Redfin and iBuyer companies had the biggest gains in a rally following the Aug. 17 deadline for practice changes.
Investors appeared happy with the real estate rule changes that went into effect over the weekend — and were especially bullish regarding companies that can offer discounts on commissions.
What happened with stocks? While the Dow Jones Stock Exchange rose less than 1% on Monday, Aug. 19, many real estate stocks performed much better. Redfin led the way, jumping more than 17% to close at $8.76 a share.
iBuyer companies also fared well: Offerpad was up 12.5%, while Opendoor stock rose 9.5%. RE/MAX, which has struggled over the past two years with declining revenue and agent counts, saw its stock rise 5.5%. Companies like Compass and Zillow had jumps in the 3-4% range.
Redfin surge: It’s been a bit of a roller coaster ride for Redfin stock this year. Shares topped $10 in January before falling to $5.18 in April. The share price was bouncing around $7 this month before the Aug. 19 jump.
During the company’s second quarter earnings call, CEO Glenn Kelman said Redfin is well-positioned to adjust to the changes, particularly as consumers do more negotiating over buyer agent commission fees.
“We’ve tried in the past to recruit buyers by offering them a better deal, and mostly they’ve been confused by that because they haven’t been the ones paying their agent. (Now) we think we can use price as a weapon to gain share,” Kelman said during the earnings call.
Are commissions already falling? Some company leaders have reported that average commission fees were starting to fall ahead of the Aug. 17 NAR settlement deadline, and they were adjusting by going after more market share.
In Opendoor’s earnings call, CEO Carrie Wheeler said the company was seeing about 10 to 15 basis points of pressure on commission rates, which in recent years have been 5-6%, split between the buyer agent and listing agent.
“While that’s not a huge amount, it’s decidedly different than all prior years where that rate has been pretty flat. So change is coming,” Wheeler said.
