A year ago, the high-tech real estate market Zillow Group Inc. (Nasdaq: Z.) announced that it will shut down its iBuyer division, shut down its Homeflip business, and cut 25% of its workforce.Digital real estate brokerage this week Redfin Co., Ltd. (Nasdaq: RDFN) did the same, closing its Redfin Now division, discontinuing its Homeflip business, and cutting its staff by 13%. Many would see this as a sad sign of a downturn in the real estate economy, but many real estate professionals aren’t shedding tears.
“The general consensus[among real estate agents]is, ‘I said so,'” Robert Whitfield, the broker and owner of Advantage Realtors in Atlanta, told Benzinga. “Many people, especially the public, rely on companies like Zillow for marketing. The problem is they take the data we paid for and try to sell it back to us. I have never been so impressed with their business model or marketing services.
Zillow and Redfin ended up competing with the same realtors they depended on for support and advertising dollars through online brokers and house-flipping arms. The agency complained that it was paying exorbitant fees to market with Zillow and that Zillow and Redfin’s retail real estate business model kept fees low. The agency also said online brokers struggled to provide the same customer service that traditional realtors provide.
Redfin is one of the few real estate companies investing heavily in online home buying with the goal of making the real estate transaction more seamless. However, the company has found that customer demands are outstripping its digital capabilities and the current market downturn makes it a tough business.
“Redfin agents are cheaper for customers compared to traditional agents, but they handle more clients. So what you get is not the personalized support you get from selling or buying,” he said. Whitfield, who has been selling properties for 21 years, said. “They have also reduced our listing fees from 1% to a 2% volatility per listing. We have charged less than 3%.” has never been.”
Redfin has set a goal for the future to adjust its customer service to reflect what it hears in the market, CEO Glenn Kelman said in a memo to employees. “Next year, as we do every year in good and bad markets, we will show who we really are by putting our customers first and taking market share.”
As of the end of October, Redfin’s inventory of homes was valued at $265 million, with an additional $92 million in commitments to sell. However, the company expects to have less than $85 million in homes by the end of January and clear all inventory by the end of the second quarter of 2023.
“Redfin needs to unload the property because their algorithms screwed up and misjudged the market. It’s a property we never accepted to do,” added Whitfield.
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