Redfin Listing Agents Sell Homes More Effectively, Faster, and for More Money

by Tim Ellis | 15 Comments

If you’re thinking of selling your home when the housing market is slow, a great listing agent can mean the difference between having your home sit unsold for months through repeated price drops and quickly attracting a great offer and successfully closing the deal. Today’s market is anything but slow for sellers, but according to our research, choosing the right agent still makes a big difference. Homes listed with a Redfin Agent sell faster, for more money, and are more likely to sell.

In order to measure this, we analyzed over 16,000 listings that came on the market in the first nine months of 2012. Compared to the competition, homes listed with a Redfin Agent:

  • Were 12% more likely to sell within 90 days.
  • Sold 6 days faster on average.
  • Sold for $2,700 closer to their original list price.

In some markets Redfin Agents had an even more impressive advantage. For example, in San Diego, homes listed with a Redfin Agent sold for $6,861 closer to their original list price and were 31% more likely to sell than similar homes listed by other agents. In Portland, our agents sold homes for $2,934 more and 16 days faster than the competition.

Here’s a breakdown of how much more effective Redfin Agents were than the competition in the markets with enough listings to produce a statistically significant result:

Redfin Listings More Likely to Sell (percentage lift in successful sales of listings within 90 days)

Staying out in front of a market that is heating up is no accident. Throughout 2012, we aggressively hired new listing specialists across the country and grew our total listings business by 120 percent. Meanwhile, we also continued to make improvements in the tools we give our listing clients to maximize their home’s exposure on our site.

If you’re thinking of selling your home, find a Redfin Agent near you, read their reviews, and give them a call. You’ll be glad you did.

How did we come up with these numbers?
For each Redfin listing that came on the market from January 1 to September 30 2012, we looked at a group of listings of the same home type (single-family, condo, etc.) in the same zip code that were similar in original list price (±10%), square footage (±25%), and list date (±3 months). All told, we looked at 16,384 listings in nine Redfin markets across the country: Portland, Los Angeles, San Diego, Boston, Seattle, Washington DC, San Francisco Bay Area, Chicago, and Denver.
For listings that were sold, we calculated the days on market and sale to original list price ratio for each Redfin listing as well as for each comparable listing. We took the average difference in days on market across the entire sample. To calculate the price advantage, we multiplied the average difference in sale to original list price ratio (0.6%) by the median price in our sample ($425,000). To calculate the improved chance of selling within 90 days, we calculated the percentage of Redfin listings that sold within 90 days and divided it by the percentage of the comparable listings that sold within 90 days.

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Discussion

  • http://twitter.com/spencerrascoff Spencer Rascoff

    Tim,
    To what do you attribute Redfin’s purported better success as a listing broker? Did the sellers follow their Redfin agents’ advice on setting the price better? Did the Redfin agent hold more (or fewer?) open houses than other agents? Is it something about how Redfin agents are compensated that accounts for the results?

    In short, assuming for a moment that your analysis is valid, what do you think explains the results?

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

      Our compensation helps us avoids over-pricing, just because the Redfin listing agent is paid to be accountable for the price he promises in the initial listing consultation. The easiest way for an agent to get a listing under contract is to be the agent promising the highest price; the most common reason a home sells for less than it’s worth is that it is over-priced on debut, and then languishes on the market.

      Because Redfin agents are paid on customer satisfaction, not commission, and our profiles show where we sold homes and where we failed to sell them, we are accountable to the client for a good result, not just any result. This makes us more likely to deliver on the price we promise in the initial listing consultation.

      The other reason we are successful is that we use our website and mobile tools to promote our listings, so that they get double the Redfin traffic that other listings get, which leads to more foot traffic and ultimately more offers. Always posting the listing to Zillow and Trulia helps, too :-).

  • http://blog.findwell.com Kevin Lisota

    Tim, how can you guys make this comparison without including expired and cancelled listings? A broker who lists 10 properties, sells 5 instantly and has another 5 than languish and end up being cancelled will have fantastic stats based on your model, yet will have failed on 50% of the listings they took.
    Glenn, are you guys actually paying your listing agent bonuses for getting the list price really close to the sale price? That is how I read your comment, but I thought you guys just paid on a customer satisfaction score each quarter.

    • Tim_Ellis

      Hi Kevin, I’m not sure what you mean by “without including expired and cancelled listings.” We looked at every single listing that came on-market during the time frame we analyzed. To calculate how much more effective Redfin Agents were at selling homes, we absolutely considered listings that were expired or cancelled. It was a simple calculation of what percentage of listings had sold within 90 days.

      In your example the broker with 10 listings who only sold 5 within 90 days would have be 50% effective. If the Redfin Agents listing comparable homes sold 6 of 10 listings within 90 days, they were 20% more effective.

      As for the speed and price stats, you can’t calculate a sale to original list price ratio or a days on market for homes that haven’t sold, so it wouldn’t make sense to include expired and cancelled listings in those calculations.

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

      A Redfin listing agent is paid based on customer satisfaction, which tends to be low when we sell below the customer’s asking price.

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  • J Philip Faranda

    Why was the New York market excluded?

    • J Philip Faranda

      I guess I answered my own question. Here is a link to one of the two Redfin listings in Westchester County, NY. Curiously, after 78 days on market, it has no property description and only one photograph.
      http://www.redfin.com/NY/Mount-Vernon/140-W-Lincoln-Ave-10550/home/20007621

      I would think that with 2 listings, someone-anyone, really- at Redfin might notice that 50% of your active inventory has one photograph (which is curiously only one quarter of the width allotted in the picture field) with only one photo uploaded on 11/18/2012, 4 days after the property was inputted onto the MLS. 30 photos are allowed, and a 500 character description is also allowed.

      Is this part of the strategy you offer to maximize exposure?

    • Tim_Ellis

      Unfortunately our listing business just isn’t large enough yet in the New York area to produce meaningful results for this analysis. Even when we have an advantage, we wouldn’t feel comfortable calling it out when the number of listings is below a certain threshold.

      • J Philip Faranda

        It is meaningful to your client with no description and 1 photo out there for 80 days, Tim.

  • Mark Scholz

    Tim, we are all aware of the numerous abuses of marketing claims in our industry which are questionably supported by accurate data. So just a few questions from a former statistician: Who did your statistical analysis – internal or outside 3rd party? How were your selection criteria established for comparable properties? And are you willing to share some or all of your data for an independent review?

    • Tim_Ellis

      Hi Mark,

      Our methodology is provided in full at the bottom of this post, under the “How did we come up with these numbers?” section. I performed the analysis myself after numerous consultations with my peers here as to what would make the most fair comparison. There were alternative approaches that we could have taken that make Redfin look even better (such as looking at all homes that sold in the year rather than those that were listed in the year), but we selected the methodology that was most conservative.

      The selection criteria were chosen based on a range that would provide us with a list of reasonably similar homes, but not such a tight criteria as to have too few comps per Redfin listing. On average there were 22 comps for each Redfin listing.

      As for reviewing the data, anyone with MLS access can run the same queries and look at the data for themselves by replicating the methodology described above. Unfortunately our data licenses don’t allow us to share the raw data.

      Thanks for the questions!

      • Mark Scholz

        Tim, thanks for the response. Yes I see the methodology section, it just leaves me with several questions so that I could accurately recreate the analysis using Portland data. And no offense, but I seen numerous analyses done by colleagues and peers within our industry, and without any additional credentials besides basic Excel or Pages knowledge, the results are highly suspect and biased. May I ask about your experience with statistical analysis? I was previously a masters level statistician at the local medical school.
        I am working on a similar analysis of agents in Vancouver WA (subset of Portland OR) and your results do not match up with what I am seeing. I will now go back and apply your methodology to see if my subsequent results are consistent with your nationwide generalization.

  • rob1699

    Since Redfin does not list either Short Sales or REO’s, please tell me you excluded those as comps. Otherwise this research is seriously flawed and purposely misleading.

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