Redfin CEO Glenn Kelman. (Redfin Photo)
As Redfin prepares to go public, it is making in-roads in the nation’s most unique and expensive real estate market: Manhattan.
Last month, Redfin added Manhattan listings through the Real Estate Board of New York (REBNY), a company spokesman said. Though Redfin established a presence in the New York area back in 2009 and later expanded service all over the region, including Westchester, the Bronx, Brooklyn, Queens, Staten Island and New Jersey, it took eight years for Redfin to break into Manhattan.
Redfin wouldn’t say why it took so long, but a lack of a traditional Multiple Listing Service in Manhattan, a database of listings that agents pay dues to access, certainly seems like a factor. Redfin competitor Zillow faced similar issues years ago and bought real estate website StreetEasy for $50 million in 2013 in order to become a major player in the New York real estate scene.
REBNY has been working to fill the MLS gap, and just last week it announced plans to syndicate its Residential Listing Service listings through a single, centralized feed. That is a big change from the current setup, where residential sales and rental listings are sent out via hundreds of individual feeds. The move is meant to push back against StreetEasy, which just started charging brokers to display their rental listings.
The lack of a traditional MLS is just one of several factors that make New York City, and Manhattan in particular, a “peculiar” real estate market, said Dolly Lenz, a veteran New York broker and founder of Dolly Lenz Real Estate, which focuses on luxury real estate consulting, sales and marketing. New York is not a welcoming place for new companies trying to push their way into the market, she said, and its dynamics — with trends like housing co-ops and land leases — are different from pretty much everywhere else around the country.
Redfin is looking to raise up to $100 million in its IPO, and Lenz suggested that some of that money could be used to help the company gain a greater share of the market in Manhattan and New York as a whole. The long-time New York broker also had some advice for Redfin CEO Glenn Kelman about operating in the city.
“If I were Glenn, I would go after some very specific segment of the market,” Lenz said.
A Redfin listing in the Chelsea neighborhood of New York. (Redfin Photo)
Redfin’s New York listings suggest the company is only interested in deploying its agents on pricey properties. The company has a minimum price threshold that varies by location throughout the U.S. For homes under that price, Redfin will send buyers over to a partner agent and doesn’t let users set up tours on the Redfin site. In Manhattan, that threshold looks to be about $5 million.
That doesn’t surprise Lenz, as most brokers in New York would rather focus on high-end properties.
“The big dollars are in luxury,” Lenz said. “Most brokers don’t want to sell a $500,000 apartment, or sell 10 of those, if they can sell one $5 million apartment. So (Redfin’s) going to have a lot of pushback at the $5 million level.”
It’s unclear when exactly Redfin would go public or how many shares it will offer. Redfin would be the first Pacific Northwest company to go public in 2017.
The 13-year-old self-described “technology-powered real estate brokerage,” which has been a recent candidate to test the public markets, is active in more than 80 markets across the U.S. It has helped customers buy or sell more than 75,000 homes worth more than $40 billion combined.
Redfin reported a loss of $28.1 million on revenue of $59.9 million for the first three months of 2017, according to the SEC filing. That’s compared to a net loss of $24.3 million on revenue of $41.6 million from the same period a year ago.
Redfin reported 20 million monthly active visitors to its site and mobile app in the first quarter of the year, which was up 44 percent year-over-year.
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