At Inman Connect, I was excited to see some of the Duets. I guess they called them that because if they’d called them Debates, some of the characters wouldn’t have shown up for the point/counter-point situation.
One duet of particular interest was between Glenn Kelman, CEO of Redfin and Lennox Scott, owner of John L. Scott Real Estate.
Some folks from outside of the Pacific NW may have been wondering why they paired these two strong personalities together.
Vulcan Capital, the investment arm of Microsoft co-founder and billionaire Paul Allen, is one of the largest investors in Redfin, a company committed to “disrupting” the real estate business through their limited service and rebate business plan. Vulcan Capital invested a huge amount of cash in Redfin, but when it came time to list and market their new condo developments, they didn’t hire Redfin.
Instead, they turned to John L. Scott Real Estate to list and market the 100′s of condominiums.
What better person than Lennox to chit-chat with Glenn?
Brad Inman was the moderator and subjected the two to some piercing questions. First question: What’s your market share? Lennox Scott, with over 61,000 closed transactions last year, grossed more than 17 billion dollars in sales volume. They have 132 offices and over 4,500 sales associates located throughout Washington, Oregon, and Idaho and Scott said they have a 17% market share in a 3-county area.
When it was Kelman’s turn to answer, he hemmed and hawed a bit and confessed to a 2% market share in Seattle. However, I couldn’t find even that. No matter how I looked at the stats, the highest I could find was a market share of 1.37% for Seattle and a total market share of 0.57.
This chart compares two years of Redfin’s market share in 10 Puget Sound cities from July 1, 2005 to Jun 30, 2006 and from Jul 1, 2006 to Jun 30, 2007 (for sold units of single family homes and condos – all numbers are pulled from NWMLS).
The market share numbers come from the total number of sold units in each city. So, for example, from Jul 1, 2006 to Jun 30, 2007 Redfin had a total of 221 sold units in Seattle out of a total 23,576 sold units (that number is in my calculations but not on the graph) in Seattle for a market share of 0.94%. For the entire market area of 10 major cities noted, there’s a total market share of 0.57 for the last 12 months.
There were other stumbles along the way. When the subject of compensation for sales agents came up, Kelman wouldn’t discuss salary. But Lennox Scott seemed unable to articulate why a commissioned sales person may be preferable to one paid on salary. Which I would have been glad to do, if anyone would have asked me.
At one point, Brad Inman questioned the wisdom of Redfin’s move into other cities when their market share in Seattle was so dismal. I, for one, think it’s a brilliant move, and urge Redfin management to continue its move and penetration into other markets, especially the South and the Mid-West
Note: Beau Betts had a great post yesterday about Redfin v.s. Debra Arends, the real estate agent from the 60 Minutes show.