Redfin Estimate might be making homes more expensive

Brokerage founder Joseph Alongi claims tool has played a large role in rising prices

Oct.October 02, 2018 10:00 AM

(Credit: iStock)

Redfin Estimate could be inflating the value of certain homes.

Joseph Alongi, founder of the low-fee brokerage SoldNest, recently argued that the company has had a big impact over the past few years on rising home prices, according to Inman. He told the publication that Redfin’s estimate would adjust right after the home hit the market and then adjust two or three more times within the first two or three days. He believes user engagement plays a role as well.

At one house in Silicon Valley listed for $1.78 million, for instance, one of Alongi’s clients made a $1.9 million offer. The next day, the Redfin estimate hit $1.95 million, and it reached $2.21 million by the third day.

He maintains that part of the issue is Redfin’s status as a brokerage, meaning most of its revenue comes from agents making a commission.

A Redfin spokesperson told Inman that the company’s Estimate tool is automatically updated daily for homes on the market and weekly for homes off the market.

“The Redfin Estimate uses more than 500 data points, including market data and neighborhood information, to generate an estimated value for a property,” the spokesperson said. “We can’t share more explicit details about the kind of data the algorithm analyzes.” [Inman] – Eddie Small

Related Articles

Brokerage firms are strategizing ways to make up losses after the cost of application fees was capped at $20. (Credit: iStock)

Brokerages on rental application fee cap: “It hurts”

Alex Rodriguez (Photos by Guerin Blask)

A-Rod is coming for NYC and SoFla real estate

There will be 70 agents based at the new office (Credit: iStock)

Compass opens Long Island City office as new-development sales surge

The Daily Digest - Tuesday

New life for Toys “R” Us, Masa Son is “embarrassed” with the Vision Fund: Daily digest

Nooklyn CEO Harley Courts (Credit: iStock)

Brokerage slashes agent commissions, delays payments after rent law change

The Daily Digest - Tuesday

NYC apartment prices hit 4-year low, Pacific Park developers reveal new plans: Daily digest

LeBron wanted it and California’s governor signed it. What the college athlete compensation law means to real estate

Racial inequality in homeownership across US is sharpest in New York: report