Firm sets stall out for the future
Redfin, the Seattle-based tech-oriented real estate brokerage, posted its Q2 data for 2021 just over a week ago, showing that the company had more than doubled its revenue year-on-year to $471 million.
The only fly in the ointment was that losses had swelled to almost $28 million – the equivalent of $0.29c per share - from $6.6 million during the same period last year.
Despite this, Nasdaq reckoned that both sets of figures were “notably better than analyst projections”, as experts had predicted just over $455 million in revenue, and a net loss per share of $0.33.
In a statement, Redfin’s CEO Glenn Kelman was in bullish mood, saying the company had gained more market-share in the second quarter “than at any point since our 2017 initial public offering”.
Tellingly, Redfin’s real estate investment arm RedfinNow bought 40% more homes in Q2 than it did for the whole of 2020, while revenue from properties grew 139%.
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Speaking to MPA, Redfin’s chief economist Dr Daryl Fairweather (pictured) expressed confidence in the company’s trajectory, saying it had put “a lot of investment” into what she described as “the number one brokerage website in the United States”.
Although she declined to comment on the company’s results, she said Redfin was “definitely in a healthy state”, claiming the firm had a distinct advantage over the competition in today’s overheated housing market, which has led to bidding wars between buyers.
She said: “We try to educate our real estate agents on how to win. A lot of times customers will fail a couple of times and may have to try several times before they get an offer accepted.
“If customers know from the very beginning exactly what the market conditions are and they’re working with one of our agents who are doing plenty of deals and know the local conditions, they can make a strong offer sooner and then get the home that they want, instead of spending months facing rejection over and over again - it’s really just about knowing what it will take to win a home.”
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She said Redfin’s technology, involving instant virtual tours at the click of a button, enabled agents to achieve better results while saving customers money. This included refunding buyers on the commission once they closed.
Unlike most brokerages, where agents are independent contractors who solely earn commissions, Redfin agents are full-time employees who receive benefits, a base salary and bonuses for closed sales, a company spokesperson explained.
The company boasts that its agents close almost three times the number of deals than other agents and sell homes for $2,200 more on average.
Dr Fairweather added: “We have something called the compete score that people can look at to gauge how difficult it will be to win a home, and we have metrics on how long it takes the home to sell.
“We pride metrics on what we call the Redfin estimate, which will indicate what we think the home will ultimately sell for. All of that helps customers make a really strong offer and know exactly how quickly they have to move to get the offer accepted.”
Looking forward, the spokesperson said Redfin was looking to integrate software to pool people’s employment records and eliminate the need to fill out an entire application online and get pre-approved.
In fully underwritten deals, Redfin also intends to offer a closing guarantee, vowing to refund clients $1,000 of the deposit guarantee in the event of a delay in closing within 21 days.
