The real-estate industry is an outdated, inefficient industry in need of disruption.
With an enormous market opportunity, three companies are leading the charge to disruption: Redfin - $RDFN, Zillow - $ZG / $Z, and Opendoor - $IPOB
Here’s how
With an enormous market opportunity, three companies are leading the charge to disruption: Redfin - $RDFN, Zillow - $ZG / $Z, and Opendoor - $IPOB
Here’s how

First, let’s talk about why the industry is so outdated and inefficient.
Throughout the U.S, there are over 1.4 million real-estate agents, many of them struggling to attain a successful level of clients.
The industry is dominated by large, old brokers, such as Century21...
Throughout the U.S, there are over 1.4 million real-estate agents, many of them struggling to attain a successful level of clients.
The industry is dominated by large, old brokers, such as Century21...
and Re/Max, in addition to other, more localized brokers.
These brokers charge sky-high commissions. Compared to a rate of 2% in Australia or 1.5% in the U.K., American brokers charge a whopping 6%, 3% for the seller’s agents and 3% for the buyer’s.
These brokers charge sky-high commissions. Compared to a rate of 2% in Australia or 1.5% in the U.K., American brokers charge a whopping 6%, 3% for the seller’s agents and 3% for the buyer’s.
Thus, on a $300,000 dollar house sale, the seller is inundated with $18,000 in fees. Add in seller concessions, closing costs, repairs, staging and so on, and selling a $300,000 home quickly becomes a $30,000 venture.
In addition to charging these large fees, real-estate brokers work through the special-interest, archaic MLS. The MLS is effectively a group of local organizations that have access to data related to home sales, with a massive set of bylaws and strict, inefficient standards.
Clearly, this industry is in need of disruption. Now let’s break down the three biggest disruptors:
(1) @Redfin - $RDFN: Redfin’s primary mode of disruption is through its agent and commission models. Instead of hiring agents as independent contractors, who set their own schedules and take on their own workload, $RDFN has hired agents who are paid a salary.
These agents are full-time employees. Importantly, $RDFN has used this model to counter-position itself to the real-estate industry; traditional brokers can not afford to just eliminated all of their partnerships and move to a salary-based model.
Even more significant is Redfin’s commission model. For $RDFN to sell your house, you pay a 1.5% fee, and only a 1% fee you also buy with $RDFN.
If the house needs repairs, $RDFN will fix it up for you and list it for only a 2.5% fee, still less than a traditional broker.
If the house needs repairs, $RDFN will fix it up for you and list it for only a 2.5% fee, still less than a traditional broker.
Finally, if your home is one that would typically sit on the market for months or you just want to get rid of it quickly, $RDFN will buy it for a 7% fee. They will then flip and sell that home for a profit.
The average $RDFN customer saves $11,800 on their home sale and sells their home faster and for more. $RDFN also is more efficient, has more repeat business, and has higher customer satisfaction than traditional brokers and is by far the most trafficked brokerage website.
Pre-pandemic, $RDFN was growing revenue rapidly and market share, and they expect to continue to do so afterwards.
(2) @zillow - $ZG / $Z - The best-known brand in real-estate disruption, $Z has over 197 million monthly unique users and had over 8 billion visits in 2019. In fact, “Zillow” is more searched in Google than “real estate.”
$Z allows customers to buy, sell, rent, and finance homes. $Z runs a “premier agent” platform, in which agents can pay to get access to the enormous number of customers using $Z ‘s platform. Since the buyers don’t pay the fees, this is an easy way to match buyer and agent.
$Z also buys houses like $RDFN through their “Zillow Offers” platform, charging a ~10% fee. They also have “Zillow Home Loans” which helps to finance home purchases.
(3) @Opendoor - $IPOB: Opendoor’s platform is based on the idea of buying, selling, and moving at the tap of a button. Like $RDFN and $Z they buy homes directly from people for a 7% fee and sell them. Opendoor is the market leader, selling 4.4x homes than the next competitor.
Currently, they are in just 21 markets, but @Opendoor is expanding rapidly. They estimate that through their platform, sellers can cut tens of thousands of dollars in fees off of the sale of a $250,000 home. Within hours of deciding to list a home, Opendoor will make an offer.
Sellers then have a few days to accept or decline the offer. Then, they can search, visit, and buy from thousand of home options. Buyers can take self-tours of homes, get financing within the app, and make digital offers.
Like $RDFN, Opendoor gets high customer satisfaction rates, and they claim to be 12x more efficient than a traditional agent. With just a 2% market share in existing markets and plans to expand throughout the nation, Opendoor is just scratching the surface.
If Opendoor can achieve just a 4% market share in 100 markets, their revenue will 10x from here. This is a very exciting growth company, and visionaries like @chamath agree, announcing yesterday he was taking Opendoor public through his SPAC $IPOB.
All three of these companies offer exciting opportunities to disrupt a market they value at $1.6 trillion. All three can be winners and I am very excited about their prospects.
Thank you for reading, and feel free to share comments, thoughts, or questions!
Thank you for reading, and feel free to share comments, thoughts, or questions!