During Inman Connect Now, Redfin CEO Glenn Kelman also noted that there is pressure on real estate agent commissions right now and expressed support for the MLS system.
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Redfin CEO Glenn Kelman said this week that his company could eventually come to resemble the Uber or Amazon of real estate, even if it doesn’t surpass rival Zillow, and noted the real estate market in the United States could eventually come to more closely resemble markets in other countries with regard to commissions and multiple listing services.
Kelman made the comments during a Thursday session of Inman Connect Now moderated by Knock CEO Sean Black. During the conversation, the two leaders touched on an array of topics, including Redfin’s growth and place within the pantheon of big real estate technology companies — with Kelman admitting that “we probably waited too long to build a national brand.”
Kelman went on to say that there was a debate at Redfin about whether the company should expand like a website — which is to say, rapidly and to a national audience — or like a retail company, which would entail a slower rollout. Redfin ultimately opted for a slower rollout, but Kelman noted that the “debate held us back.” He also said that the company’s focus on for-sale homes has meant that “Redfin wasn’t really meeting anyone until they turned 34” — though the firm is now working to engage consumers at younger ages by incorporating rentals onto its site, among other things.
The big takeaway from all of these comments, though, is that Kelman doesn’t believe Redfin needs to be the biggest or most dominant real estate website in the world. He compared his company to Amazon or Uber, noting that the ride hailing startup “probably cares about its traffic, but what it really cares about is whether people use it to get a ride.” His point was that Redfin wants to be a “destination” that offers push-button real estate services.
“I think Redfin could live in a world where a Zillow or a [Realtor.com] or a Trulia could be the Google and we are the Amazon,” Kelman said, adding a moment later that “if we can offer that push-button service, I think we could live without being the number one real estate website. Because that Zillow mountain is a tall one to climb.”
Kelman also weighed in during the conversation on how the future of real estate might look. He mentioned that currently, when it’s easy to sell a house, there is downward pressure on commissions. However, he also added that Redfin previously surmised that buyers cared about agent commissions, and that turned out to not be the case.
“Redfin was fundamentally wrong about commission in this one respect, we thought that buyers were price sensitive and really buyers aren’t,” Kelman explained. “The buyer doesn’t pay the real estate agent, so when you try to explain how you’re saving the buyer money, it’s a lost cause. What the buyer really cares about is winning the house.”
However, Redfin was right that sellers are sensitive to the commissions they pay, Kelman added. And he went on to point to a handful of commission-related lawsuits and legal cases, noting that if sellers do eventually stop paying buyers’ agents — which is closer to the way things work in other countries — that could drive demand for push-button services oriented to would-be homebuyers.
“If we get into a world where the buyer has to pay the buyer’s agent,” Kelman said, “then I think we’ll see much more interest in buying over the phone, unrepresented, or with dual agency where the listing agent is giving you some guidance.”
Kelman later went on to note that other countries also lack centralized multiple listing services (MLSs) where people can turn to a central location to find all the listings in a given area. The U.S. has centralized systems, but Kelman said that there are forces in the industry right now that would weaken the MLS, for example by encouraging agents to put their listings onto just one website. Redfin, however, supports MLSs, with Kelman expressing support for an “open, fair market” — though he added that the MLS system may be “less stable than most people in the U.S. realize.”
“Housing works better here because of the MLS,” Kelman concluded, “but the MLS needs to keep pace with everything that’s happening in technology.”