I wrote the original report, which plainly stated that our customers are one reason we have competed as well as we have. We continue to feel that it would be unreasonable to conclude that how we pay our agents is not another reason.

You will note that no one at Redfin has ever said our agents are more skilled or capable than other agents, though obviously we are very proud of the team we have here, only that they got better results than their counterparts.

If we could have figured out a scientific way for us to eliminate customer self-selection as a factor, we would have. If you know of one, please let us know.

The only statistical claim we have made is that it would be extremely unlikely (a p-value of .03) to see the results in the NWMLS data that we did unless Redfin customers did in fact tend to get a better deal as compared to list price.

I’m surprised you want to continue this conversation, but here goes…

1st off… I never made the $86K claim. I said if Marlow’s numbers are correct, then $86K is the logical fallout. I put a number to Marlow’s speculation… That’s all I did. (Notice I did use the “if” word!)

After that, I don’t follow you at all… I never claimed that the commission encourages a faster or cheaper closing.

What I claim is that you making some outrageous and untrue claims based a very unscientific-collected data source. Before you can make claims that Redfin negotiated on our buyer’s behalf for XYZ number of dollars over other agents you NEED to understand if we are talking about the same type of buyers.

Based on the nature of the Redfin buyers that have contacted my wife trying to get a “free” showing, I feel comfortable saying that Redfin buyers tend to be young, tech-savvy, and cheap. (I feel pretty comfortable saying we probably get more Redfin buyer’s contacting us for a showing than anyone else on the internet!) It is ridiculous to think that you can compare a Redfin buyer’s habits (and they way that they self-negotiate using internet tools) to the buying habits of the general population in Seattle.

Again, it has nothing to do with the commission (being intuitively in the “discount” world, I think you are stuck on that). The difference has to do with the type of buyer that is using your service. You are not taking into account (hence: the unscientific data collection on your part) that Redfin buyers do not have the same needs or demands as the general internet buying population. (By the way, money is only one of the needs and/or demands in a typical transaction as buyers have different time, emotional, aesthetic, etc. requirements that can all effect the eventual purchase price)

I could try to speculate on the type of buyer (beyond young, tech-savvy and cheap) that Redfin attracts, but I won’t. The research report that Redfin released is probably right-on-target (Kudos to the hard work of your analytical-staff). It is your claim, Glenn, that Redfin agent’s negotiating skills account for the $4K difference that irks me (plus I think somewhere I read that you claimed this number was a scientifically valid fact! OUCH, you clearly don’t understand statistics either!). It is obvious to me that you do not understand the appropriate conclusions that can be drawn from the work of your researchers.

I agree the entire argument is silly. It was silly when Dalton started it, and he looked foolish doing it, and you should have left it at that in my opinion.

No one is buying that Redfin agents are better at negotiating than most or even many of the other agents. You can’t take one client who “saved” $20,000, and spread it over 5 clients and say they each saved $4,000. That is just not a credible use of data. It’s false info, and gives your “competition” a chance to throw their poison darts at you.

Better to say 2 out of 5 people were able to negotiate below list price, than to pretend that all five participated in the other 2 client’s savings. That’s just false advertising.

Dustin, my goodness, are you standing by the $86,000 claim or just shifting ground? We have always acknowledged that our customers are deal-savvy but on what basis do you argue that Redfin agents don’t negotiate? The idea that commissions can have the affect of encouraging buyer’s agents to close, regardless of price, may be upsetting, but do you think it’s true? Many factors may motivate buyer’s agents to represent clients’ best interests; the commission paid by the seller is just not one of them.

James, thank you for your analysis. A colleague, Sasha Aickin, is responding to it. I’ll dive in if I have anything to add…

I don’t know why the term offends them.

Maybe because there hasn’t been a discounter that has been able to put a dent into a market and stay in business. In order to keep the doors open you have to make a profit. Even Glenn himself continues to say that under the current model they haven’t been able to break even.

Consumers want to know that the company they are choosing to do business with can actually stay in business. But there are some consumers that just want the discount so bad they aren’t thinking about the what ifs.

Lets take this hypothetical:

A new real estate company goes into operation they represent a buyer and during the transaction there are errors made. The buyer a few months later seeks legal advice and their attorney feels their representation failed them and recommends they litigate. When they go back to sue the broker and the company is out of business that discount doesn’t look that appealing.

This is not an unfounded hypothetical maybe Craig or Russ can chime in on this.

Agreed. Good point, Ardell.

If redfin.com consistently advertises that it gives back ,67% of what they earn as a buyers commission and most real estate agents average a “giveback” of say…5-10% of what they earn..doesn’t that make redfin.com a discounter?

and what’s wrong with being a discounter? I say embrace your model and call it what it is! Clippers owner, Donald Sterling, made a veritable fortune as a dollar store owner. Sam Walton built an empire on his model.

I agree. A hearty British parliamentary ‘here, here!’ At he end of the day, Redfin’s satisfied clients have more money in their wallets. Wouldn’t people agree that is the bigger story?