Redfin executives were happy to discuss commission lawsuits during their firm’s third-quarter 2023 earnings call with investors and analysts Thursday evening, just not the one their firm was recently named as a defendant in.
“Let’s talk about the copycat lawsuit first, mostly to say that we are not going to talk about it,” Glenn Kelman, Redfin’s CEO said in response to an analyst’s question.
Although Kelman did not want to comment on the lawsuit, known as Gibson after its lead plaintiff, he told listeners that he was confident that his firm would be able to prevail.
“This company exists to give consumers a better deal. For 18 years we have busted our tail to work with the industry to find different ways to save people money,” Kelman said. “Every possible configuration of a business that could put the customer first, we have tried, and we are absolutely proud of everything we have done, which means we have very good defenses for this lawsuit.”
In regards to the outcome of the Sitzer/Burnett commission lawsuit, Kelman said it was one that Redfin has long prepared for, which he felt was evident in the firm’s commitment to giving consumers a better deal and the announcement of their break from the National Association of Realtors.
Despite Redfin’s preparedness, Kelman acknowledged that the jury verdict may very well lead to a revolution in the industry.
“If buyers’ agents become less common, Redfin will prosper in that world too,” Kelman said. “We run one of the largest brokerage websites in America, as well as a national network of contractors trained and licensed to provide low cost on demand property access. We’ve built self-service technology for buyers to set up their own tours and make offers on our listings without a buyer’s agent.”
Kelman said Redfin could use that technology to market properties listed by Redfin directly to consumers. He also noted that Redfin could open the platform to other listing agents who work with Redfin as partners.
Redfin’s CEO was also positive about where the housing market is headed, despite a dire 2024 forecast by Goldman Sachs.
“I feel a twinge of optimism. Most people buy a home to move to a better life,” Kelman said. “Those plans can be deferred from 2022 to 2023, but not forever.”
According to Kelman, the number of homeowners asking for listing consultations has increased meaningfully in the past few weeks as part of an overall year-over-year increase in consumers contacting Redfin agents.
Also fueling Kelman’s optimism is Redfin’s increase in market share, which rose from 0.75% in Q2 2023 to 0.78% in Q3 2023 even as the housing market continued to cool. Kelman’s firm also posted a smaller net loss during the third quarter compared to a year ago, at $19 million versus $90.2 million in Q3 2022. This smaller net loss came despite a 12% annual decrease in revenue for the quarter, which came in at $296.0 million. Kelman attributed this in part to the shuttering of its iBuying venture Redfin Now a year ago.
“Our third quarter results show how much more efficient we have become over the last year,” Kelman said.
Looking ahead, Kelman said Redfin plans to continue trying to attract visitors from other listing portals and to recruit more top performing agents through the firm’s variable compensation plan, Redfin Max, which it is currently piloting in San Francisco and Los Angeles.
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