Redfin may not be enforcing a ban on private listings, but outgoing CEO Glenn Kelman has made it clear in extensive documents that private listings is a strategy he believes is bad for consumers.
Kellman announced Tuesday that he is stepping down from the company he has run for 20 years. The documents were released as part of a lawsuit between Compass and Zillow, but also include internal communications from Redfin that reveal Kelman’s views on some of its biggest competitors and policy issues facing the industry. In fact, the documents show that Kellman and his company were in a somewhat unique position, agreeing in part with both Compass and Zillow.
“I very much agree with Compass. … Listing agents and homeowners should be able to control how their properties are sold,” Kelman said. “I don’t agree that you should be able to reveal who a listing is being sold to.”
In an affidavit included in the document, Mr. Kelman also expressed his belief that private listings are bad for consumers and opposed Redfin building its own network, even though it could potentially profit from it.
“I’m a software person. I just want to build the best software and win that way, instead of playing reindeer games with inventory,” he said.
Kelman also said he understands the desire of some owners and other brokerages to give sellers more control over whether metrics such as days on the market and price history are included in listed stocks.
“We’ve sat in the living rooms of people who are concerned about that, and we understand that concern. But it doesn’t extend to the point of, ‘I don’t want to sell to that group of people, I only want to sell my home to this group of people,'” Kellman said. “That’s the bright line.”
These comments and others in the document highlight the complex and delicate position Redfin, which Rocket acquired last year, occupied as both a portal and an intermediary as the debate over listing access rages on in the broader real estate industry.
Redfin did not respond to a request for comment Wednesday.
Inside the Redfin
According to the documents, there were questions within Redfin about why it would develop a private listing policy similar to Zillow’s.
Glenn Kelman of Redfin. Image courtesy of AJ Canaria
In his sworn testimony, Kelman noted that various leaders within Redfin have different views on how to proceed. Kellman specifically pointed out that Redfin’s head of real estate services, Jason Aleem, has a different view than his own.
In an April email, Joe Rath, Redfin’s senior director of securities operations, asked Kellman and others why Redfin was preparing to follow Zillow’s lead.
“I still struggle to understand why they are rushing to make this pledge when they could have increased their listings on Redfin.com and waited to better understand the downstream impact,” wrote Russ, now Rocket’s head of industry relations. “The challenge before Compass (and Berkshire), Howard Hanna, and Douglas Elliman is how to get them listed on Zillow. We have an opportunity to get those listings while they discuss next steps.”
Kelman said he understands and supports some of the changes to the listing related to days on market and price history. These statistics are the main reason why Compass prefers to start listing as a private exclusive stock. He summed up Redfin’s position in one sentence: “We want MLSs to help us control how our listings are marketed, not who we market them to.”
Kelman also discussed what he thinks could happen if private listings take root, even in the single market.
“Howard Hanna’s domestic market share can be said to be negligible. What are you worried about?” he said. “That’s because you can capture a significant share of the market, but when buyers come to real estate websites like Homes.com, Redfin.com, and Zillow.com, and those properties are no longer showing up, all of a sudden it becomes unbearable.”
Branch with Zillow
Although Redfin’s public position at the time appeared to mirror Zillow’s, Kellman suggested in a sworn statement that there was, in fact, no relationship between him and other major companies.
“Our position is different from Zillow in that we want to give sellers more control over how their listings are marketed. So I think it’s very similar to Compass’ position,” Kelman said. “It’s similar to Zillow in that we want every buyer to see every home for sale. So that’s where I knew Zillow’s position and opinions were likely to diverge.”
Kelman also wondered if Zillow would “bypass the MLS” and enter into a listing agreement with a brokerage firm.
“When you’re the No. 3 website, I think we’re selling it, you worry about it,” Kelman said.
In fact, according to court documents filed by Compass, Zillow was trying to reach a deal with a brokerage firm while discussing how to secure the widest possible source of property information.
Although Redfin is not a defendant in the antitrust case in which it filed documents, Compass alleges in its complaint that Redfin colluded with Zillow regarding its private listing policy. But Mr. Kelman rejected that claim.
“He’s a complete wreck,” Kelman said.
Insights about Kelman himself
Mr. Kellman’s reputation as an executive willing to take a stand for a cause he thought was right was evident in his sworn testimony.
“Homebuyers should be able to see all the homes for sale, whether they’re on Realtor.com, Zillow.com or Redfin.com,” Kelman said at one point. “You shouldn’t need to know the secret handshake to see all the homes for sale. There’s a long, long period of time. [sordid] There is no history of real estate being selectively sold to different groups based on the property and the people in it, but that is wrong. ”
“Why is that important to you as the CEO of Redfin?” Zillow asked during Kelman’s deposition.
“Well, we’re all here to make money, but at some point in your life you’ve made enough money that you want to feel like your business is going to improve the industry,” Kelman said. “Redfin defines itself as a consumer advocate, so I think this is an easy way to be a consumer advocate.”
Mr. Kellman has consistently said he is looking for ways to empower consumers and save them money.
“When you ask yourself, why isn’t technology making real estate more efficient? Why aren’t startups lowering the fees real estate consumers pay? It’s because the accumulation of capital and power is actually making it harder for brokers to make a living and harder for consumers to get a good deal. And that’s why I got into this mess in the first place.”
Ultimately, he said he was concerned that a private listing would undermine his efforts.
“You don’t want to get towards the end of your career and feel like you didn’t actually make the industry better, but you did something to run the table as a business,” Kelman says. “I worry that pocket listings can be a strategy that is good for companies but bad for the world.”
In the deposition, which took place in October, three months before he announced he would exit the real estate industry completely, Mr. Kellman revealed his stake in the private listing battle.
“I think what’s most likely to happen over the next five years is that people are going to have to go to different websites to see as many homes for sale as possible and have to worry about not being able to see them all,” Kellman said. “It’s really frustrating.”
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