Technology-based brokerage Redfin is offering consumers a new home-price tool that’s designed to let sellers build their own comparative market analysis, or "CMA," by choosing comparable homes ("comps") using recently sold data from multiple listing services.
The tool, designed to start a conversation with a Redfin agent, is one facet of an ongoing Redfin campaign to boost the number of sellers it represents.
The Seattle-based brokerage has made a name for itself among homebuyers by offering commission rebates and access to Virtual Office Website (VOW) listings data, a richer source of information than Internet Data Exchange (IDX) data, which is predominant among brokers.
Redfin Chief Marketing Officer Tom Vogl said listings currently represent "a very small percentage" of Redfin’s business, but that seller representation is growing at a pace "two to three times faster" than buyer representation.
"Our listing business is a major strategic focus for Redfin, and our home-pricing tool is one part of our strategy to grow that business," Vogl said. The brokerage is currently "staffing up" with agents who specialize in representing listings.
In its most recent annual report to investors, Redfin competitor ZipRealty Inc. said its agents represented buyers in 90 percent of the transactions they closed last year. The company, which last year stopped offering rebates to buyers, recently removed language from its website offering sellers savings of "up to 25 percent."
A spokeswoman for the company, Talia DeBene, said ZipRealty charges a minimum commission of $2,000 plus the market rate cooperating broker fee on all listings. "However, as independent contractors, our agents are free to negotiate the specific commission percentages with clients," DeBene said.
Redfin charges sellers a 1.5 percent commission, subject to a $5,500 minimum fee — about half of what traditional brokerages charge. But Vogl said Redfin understands that sellers are looking for more than a break on their commission.
"If you think about it from the seller’s perspective, the lower fee is part of the value equation," Vogl said. "But the thing that’s most on the seller’s mind is having (the home) sell quickly for a price that is as much as (the seller) can get."
Other tools for sellers include a monthly home report that shows closed sales in their area. Redfin also offers up to $250 in matching funds for sellers to "stage" or otherwise spruce up their homes, and employs professional photographers to capture the images that will help market the house on Redfin.com and other websites.
Redfin expects the home-price tools will ruffle a few feathers in the industry — and it wouldn’t be the first time the company launched a controversial new feature or technology.
Listing brokers and agents often complain that sellers have unrealistic expectations about what their homes are worth. But Redfin doesn’t think allowing sellers to pick their own "comps" to build a CMA will exacerbate that problem.
The tool is designed to help sellers start a "fact-based conversation" with Redfin agents about home values.
Homeowners start with a price range based on nearby recently sold homes that are similar to theirs. If homeowners disagree with the comps used to create the estimate, they can change the mix of homes or adjust the value of those that are included based on differences in size, condition, age or improvements.
The "range widget" from Redfin’s home price tool.
"When somebody contacts us through this tool, our agents have the ability to see what (comps the consumers) chose, what they threw out, and to see their notes," said Jim Lamb, lead product manager for Redfin. "We’ve given agents the ability to reply with their own estimate, with their own notes on the comps."
The CMA built by the agent will be branded as "created for you" by the agent, Lamb said.
"It’s not putting your address into blank space on our website, and shooting out a number," said Redfin’s Rachel Musiker. "It takes a little time and thought — it’s a better way to educate consumers and to have a conversation."