Third quarter tallies for real estate sales give us a good look into the growing divergence between old and new ways of doing business within the housing industry. Zillow nailed the quarter by earning a net profit of $9.24M to mark $1B in revenue year to date. The real news, however, is that Redfin, the tech broker, outscored Zillow with a Q3 net profit of $10.6M, up from $5.7M last year.
Clearly, Redfin’s tech-driven approach is working. While “old school” brokers are struggling to grow profits on razor-thin profits, this tech broker’s discount model is generating returns. With a net income of $109M, Redfin’s business model scales consumer traffic and nabs a piece of the commission angle. Industry insiders say that it’s a question of when, not if, CEO Glenn Kelman will be able to guide the iconic tech company into a stratospheric $1B business.
Another industry upstart, Compass, recently announced $100M in funding on its $1.8B valuation. Its CEO, Robert Reffkin, is on the record with his plans to take 20% of the nation’s top metros market share within the next two years. Many already see Reffkin as a “significant” industry leader.
Realtor.com reported a 20% jump in its “digital real estate” income quarter over quarter. With its total revenue of $271M, Realogy posted a 42% increase of net income at $9.5M.
Re/Max didn’t bother to post Q3 earnings this year. The company reported only that it’s in the midst of an internal investigation into “allegations of wrongdoing in employment practices and conduct.”
Realogy and its $1.7B in revenue reported an increase of just 2% year over year for an overall profit of $9.5M for Q3. Realogy pointed to environmental disruptions (hurricanes), inventory shortages and its own executive makeover as the causes of its modest progress.
Though not publically traded and not required to post public results, Keller Williams indicated that its year over year growth in sales volume increased by 16.3% and 7.3% in sales transactions.
Most industry experts point to 2018 as a growth year as well as a year of continued consolidation, investing and hiring.