Many real estate investors think iBuying is a massive market opportunity, but Zillow's (NASDAQ:ZG)(NASDAQ:Z) surprising exit is making people think twice. Will other players in the space like Redfin (NASDAQ:RDFN), Opendoor (NASDAQ:OPEN), and Offerpad (NYSE:OPAD) call it quits as well? In this Fool Live video clip, recorded on Nov. 9, Fool.com contributor Matt Frankel, CFP®, and real estate analyst Matt Argersinger, discuss whether investors in these other companies should be worried.
Matt Argersinger: Grasshopper just asked the question and I think there's an obvious answer here, but he said "Are Opendoor and Redfin planning on staying in the iBuying business?" I think Opendoor for sure. I mean, it is their business, their direct play on iBuying. Redfin is interesting. We talked about Opendoor and Offerpad so far. What do you guys think about Redfin? Frankel, you know that company probably best. What do you think about their iBuying opportunity relative to Zillow's or the others?
Matt Frankel: If one of the three were to get out of the business, it would probably be Redfin. Not that they're planning on it, but they are the most likely to get out if I had to name one. The reason being is that they don't need the iBuying business, their core brokerage business is growing so fast.
Unlike Zillow's Premier Agent business, which is pretty mature at this point, Redfin's core business is still growing fast. If something happens like Zillow where they're not making the right unit economics or something like that, I could see them making a knee-jerk reaction like Zillow and saying, we're just going to focus on our core brokerage business because that has enough potential on its own. But I don't think they have any plans to get out. I think all three have said that they are open for business and doing well, so I don't think they're getting it out anytime soon.
Argersinger: Yeah. In a way, I guess I like that statement like not needing iBuying to grow. In a way, that makes Redfin a little more interesting just because they are growing faster than a Zillow legacy businesses. So you're betting on Redfin, which also has a good amount of brand power and data. Obviously, I don't know about you guys, I tend to like Redfin's user interface a little better than Zillow and some of the others. It's very easy to use. In a way, I've always liked the fact that unlike Zillow, which is perpetuating the current model with their premier agent business.
They're essentially digitizing and monetizing the existing status quo of the housing industry. Redfin is from day one has at least tried to disrupt that a little bit by doing a different agent model, trying to cut costs, trying to partner with buyers and sellers in a way that's different. To the extent that business can continue to grab market share and they can do iBuying then it makes sense to do it versus putting all the chips in like Zillow just did.