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