Back in July of 2006, Glenn Kelman of online real estate company Redfin, went to Washingtom. He told the House Financial Services Committee there that the existing real estate industry was stunting any sort of possible innovation and that needed to change.
As an upstart that offered both a new approach to helping customers buy and sell their homes, and a discounted fee for both buyers and sellers, Redfin was in the crosshairs. “Competing agents have threatened us with violence, intimidated our customers and tried to block their offers,” Kelman said. Just as bad, he said, any attempts to get relief from what seemed like impartial regulators didn’t work, since “the commissioners worked for the brokerages we were complaining about. It has been like a Western where the cowboy promises to report the desperadoes to the sheriff, only to have the desperadoes whip out their badges.”
Thirteen years and one catastrophic housing crisis later, not a whole lot has changed in real estate. Many real-estate agents have made their peace with Redfin and other discounters. Companies with entirely new approaches, known as “iBuyers,” are emerging, but most of America still transacts real estate in an industry known for its I’ll-scratch-your-back approach.
That may soon change. A class-action lawsuit just filed against the National Association of Realtors and big brokerages may upend the industry, although Kelman told MarketWatch that he believes any evolution will be organic, not litigated.
As of the end of last year, Redfin commanded only 0.81% of the share of homes sold across the country, according to an investor presentation. But Kelman is content to keep playing the long game. He thinks Redfin’s ability to make customers instant offers or help them sell their homes with an agent positions it better than Zillow which makes its money selling the names of people who request an instant offer to agents who spend money for those leads.
Over the last 52 weeks, Redfin shares have dropped 11%, compared to a 7% gain for the S&P 500.
MarketWatch sat down with Kelman to discuss the state of an industry that’s suddenly in flux after years of stasis.
MarketWatch: Any thoughts on the lawsuit announced in March?
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