Redfin Brings Transparency to Title, Inspection, Mortgage, Staging

Big news! Today, Redfin is launching a major expansion to our charter as a technology-powered real estate broker: Redfin Open Book, a local reviews site for lenders, inspectors and title companies.

Later this spring, we’ll add the stagers, landscapers and handymen used by sellers to get their home on the market.

Our goal is to ensure our customers get the best service at every step of a deal, by bringing together the best local team and holding that team accountable for the best result.

The Goal: Better Service
Unlike Angie’s List, Open Book is completely free. And unlike Yelp, it’s completely focused on the folks who serve our customers when buying or selling a home.

There are no kickbacks from anyone we include or recommend. In fact, there’s no revenue model at all for Open Book, not now nor in the foreseeable future.

The goal is simply better customer service. The best real estate agent in any market is good because of her own skills, but also because of her team, and her ability to hold that team’s feet to the fire when a loan or a listing is on the line.

As Redfin’s online traffic and transaction volume grows, our influence over all the folks who provide real estate services grows too. We want that influence to lead to better performance across the board for our customers.

This means that our focus is quality, not quantity. We don’t want to be the phone book, showing every lender or inspector in town. We want to be a reliable guide to the partners you should actually use, in any market we serve.

Today, people mostly take their agent’s recommendation for an inspector or a lender. But we think customer recommendations are important too, in finding an inspector who will tell you when to walk away from a crumbling house, or a lender who will steer you toward a cheaper loan, even if it pays him less.

This is crucial information, which is why Open Book, while intended for our own customers, is available to everyone browsing our site.

Our Advantage: Redfin-Certified Reviews
No one else could build such a reliable reviews site for real estate vendors.

Because we honcho a transaction the whole way through, hundreds of times a month, we know which inspectors and lenders our customers are using. Redfin’s online Deal Room, for tracking who is supposed to do what to close on time, stores information about thousands of vendors in a big database.

And we already survey every customer, deal or no deal, so it’s easy to ask each customer about his lender, inspector or stager. This means that we can validate every review, to avoid the bogus reviews from vendors’ friends and competitors that plague most review sites.

At some point, we’ll probably solicit reviews from the general public, but we’ll always highlight the reviews that came from actual customers, just because we can verify that the customer did in fact use the vendor she’s reviewing.

Our Investment: Redfin-Certified Partners
As with our brokerage, we aren’t just offering technology; we also offer a human touch. The inspectors, lenders and stagers who get the best reviews qualify for an additional level of certification, as Redfin partners.

Redfin has hired a team of former Redfin agents to interview potential partners, briefing each one on Redfin’s mission and our service expectations. We then monitor the partner’s performance. The ones that make the grade are certified as official Redfin partners. In Open Book, a tiny Redfin ribbon appears beside their profiles.

These are the folks our agents are most likely to recommend to our customers.

Over time, we’ll ask each certified partner to deliver premium service to our customers. This may entail attaching digital photos to an inspection report, or offering to refund the inspection fee if an unexpected repair crops up within 60 days of the closing.

We expect to drive plenty of customers toward our partners; if history is any guide, we’ll have to be careful to ensure no one gets overwhelmed.

And of course we’ll also be careful to strike a balance between ensuring our partners build a profitable business, and giving Redfin customers premium service. Inspectors, stagers and lenders who want to apply to be a certified partner can email us at openbook (at) redfin (dot) com.

Where We’re Starting: Washington DC and the San Francisco Bay Area
For now, the reviews are available only in the Bay Area and Washington DC.

To find Open Book, just click the “Buying” link at the top right of any page on Redfin.com, and choose “Open Book” from the menu. As we capture more reviews in the coming months, we’ll launch Open Book in more markets, for a wider range of services.

DC Market Could Use Some More Condos

Last month, the number of DC condos sold plummeted by 32.4% from December. The dip in sales is explained by the fact that many home buyers put their home search on hold for the holidays, but the number of condos for sale also dropped 4% last month. Tom Lewis, an agent on Redfin’s DC team, explains that the local condo market is tricky because most condo buyers in DC are relatively transient, and many of those who bought five or six years ago at the height of the market are now ready to move into a bigger place or out of town.  A seller in DC has to factor in agent commissions of up to five or six percent (if they’re not selling with Redfin), as well as transfer taxes tacking on another 1.1% or 1.45% of the purchase price. So before they’re out the door they’re down about 6.5%. “I find that plays a huge role in how sellers price their homes, and I warn buyers that it leaves very little room for negotiations,” Tom said. A condo seller will also compare their offers with the option of renting. “Rents have actually gone down a bit in DC, but not by that much, so if a condo seller isn’t getting the kinds of offers that he’s looking for, becoming a landlord and covering the mortgage for a few years doesn’t sound so bad,” Tom said.

What Tom is seeing fly off the shelves are new construction condos.  They are typically priced a little higher, but still competitive with the resale market, so buyers are willing to pay a little more for a brand new home. “Small boutique buildings, like 1793 Lanier Place NW, are so hot on the market that they are selling out before buyers have a chance to go see them.”

Speaking of heat, January was unseasonably warm for home tours as well.  According to Tom, “buyers didn’t ease into their home search this winter like they normally do.”   In fact, Redfin DC agents took buyers on 43% more tours this January than they did in December, and more tours than any month last year.  “The demand is certainly alive and well, but we’re all still waiting to if the sellers follow suit and supply some more options for all the buyers out there.”

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Washington-Real-Estate-Market-Report-January-2012. Want to know how the DC real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:

• MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
• $YOY = Year-over-year change in the median price per square foot.
• Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

Fairfax County Home Prices Back to Their Late Spring High

Something strange is happening in Fairfax County.  Check out the median list price of a single family home (SFH) in Fairfax County back in May ($649,500), the height of the real estate season. Now take a look at where prices were last month (also $649,500).  Prices took a short dip this fall but have avoided the winter slump and are already back where we left them last spring.

What the heck is going on in Fairfax this season?  This has been a strange season all around, not just for housing.  “Winter never really came, and when we ask our clients why they’ve chosen to buy or sell now, they tell us ‘2012 is my year,’” Rob Wittman, Northern Virginia agent told us.  Well, apparently there’s a lot of 2012 to go around. January saw buyers come out in droves with lots of bidding wars, so sellers who are pricing on the high side may have the right idea.  There are about 2 months of inventory currently on the market, meaning it’s a seller’s market, as Rob says, “the buyers we’re working with are still looking for the right home at a good price, so homes will still sit on the market if they are overpriced.”

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Washington-Real-Estate-Market-Report-January-2012. Want to know how the Washington DC area real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:

• MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
• $YOY = Year-over-year change in the median price per square foot.
• Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

Case-Shiller: Another Winter for Home Prices

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – November data is released in January).

Here are the basic Case-Shiller stats for the Washington area* as of November:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between October and November (the same as between September and October): Only Phoenix saw an increase, for the second month in a row. This month Chicago bumped Atlanta out of the bottom spot, falling 3.4% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Washington’s tiers fell in November. Month to month, the low tier was down 3.5%, the middle tier fell 0.7%, and the high tier decreased 0.4%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just five months ago, all twenty cities saw month to month gains. Now just one is not the red.

Read the rest of this entry »