To all the agents in the house,
Redfin is truly different. Its agents are employees, not independent contractors, directed by managers to pursue certain leads and are less financially incentivized to help clients buy or sell a home for the most money. Also, these leads come not from leaving flowers with a doorman, or going to the right Zoom cocktail party but systematically through Redfin's website.
I wrote all about all this in a detailed story of Redfin's past, present and future as a real estate brokerage. I highly recommend you read it. It is, as my editor put it, "long."
And yet, it's unclear what comes next for Redfin. See, the brokerage is neither a disruptor nor a failure. Its real estate service operations actually make money. Redfin agents are exceptionally productive, and, perhaps in a less helter-skelter market, more willing to stay with the company.
The business model, though, has not spawned copycats. REX employs agents, but we've only heard of that company because of its litigation against the National Association of Realtors, Zillow, and multiple multiple listings services. Zillow could in theory compete with an audience that dwarfs Redfin's. But judging from last week's earnings call, Zillow may be the Bee Gees of real estate, very effective at a couple of things but never tapping the full potential.
The closest possible competitor is mortgage lender Rocket, which must ramp up website visits to compete. Plus, Rocket's most recently recorded quarterly real estate transaction volume was $2.3 billion, a good distance from Redfin's $14.9 billion.
So, does that mean Redfin can swim along, neither taking over real estate as we know it, but running a profitable business?
One variable is a class action lawsuit accusing the brokerage of race discrimination. Filed in federal court in Seattle, the case is expected to soon reach a settlement that requires a change in Redfin company policy. At issue is whether the leads that Redfin agents focus on has the effect of disproportionately white customers being served. A settlement could end up with a slap in the wrist for Redfin. Or it could change the expectation for Redfin, or other brokerages, in adherence to fair housing law.
Agents, let me know your Redfin thoughts. Please email me at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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