Domo Arigato Mr. Animoto

After reading a TechCrunch post on Animoto, the new make-a-music-video-of-your-photos website, we decided to give it a quick shot for one of our own listings, in Bellevue (we had to use a Redfin listing because it’s copyright-infringement to take another broker’s):

I wanted to use Prince’s “Let’s Go Crazy” for the music, but we don’t have the rights for that either. As our lead search engineer & award-winning documentarian can tell you, it’s a problem for any aspiring film-maker.

Do you think this would make you more likely to look at a listing?  And what’s the best song for this house?

The Redfin Advantage: Bigger, Broader, Higher Statistical Confidence

April 24, 2008 addition: Redfin is correcting how it calculates the weighted average in the Redfin Advantage report.
Greg Wharton, the general counsel at my last job, liked to answer questions enigmatically. When I asked him if a software pawnshop in Florida was trying to buy us, he would smile and say, “answering that question now would obligate me to answer that question in the future.”

That can be a heavy burden to bear, especially when the question you’ve answered is a contentious one. Last spring, Redfin analyzed the MLS data available to all brokers to show that our home-buyers negotiated a better deal on a home — saving an extra $4,000 off the list price — over and above our commission refund. We called the total savings, of $14,080, the Redfin Advantage. We promised to make calculating it a regular thing, which meant that saying we saved customers money in one year would obligate us to admit it was a fluke if we didn’t repeat our performance in the next.

So when Redfin set out to evaluate our performance over the last 12 months, in a downturn that has brokers of all stripes competing ferociously at the negotiating table, I was sick to my stomach. As transaction volume grows, we should regress towards the mean. But the numbers came in for both Seattle and the Bay Area, and they only show the Redfin Advantage got bigger, with a smaller range of error (thank goodness!):

• Redfin home-buyers over the past twelve months paid on average 1.015% below homes’ asking price, while customers of other brokerages paid .087% below asking price.
• This difference in negotiating results saved Redfin customers nearly 1% of the home’s final price, for an average savings of $5,048.
• In addition, Redfin refunded each of these customers an average of $10,520 in commissions.
• The data is statistically significant, with p-values for each of the three counties we evaluated between .00004 and .02. To a statistician, this means there is less than a 2% chance that our results could be the result of chance. The p-value for last year was closer to .03 or 3%.
• It would be hard for us to exaggerate or fabricate this data, since other brokers can and will challenge the result. There was a huge brouhaha last year. One intrepid broker found an error on one transaction, and we immediately issued a .01% correction.
• Redfin’s customer satisfaction rate was again 95%, for home-buyers whose offers succeeded or failed. Our demographic broadened, with the number of high-technology customers dropping from 48% to 33% of our total, and the number of first-time home-buyers increasing to 45%. Unlike the negotiating advantage, the satisfaction and demographic results come from our own surveys, which are less reliable.

The report analyzes data from February 6, 2007 – February 5, 2008, based on the anniversary of our launch of our home-buying service, Redfin Direct for Buyers. We didn’t analyze LA, San Diego, Boston or Washington, D.C. because we hadn’t served those markets for the full year, and we didn’t have a statistically significant numbers of sales there either.

Because the negotiating advantage is consistent across different Redfin agents, different customers, different counties, different years, in markets that were healthy and slumping alike, it seems fair to conclude that the advantage stems from the Redfin business model itself. What does that mean?

Customers on the prowl for a deal are a big reason we negotiate effectively. The partnership we try to set up with customers gives them a more active role in negotiations and, because they have the most skin in the game, they come to the negotiating table armed to the teeth with data from our site. Last year we tried to give all the credit to our agents, but now, we think Greg Swann was right: a lot of credit goes to our customers too.

We still think the results validate the skill of our real estate agents too, whom we pay customer satisfaction bonuses rather than commissions to avoid creating any pressure for customers to close on a bad deal. Alone among any national brokerages, we require our agents to have experience with at least 20 transactions before representing a client. Hats off to all our Redfin agents, and thanks for your hard work, now being recognized on TechCrunch, in our favorite real estate blogs and the local papers.

Many thanks to Redfin star Chris Glew for preparing the report, his first big business project. An anthropology M.A., Chris previously studied ancient Mexican turds and fabulous jungle-buried relics. In his interview for the job, he explained that the diameter of an empire’s tortilla-making griddles increased with its ability to enslave people in the fanatical construction of monuments (which in turn prompted us to expand Redfin’s Costco order.)

A Sound as Continuous and Dense As Stars

Michael Arrington complains again today that people are overwhelmed with email. Michael cites a venture capitalist who encourages people awaiting his email reply to befriend him on Facebook, but then admits he is even less responsive there.

“Someone,” Michael says, “needs to create a new technology that allows us to enjoy our life but not miss important messages.”

But if Michael wanted fewer messages, he could just switch to a private address without telling me what it is. Every time we write an email rather than call, or add another distant “friend” to Facebook, we choose a network over true friendship, communication without commitment. And usually, we’re choosing what we want.

This is a process that starts early: the New Yorker’s Adam Gopnik recently wrote about the imaginary friend his toddler talks to on her toy-cellphone, usually only to say that she’s too busy to talk to him.

And it began a long time ago. The critic Hugh Kenner speculated that the disembodied voices of modern poetry grew out of the invention of the telephone. What I grew up seeing as a way to reach out and touch someone, a previous generation saw as a paltry substitute.

And now that’s how I now see Facebook, as a paltry — but not quite dispensable — substitute. Facebook comforts us with the thought that we have lots of friends. And yet the prestige that this network offers is the opposite of security, that 8^th-grade sense we got from knowing exactly who our friends were.

The “social utility” of friends on Facebook is different than other forms of friendship. Most of my friends’ Facebook updates have the quality of overheard cell phone calls: mundane, impossible not to listen for, really only half of a conversation, but also comforting. Someone stuck in Singapore for a year once told me that what he missed most was the English chatter of overheard conversations.

This is why I’ve stopped checking Facebook throughout the day, but then suddenly find myself, alone in the wee hours of the night, glad to see everyone there. The feeling it gives me was best described in Augie March: “Wherever it was dark there was this sound, continental and hemispheric, again and again, like surf, and continuous and dense as stars.”

Saul Bellow was writing about falling asleep to the chirping of insects, but now that sound is the buzz of our friends. Maybe the one-line updates of Facebook have just reduced communication to what we really need to hear, over and over again: “Are you there?” “Yes, I am (everything’s fine).”

(photo credit: Moriza on Flickr)