Redfin and Others May be Less "Disruptive"
The disrupters watch for next-level disruption.
(Mountain Lakes, NJ, October 5, 2017) — Fresh off a successful debut on the stock market, Redfin founder Glenn Kelman took something of a victory lap at this summer’s Inman Connect conference in San Francisco.
Redfin has opened offices nationally with a strategy of paying salaries to agents and charging sellers a fee of just 1 percent or 1.5 percent, depending on the market. That rock-bottom level of commission makes sense on a $400,000 or $500,000 sale, but not on entry-level homes.
"We still haven’t figured out how to make money selling a home that costs less than $200,000," Kelman said. "Making money selling a $150,000 home is hard."
That might be good news for traditional brokers who see Redfin as a threat. The median price of a home sold in the United States in July was $258,600, meaning a large share of transactions fall outside of Redfin’s wheelhouse.
Even a disruptive broker like Kelman frets about being displaced himself. "We worry about Google and Facebook rolling over the whole real estate industry," Kelman says.
But real estate consultant Stefan Swanepoel sees an upside to the real estate industry’s long-lamented fragmentation and lack of standardization.
That might be the very thing that has kept the real estate industry from being taken over by Amazon or another consolidator.
"We are not a commodity," Swanepoel told the Florida Realtors annual convention in August.
More on the future of real estate appears in the October issue of Real Estate Broker’s Insider.
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