. We haven’t rented any camels or biplanes or aging rock stars to launch Redfin Select, because we’re only taking 20 clients at first, so we can be sure to have enough tours to go around for everybody, even on short notice. The trial period will last a month or more, albeit with more and more clients.
This means that Redfin Select will only be available in a limited area — Seattle, Bellevue, Mercer Island, Redmond, Kirkland — at first, but we hope to expand the service over the summer to other markets. To do that, we need to build a better application for scheduling home tours, for us and for our field agents, which we’ll bundle with lots of improvements to how Redfin handles your favorite listings.
For now, let us know what you think of the service, and thanks for all the ideas so far. To learn more about Select, read on…
(Camel photo credit: Iqbal on Flickr)
Bonus link: live tape of 20 centimeter worm found in woman’s gut, not for faint of heart.
April 2, 2008
What makes a neighborhood? The type of person who lives there? The architecture? The crime? How the flowers look in the spring?
Capitol Hill, Washington DC. Photo credit: Flickr.
Everyblock thinks all of those things make a neighborhood, as well as restaurant inspections, permits, news, and, now, real estate listings. Using our RSS feed of listings, they just added summaries of real estate listings to their data for every block in San Francisco. For example, here’s what’s happening today in Supervisorial District 6, in North Beach.
All this data and a growing number of neighborhood bloggers mean we no longer have to rely on print weeklies for hyper-local news. Here in Seattle, the bloggers cover everything from burning tires to park closures, to old ads for local beers. In DC, they blog about sidewalk posters, a new hemp store, the blooming of the cherry blossoms and police cameras.
Capitol Hill, Seattle. Photo credit: Flickr.
If you’ve got an idea of what defines your neighborhood, leave a comment.
