The Redfin Advantage
Ok, so I’ll weigh in here. Redfin recently announced their updated buyer-side performance statistics. Redfin agents, they say, beat other companies by negotiating 1.015% off the list price compared to .087%. Locally, Redfin states they’re able to negotiate more off the sales price for their buyers compared to all other agents, 98.89% to 99.38%. And, when combined with buyer rebates, they save their buyers $12,262 on average. This amounts to 2.45%…what they call the Redfin Advantage. Very commendable, indeed.
So, how did my buyers fare? Would they have done better with Redfin?
Over the same period, on average, I negotiated 2.76% off the list price saving my buyers $15,666 off the top. This figure does not include subsequent seller concessions such as seller paid closing costs (not wrapped into the sales price) and credit for repairs and so forth, which amounted to an additional $3,833, on average.
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Redfin buyers save on average: $12,262 which include the buyers rebate.
Ben’s buyers save on average: $19,499.
That came through on Twitter titled “The Ben Advantage.” I liked that title and that Ben advantage is a big one.
I think it’s worth noting that your buyers may have been better off with you even if the “savings” weren’t statistically apparent.
Residential real estate is not just about the numbers. If a commercial broker wanted to boast about getting higher cap rates or resale premiums for their client, that would be of some significance - after all, the purpose of buying investment property is to make a profit.
What number of sales do the “Ben” savings averages represent? I suspect that it is a sample size of less than 30 and in a much smaller geographical area. If so, then the numbers are not a valid comparison.
Redfins comparison to the whole market and all of their sales is interesting. To determine if it is significant would require a little more analysis than what they have presented.
Big - Certainly, I haven’t done the number of transactions that Redfin has, so there is validity to your statement. However, the same argument can be made for Redfin, whose local market share is about 1.5% (Redfin does the same amount of business as a medium-sized single office of a major brand). Therefore, according to your statement, Redfin’s own published numbers are not a valid comparison to the real estate market as a whole.
No, my results are not an apples-to-apples comparison to Redfin. Plus, there are a number of other factors that must be considered - time on market, terms of the contract, seller concessions and so forth. That said, the numbers I presented above are accurate.
Hi Ben–love this idea for a post. Just out of curiousity, I ran the same numbers and was happy with what I found out.
Though as BIG pointed out, we are not really talking about a statistically significant sample or anything. Of course, Redfin’s advantage would also not be considered statistically significant once you account for a margin of error.
[…] to Ben at Seattle Housing Buzz for the idea. Sphere: Related […]