A continued look at Redfin, a full service real estate investment. A detailed look at the company’s multiple revenue streams which differentiates it against the

Why hasn’t Redfin entered the NYC real estate market?

The NYC real estate market is a world unto itself, and almost everything about it is different from the rest of the country.

Primary Trade Association
Everywhere Else:  The National Association of Realtors
New York City:  The Real Estate Board of New York

Primary Housing Type (Sales)
Everywhere Else:  Mostly single family homes, some condos
New York City:  Mostly coops, many condos, some single family homes

Typical Rental Transaction
Everywhere Else:  Transacted directly between the owner and the tenant
New York City: Both the owner and the tenant are represented by agents

Rental Broker Fees (when applicable)
Everywhere Else: 4% – 8%, paid by the owner
New York City: 10% to 15%, paid by the renter

Rent Regulation
Everywhere Else: Minor regulation in a few cities
New York City: 2/3 of the rental stock is subject to regulation

Major Real Estate Portals
Everywhere Else: Zillow, Trulia, Realtor.com
New York City: Streeteasy

New York City also:

  • Is the only major city not to have a widely-used multiple listing service
  • Has the lowest vacancy rates, the highest rents, and the highest sales prices per square foot
  • Has a highly complex and unique property tax system

For all of these reasons, NYC is a complete anomaly when it comes to real estate, which is why the biggest real estate websites have not been able to penetrate the market here (the Zestimate for my apartment is about 5x too high).

In the case of Redfin in particular, it would be even harder. Unlike the other big real estate sites, Redfin is a licensed brokerage, which allows it to tap into multiple listing services around the country.  This is why its data is more accurate and complete.  In NYC, which does not really have an MLS, Redfin’s business model just doesn’t translate.

For Zillow/Trula/Realtor, whose revenue comes from advertising, there is nothing to lose by including NYC, even if the information is spotty. However, Redfin’s revenue comes from the broker commissions it earns on actual transactions. And I suppose they have decided that the costs of operating as a broker in NYC are just not worth it.