Redfin, a high-tech real estate company that refunds the lion's share of real estate commissions to consumers, marked its first year in business with the release of a company report which found that its agents tend to negotiate a better price for home buyers even before considering the commission savings.
The report, based on company statistics and MLS data taken from Washington's Northwest MLS (NWMLS), found that the company's consumers in King County paid an average of 99.33 percent of the listing price of homes while buyers with other brokerages paid 100.23 percent of the listing price, a 0.9 percent difference. That translates to an average savings of $4,474, the company reported.
Meanwhile, NWMLS reported in a 2006 Statistical Recap report that the ratio of the selling price to listing price of single-family homes in King County was 81.61 percent. Redfin notes that the data set it used differs from this MLS report.
Redfin CEO Glenn Kelman told Inman News (see story) that there will undoubtedly be controversy over the report's findings, as discount real estate companies are sometimes labeled by real estate professionals as providing less bang for the buck compared to higher-cost alternatives.
Redfin, despite its youth, is no stranger to controversy – the company has drawn a lot of media attention and industry commentary for its unconventional business model. Agents are paid a base salary and receive bonuses based on customer satisfaction. They do not receive a commission. Also, the company allows buyers to make purchase offers on homes through an Internet platform.
The report includes a customer survey (based on 247 responses) that found that about 48 percent of respondents worked in technology, 37 percent were first-time home buyers and 49 percent heard about the company from a friend or acquaintance. Less than 2 percent of respondents said they heard about the company from advertising, while 23 percent learned about the company through "newspaper articles," the survey revealed.
Kellman said, "We expect that media coverage may not be as intense as it has been over the course of our debut year, but that word of mouth will become even stronger as we reach more customers."