Redfin… I don’t hate you as much as I hate Zillow but I do hate you. I know that “hate” is a strong word but I’d be lying if I watered down my feelings.
I can’t say that Redfin is completely evil because it has created a fantastic real estate application and has helped to push competing brokerages to create better sites for their agents.
My reasoning is transparent. Redfin, like ZipRealty before it, and a handful of other local fly-by-night operations are killing profit margins for real estate brokerages and agents alike. There will always be discount brokerages, I get that, but Glenn Kelman and Redfin seem to be doing it with a smile and a wink and it’s the smugness without reproach which Glenn Kelman and Redfin espouse that makes me especially hateful.
The worst part is that Redfin couldn’t exist without agents but it seems that agents are bending over backwards to work for Redfin. There are currently 152 agents working for Redfin in Massachusetts, according to MLS PIN, and that doesn’t count Partner Agents which are agents who work for competing real estate companies but accept referrals from Redfin. Redfin recruited me to become a Partner Agent as one point in time but I quickly decided that it wasn’t for me because I didn’t want to be a Redfin drone.
Read through some of the reviews by former Redfin agents on Indeed.com.
I never got promoted despite receiving consistent 10s on their Redfin customer satisfaction reviews and my tenured experienced as a successful real estate agent. Redfin is a clickish company managed by nerds with marginal people skills. They preach inclusion and transparency, but they do not practice the mantra with their own employees. The deal writing salaried agents do well income-wise and do get great benefits, but they pay dearly for them in the way of slave labor.
That review, entitled “Horrible Place to Work – Don’t Believe the Hype!“, currently has 209 “Yes” votes which is, by far, the most of the 22 total reviews.
Here’s my point. Redfin is the shiny toy under the Christmas tree but there’s not much underneath the gleam. Redfin agents comprise some of the most inexperienced agents out there. It’s almost impossible to create a trusting relationship, something that is important for most buyers, with Redfin since it slices and dices the real estate transaction into its parts. One Redfin agent might show up for the showing, another Redfin agent might show up for the home inspection and another Redfin agent might show up for the final walk-through. There’s little continuity!
I’m in the process of building a new real estate brokerage and am actively recruiting agents. I want to empower agents who decide to make the choice to join my firm. I can’t do that by stripping their earning potential down to the bare bones because most agents don’t earn a lot of money as it is.
Read “Redfin soars 45% after IPO: CEO calls it ‘Amazon of real estate’” on TechCrunch.
Investors seem to like Redfin’s improving financials. The company has shown strong year-over-year growth. Its top line was $267.2 million revenue for last year, up from $187.3 million in 2015 and $125.4 million in 2014. Losses narrowed to $22.5 million for 2016, down from $30.2 million in 2015.
Redfin’s first quarter showed growing losses, largely due to the introduction of its mortgage origination business. In the first quarter of 2017, it lost $28.1 million, up from the $24.3 million loss in the same quarter of last year.
Improving financials?! Redfin lost $52,700,000 over the past two calendar years! It lost $28,100,000 from January to March of 2017 alone! The mantra of top line growth that is being espoused by Wall Street gurus is a false deity.
Redfin went public now because it knows that the real estate market is nearing its peak and it also knows that it’s screwed when the next real estate bubble pops. ZipRealty was swallowed by Realogy back in 2014 after losing money for years. Expect a company like Realogy to swallow Redfin once its stock price tanks.
By the way, this might be a great opportunity to either short RDFN or buy put options. Why not both? Maybe Redfin agents will take my advice? It might turn out to be the most money they’ve ever made from Redfin…