Redfin estimates are BS and manipulative

Jan 14 33 Comments

The higher the estimate, the more money Redfin potentially makes as they take a percentage of the sale price when their agents are involved in a sale or purchase of a house. Hence, them providing estimates are a huge conflict of interest.

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TOP 33 Comments
  • Google Geist
    The entire real estate industry is a scam.
    Jan 14 20
    • Microsoft Wmum85
      Why not just build more houses and keep prices down?
      Jan 23
    • Facebook public2
      I'm all for building, that doesn't solve the location issue though. Prime locations are 100% built out and developer struggle (and get lots of resistance) to buy and rebuild denser.
      Jan 23
  • Stripe bhYX87
    I think the worst part about the estimates is that Redfin retroactively smoothes them out. Throughout most of 2019, when real estate was dipping in Seattle, instead of representing a dip, they went back and erased the 2018’s peak, smoothing it out to make it look like a consistent upward trend.

    Redfin smoothed the data to create the false appearance of an upward trend to conceal the downward trend in 2019. Except, people in 2018 really were paying higher! It was downright dishonest.
    Jan 14 1
    • Google KytN86
      Don't know about redfin, I know that Zillow doesn't.
      Jan 14
  • Redfin TreeFity
    You all missed the point that an estimate is an *estimate*, estimate will change over time based on the recent sale records. No one can predict the future of housing markert be it an algo or agent. The estimate changes over time to reflect the best guess of the house value based on all !current! information we have.

    This is conceptually different than price history, which is more close to what y'all are looking for. And we do provide our tableau dashboard for you to query with, you can see clearly downtrend there: https://www.redfin.com/blog/data-center/

    And to the price inflation comment ... We don't do that because it doesn't do any good for our customers and business, plus it is against our company culture. From a conflict of interest perspective, the incentive of inflating the price is too small for any agents to benefit from it.

    Hope this helps!
    Jan 16 1
    • Stripe bhYX87
      YOU are missing the point. Redfin has a conflict of interest, which is that it does better when it sells more homes. Users are more comfortable investing in a home if they believe the value is steady appreciating over time, rather than depreciating, or growing but with great volatility. It is inherently dishonest to rewrite historical trends to create the illusion that home prices are trending up when they actually are trending down, and Redfin financially benefits from this trend smoothing.

      Estimates should indeed reflect the best guess with the current information at that time, as you say. An estimate should represent “this is what we think the price is, at this time, with this information.”

      Stock prices are valuation estimates too. This should behave similarly to stock prices, where we don’t return to retroactively change our valuation of an equity stake in a thing based on better information later. People don’t go back and rewrite the history of a company’s stock valuation when they get new info, they update it as of that day. Why? Because arbitrarily re-writing the past makes the entire plotting of estimates over time meaningless, and conceals material historical information from investors making large purchasing choices. It’s okay for estimates, like stock prices, to change prospectively. It is not okay to retrospectively smooth out historical estimates.

      I’m not saying what Redfin does is illegal, because no regulation captures its false and misleading estimate practice. I’m just saying it is false and misleading, and fortunately for Redfin, not regulated.
      Jan 16
  • Facebook public2
    That's why you rely on an agent instead of an algorithm that cannot see a house lol
    Jan 14 1
  • Walmart QTFP86
    It isn’t like all agents are Redfin agents so it is only partially true.
    But Redfin does not do their due diligence neither their algorithm is well equipped so looks like they inflate the price which gives benefit of doubt to seller mostly.
    Jan 14 0
  • Indeed Pk3KVF3LfD
    TreeFity let us know when the koolaid wears off.
    7d 3
    • Indeed Pk3KVF3LfD
      Don't worry they'll drag you down too, it is just a matter of time.
      7d
    • Stripe bhYX87
      For the record, I like Redfin and bought my first house through Redfin. But I kind of agree with Indeed’s arrogance dig on the basis of your arrogance.

      You accused me of “missing the point” and now dismiss the feedback on trend smoothing it a “meaningless argument.” It’s pretty clear Redfin employees don’t actually care what their users think. As someone who bought a home on Redfin in the past, and then watched Redfin manipulate the values of homes in my neighborhood in prior periods to make it appear as if they were still going up while I was regularly checking historical sales data and it was objectively proven that they were going down, it was a trustbuster. When I stepped back to consider the incentives and conflict of interest Redfin, it was clear that Redfin was financially motivated to understate historical values in a non-transparent way, and the only way to catch on is to actively check your home value at least a couple times a month and make note of it, which I did.

      I think you believe users won’t notice, but they do, I had two friends in real estate say they think that happens but couldn’t prove it (since the history is scrubbed). I seriously doubt any users will ask you to go back and rewrite historical estimates if you leave them fixed, interesting argument though. I mean keep doing it, it benefits the company, but at least be honest that it is just an unregulated form of false advertising, not for user’s benefit.
      6d
  • Google KytN86
    Disagree. While you have a point, the extra commissions they may get through manipulation is miniscule and is not worth tampering your product for.
    Jan 14 0

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