The Likelihood That an Agent Will Sell a Listing? Less Than 50%

A couple of weeks ago, Redfin engineers got together for a hackathon to prototype features we’d like to see on the site. One team, featuring Jane Nemenman, Jamie DeMichele, Dane Brandon and Llewellyn Botelho, built a Redfin.com widget for each listing that showed the listing agent’s track record: how many listings he had on the market, what his average discount to list price was, how long it had been since he closed a deal.

It was a great idea. But it didn’t all come from the engineers. The original insight started with our San Francisco agents, who like to size up a seller’s agent before deciding how to represent a buyer in a negotiation, on the theory that negotiating strategy is often influenced as much by the listing agent’s state of mind as by her client’s. Some agents are chronic over-pricers, expecting to give part of that away at the negotiation table. Others stand firm. And still others just need to get a deal done.

For the full report visit the Redfin Research Center.

Discussion

  • Will

    If a property is listed 3 times before it sells, does your analysis count it as 1 out of 3 listings sold or 1 out of 1? Makes a big difference in the numbers…

  • http://blog.redfin.com GlennKelman

    Good question Will; in this analysis, it counts as 1 out of 3 listings sold. Our goal was to measure the likelihood that a listing agent could sell a listing, not the likelihood that the house would eventually sell. That said, the two numbers are not so different, as most people who fail to sell a house through one listing agent do not hire a second, and very few hire a third.

    • Paul Friedman

      But, many agents delist/relist instead of just lowering the price on a house, so doesn't this contaminate your data and affect the “strategy” recommended by that data?

      • http://blog.redfin.com GlennKelman

        My point was that home-sellers' first criterion in choosing an agent should be the agent's track record of successfully selling houses, not a promise to sell a house at what may be an unrealistic price. Too often, the agent who is most desperate to get the business promises a price he can't deliver on, knowing full well he can mark it down a month after the customer signs with him.

    • Clare

      Why not pull all the forces together and do it right the first time? It requires herculean effort to establish and maintain a 5 star clean home, staged to a focused market buyer, with the entire team playing full out for 30 days but don't we all know the very best change of selling is in the first 30 days providing all everything has been set in place, video marketing,warm and fuzzy description, stage to buyer, get inspection before setting price, full participating of owner, break the illusion of value from 2 years ago and more. We are living in a new reality and must create new ways to addressing the market. Buld the parachutte on the way down, painful and creative

      • http://blog.redfin.com GlennKelman

        Great comment Clare, and couldn't agree more.

  • http://stylestruggler.blogspot.com/ Pauline W.

    Fascinating. Your feeling that this comes about through a stand-off / impasse makes a lot of sense to me.

    • Clare

      a good business deal is one where both parties have full disclosure and both come away from the negiotation table feeling satisfied. It's not an arm wrestle.

  • Clare

    clare,homesellingstrategist
    Data reflects what I see and hear across the nation. Any which way you view the data, it's dismal. Big contirubting factor, our reality has changed, traditional methods of selling aren't working, home owners are lamenting for a past that no long exists, resistant to advice from agents and stubborn to stage and take responsiblity for due diligence in setting the price.I see a new way of coming at the market, one built on team effort and leverage guided by coaching. I did it and have done it for others and it works!

  • John Keith

    Glenn, are these single-family home sales or does the analysis include condo sales?

    • http://blog.redfin.com GlennKelman

      Both!

    • L. Hall

      Is this John M. Keith “Furman”??

  • http://www.columbia-re.com Brett Frosaker

    I don’t thing publishing the statistics is a matter of embarrassing agents. It is more of a transparent insight into different marketing styles. Agents who over price homes do so either because they want to “buy” a listing, or because the seller feels their home is worth it. The former is an irritant; the latter is letting the seller control more of the sales process. In either case, the agent is hoping to be around when the seller agrees to a price drop. The Wall Street Journal statistics indicate sellers are more inclined to switch agents when it doesn’t sell. This I feel has more to do with a long standing problem in the real estate industry and the personality styles of agents in general. That problem is lack of communication. A few years ago, John L Scott changed their tag line to “others talk, we listen”, in response to surveys of buyers and sellers who commented that they didn’t feel like agents listened to them. Agents are generally emotionally driven creatures that do not use analytic systems in their business. I admit to taking an overpriced listing, not because I wanted to “buy the listing” but because the customer felt strongly that their price was indeed the market price. The difference is, I supplied him with a continual stream of stats and feedback that helped them to decide to reduce the price. They spoke, I listened, because they were the customer and educating them along the way is my business.

    • http://blog.redfin.com GlennKelman

      I really like your combination of empathy and analysis Brett; we have in the past tried to take the same approach. The problem is that a price reduction is noticed by fewer people than a debut, so now we tend to turn away many would-be listing clients. They aren't thrilled when we do that, and I am not sure if we are doing those folks any favors either.

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  • Adam Wiener

    Glenn, I'm not 100% sure I agree with your comment that people who fail to sell with one agent generally don't hire a second or a third. I don't have any hard evidence to back that up, but one of the age-old practices for new agents to generate business in the traditional world is calling expired listings to see if they can win them over with a new “marketing plan” for their home. Now maybe you only need to hit 1 in 20 or 1 in 100 if you dial fast but as Brett pointed out above sometimes it's the seller that has a slightly skewed perception of pricing. When it fails to sell the first time around they may be more open to a more realistic price with a new agent (sometimes I'd guess there's too much water under the bridge with the first agent).

    As a part deux I'd love to see what % of the listings that sold were sold by the first listing agent, the second, and so on… and if I could have a pony we'd look at what % of the 1st agent's original list price it sold for and what % of the last agent's original list price it sold for.

  • http://www.roseville-ca-homes-for-sale.com Anthony Rueda

    Glen, I agree with your assessment that the seller should make their decision based on the agent's track record, but I also think that the analysis is flawed, the statistics should take into account every time the same agent re-lists the same property.

    • http://blog.redfin.com GlennKelman

      Good point Anthony but if we're measuring a listing agent's success rate, I wouldn't call an expired listing a success, even if the client re-lists.

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  • david d

    so what do we expect for 2010? 50% or a lower %? clearly a tough market to sell into.

    • http://blog.redfin.com GlennKelman

      Personally, I think 2010 will be lower. Plenty of folks got caught out when the tax credit ended and the economy dipped down again…

  • http://blog.redfin.com/ GlennKelman

    I think 2010 will be lower. Plenty of folks got caught out when the tax credit ended and the economy dipped down again…

  • http://www.findire.com/StandardPropertyDetails.aspx?listingid=1919 Infinity at Brickell Condo

    I admit, I have not been on this real estate blog in a long time… however it was another joy to see it is such an important topic and ignored by so many, even professionals. I thank you to help making people more aware of possible issues. Great stuff as usual….

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  • Black Cap

    The likelihood a Redfin Agent will sell… Let's do the math… Venture Capitalists write checks to fund company. Company spends on advertising, R&D, fees, more advertising, more staff, more advertising… Gives away 25% of income while ridiculing competitors. Hmmmm… What was that dot.com model that crashed about 10 years ago? I think there a pet food store that advertised that year in the Superbowl…

  • prisoner

    Very interesting. Has this practice of over-pricing to see if the market will bear out an ideal or dream price only hurt sellers in the aggregate? If more sellers over-price and that becomes the climate, then more buyers will simply presume that homes are overpriced from the outset, in turn, further driving the market perception that price reductions are warranted on many homes regardless of their price.

    If that's too wordy, in short sellers might be shooting themselves and others in the foot with “try-it-and-see” pricing strategies.

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