R
eal estate stocks saw significant gains after the recent rule changes went into effect on August 17. Investors were pleased with these changes, particularly those related to commission discounts offered by companies like Redfin and iBuyer firms.
On Monday, August 19, the Dow Jones Stock Exchange rose less than 1%. However, real estate stocks performed much better, with Redfin leading the way. Redfin's stock price jumped over 17% to close at $8.76 per share. Other iBuyer companies also saw significant growth: Offerpad increased by 12.5%, while Opendoor's stock rose 9.5%. RE/MAX, which has struggled over the past two years due to declining revenue and agent counts, saw its stock price rise by 5.5%. Companies like Compass and Zillow also experienced growth in the range of 3-4%.
Redfin's stock price has been quite volatile this year. It reached $10 in January before falling to $5.18 in April. This month, shares were bouncing around $7 before the August 19 jump. During Redfin's second-quarter earnings call, CEO Glenn Kelman expressed confidence in the company's ability to adapt to these changes, particularly as consumers become more comfortable negotiating over buyer agent commission fees.
Kelman stated during the call, "We've tried in the past to recruit buyers by offering them a better deal, but mostly they've been confused because they haven't been the ones paying their agent. Now, we think we can use price as a weapon to gain market share."
Some company leaders have reported that average commission fees were already starting to fall ahead of the August 17 NAR settlement deadline. This trend is expected to continue as more companies compete for market share.
During Opendoor's earnings call, CEO Carrie Wheeler mentioned that the company was seeing about 10 to 15 basis points of pressure on commission rates, which have traditionally been around 5-6% split between the buyer agent and listing agent. Wheeler noted, "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."
