Redfin CEO: Los Angeles home prices may be near bottom
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Glenn Kelman, chief executive of the online real estate brokerage Redfin, met with me Friday and spoke frankly about price and sales declines in some of the real estate markets his company serves across the country.
Lately, Kelman said, Los Angeles has been a pleasant surprise for his company. Low prices have spurred buying activity, and Southern California, which had been a drain on the company, is now a profit center. ‘Price discovery is happening’ in Los Angeles, Kelman said, somewhat wonkishly.
Kelman said Los Angeles prices have taken their biggest hits already, unlike some other places he would not name. (The company is based in Seattle.)
Kelman has not been an industry cheerleader. He comes from the software world and isn’t a licensed real estate broker.
Since its start in 2006, Redfin has made plenty of enemies among real estate agents by providing information on its website many conventional brokers didn’t want out there. The site shows, for instance, how many times a home for sale has cut its price, and by how much. It also lists previous sale prices for the same house so a buyer can easily tell what the seller paid.
The website, which lists homes for sale with loads of additional data on the properties, is free and contains no outside advertising. The company’s revenue comes from home sales by its agents, who are paid salaries instead of commissions. Clients typically search for homes on the website, then use their agents to tour properties and negotiate deals. The company rebates 50% of the agent’s commission to the customer.
Kelman said Redfin’s website views have tripled since last year and that revenues are up more than 40% from a year ago. But the company recently laid off 20% of its staff.
What do you readers think? Will firms such as Redfin replace old-fasioned real estate agents ? Or do most buyers and sellers need more hands-on assistance from a traditional agent ?
-- Peter Y. Hong