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Several real estate companies saw their stock prices plummet following news of the $418 million settlement the National Association of Realtors reached last week over commission bundling and inflating, namely Redfin. But CEO Glenn Kelman, who has held the role for almost two decades, seems newly optimistic about Redfin\u2019s future following the settlement.<\/p>\n
\u201cFor 18 years, we\u2019ve been trying to change the game and give consumers a better deal,\u201d said Kelman in an interview<\/a> on Wednesday with CNBC. \u201cSometimes that\u2019s been easy, sometimes that\u2019s been hard, but over the weekend, it got easier.\u201d<\/p>\n The discounted residential real estate brokerage\u2019s business model strays away from simply ensuring commissions aren\u2019t baked into listings<\/a>. Redfin charges between a 1% to 1.5% fee for selling and buying on its platform, compared to 2.5% to 3% from traditional brokerages. The company has been hit hard by rising mortgage interest rates amid higher inflation, and from April 2022 to December 2023, Redfin reduced its employee count by 40% and cut its lead-agent force by 40% through \u201cinvoluntary reductions and attrition,\u201d the company said. Redfin employed about 1,776 real estate agents on average last year<\/a>, down from 2,426 in 2022. The company also shuttered its online home buying and selling business, RedfinNow, in November 2022.\u00a0\u00a0<\/p>\n However, the day the news of the settlement dropped, listing demand jumped 14% and over the weekend, homebuyer demand rose 5% for Redfin on a weekly basis, Kelman boasted. Last year, Redfin saw 50 million visitors per month, on average, to its website and mobile app. Kelman said the weekend surge in demand wasn\u2019t just seasonal, although there might be a little seasonality at play; (spring is a pivotal season<\/a> in the housing world, known for selling and shopping). \u201cThat\u2019s an unusual signal for us,\u201d he said.<\/p>\n It\u2019s hard to say the dust has settled in the week since the National Association of Realtors reached a settlement<\/a> over an alleged conspiracy to conflate commissions. The country\u2019s largest trade association agreed to pay $418 million in damages across multiple antitrust lawsuits\u2014although it still denies any wrongdoing. The real estate market index is down 19% based on the past five days and 49% during the past six months.\u00a0<\/a><\/p>\n Kelman, for one, doesn\u2019t seem too concerned about the settlement\u2019s impact on his business.\u00a0<\/p>\n \u201cWe\u2019re just getting more aggressive about selling homes directly to consumers,\u201d Kelman answered in response to a question about how Redfin is adjusting in the aftermath of the settlement. \u201cThere are so many people who called us over the weekend after the news of the settlement broke and said, \u2018I don\u2019t want to pay a buyer\u2019s agent. I want to hire you to sell homes directly to homebuyers.\u2019\u201d<\/p>\n Kelman then touted Redfin having already saved consumers more than a billion dollars in fees, and that over the weekend, he saw \u201ca higher affinity\u201d for the company, with more people asking to list their homes and be represented by Redfin. He mentioned Redfin\u2019s business model, and that they charge a fee as low as 1% to list a home, or 2% if they sell directly to a buyer\u2014and if representing a buyer on a listing from another brokerage, they refund part of the commission to the buyer.\u00a0<\/p>\n Kelman suggested that everyone is just trying to figure out if the real estate world is really going to change. \u201cEveryone wants to know, is this for real?\u201d It is real, but the settlement is still awaiting court approval and wouldn\u2019t take effect until this summer. Kelman seems to think that buyers can go either way from here, whether they choose to enlist the help of an agent or not.\u00a0<\/p>\n \u201cWe just think people ought to have a choice; we are buyer agents too,\u201d he said. \u201cSo we know that people need guidance through the whole process\u2026but they shouldn\u2019t have to hire someone, they should do it because they want to\u2014and when they do that, they should have a voice in how much that agent gets paid. That\u2019s the premise of this reform in the industry.\u201d\u00a0<\/p>\n In his mind, now that consumers know what\u2019s going on, it\u2019ll be hard for them to go back to the old regime, or standard commission structure of 5% to 6% that\u2019s baked into a listing and split between sellers\u2019 agents and buyers\u2019 agents. So far, Redfin has had customers ask if they could lower or eliminate commissions on already-existing listings, Kelman said. However, the number of homes listed over the weekend that no longer offered a commission to the buyer\u2019s agent hadn\u2019t changed much, he added. \u201cPeople are still processing the news,\u201d Kelman said.\u00a0<\/p>\n In October of last year, Redfin announced it was cutting ties<\/a> with the National Association of Realtors. NAR\u2019s policies were an issue, but there was more than one factor at play. \u201cNAR still blocks sellers from listing homes that don\u2019t pay a commission to the buyer\u2019s agent, and it blocks websites like Redfin.com from showing for-sale-by-owner listings alongside agent-listed homes. Removing these blocks would be easy, and it would make our industry more consumer-friendly and competitive,\u201d Kelman and others on the leadership team wrote in a scathing letter<\/a>.<\/p>\n On the day the settlement was made public, Kelman wrote<\/a>, in a long-winded reaction, that change that\u2019s beneficial to consumers is good for Redfin. But of course, Redfin is facing its own lawsuits\u2014including, a very recent one<\/a> filed last month in California, that claims NAR, the California Association of Realtors, and Redfin, conspired to inflate commissions. In his reaction to the settlement, he wrote, \u201cthe settlement doesn\u2019t address the lawsuits against Redfin,\u201d without expanding further.\u00a0<\/p>\n<\/div>\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n