There are no guarantees in life, but this is about as good of a position as we could be in with the housing market being in about as bad a position as it could be in. 4 million units, 4.1 million units, that’s about as low as you can go. You know, there’s a placeholder in the earnings script for me to write the housing section and I don’t do it until like a day or two before the earnings script. But the placeholder was called the whale turd slides off a shelf and somehow falls into a trench to the bottom of the ocean. So that means that, yes, housing was bad in Q4, Q1, but now we expect it to be worse and we don’t think it could get that much worse. The people we’re talking to right now are the people who have to move. They’ve been divorced for a year and they’ve been living with someone who’s driving them crazy.
They hired a third child and they’re still living in townhouse with one extra bedroom.
Ygal Arounian: Very helpful. Thank you.
Operator: And the next question comes from the line of Tom White with D.A. Davidson. Please proceed with your question.
Wyatt Swanson: Hey, this is Wyatt on for Tom. Thanks for taking our questions. I just had one on buyers rep agreement requirements. Could you help us understand what the net effect that this could have on your business? Like do you foresee that it might negatively impact on your ability to convert some of your traffic into customers? Or could it pressure the ROI on the leads you send to partner agents? Thank you.
Glenn Kelman: We don’t think it’ll have much of an impact, but it’s hard to say. So last week, some of the brokers, some of the portals talked about having a very nominal agreement where instead of disclosing the ultimate price that a real estate agent would charge, you’d simply say that the tour is free and all we’re doing is sending you out on the tour with a contract that covers one day or one tour. And the notice requirement signed that could be when you sign up for the tour or could be after the tour. Also we saw several states like the state of Maryland object to this. So we’re trying to respond to it in real time. Obviously, we want to do what’s right for the consumer. We’re going to comply with all of the rules that are being put out by the National Association of Realtors and others.
We’re just trying to figure out the lay of the land. But it seems pretty clear right now that the industry is trying to figure out a low friction way for websites to introduce homebuyers to real estate agents. And so we’ll be on the same playing field as other real estate websites and we think that the friction will be fairly low. It’s a separate question as to whether or not that’s the way it should be. We’ve always been an advocate for consumers and sometimes we’ve wanted to create a more transparent marketplace around the fees that different agents charge, but that’s easier said than done.
Wyatt Swanson: Okay. That’s helpful. Thank you.
Glenn Kelman: Right now, it’s trending toward low friction, very low friction.
Operator: [Operator Instructions]. Our next question comes from the line of Dan Lee with J.P. Morgan. Please proceed with your question.
Dan Lee: Great. Thanks for taking my question. This one for you, Chris. Kind of feels like 1Q was an interesting quarter from a marketing and engagement perspective with you spending less against a significant marketing push from all of your rivals. So just curious if there are any learnings you can share around what you might have learned from this dynamic in 1Q? And then I think going forward you said marketing will be a $150 million in 2024, which does suggest you might — you’re expecting a sequential growth or a growth in 3Q, just curious of what’s giving you the confidence to lean back into marketing into back half of the year?
Chris Nielsen: Yes. Let me start with the second question first, which is we did provide guidance on marketing spend for the full year as well as for the second quarter. And in general, what you should take away from that is that we spent dollars in Q1, we’ll spend more in Q2, but then both in Q3 and Q4, sequentially, our marketing spend will be down. And that is related to what Glenn was talking about earlier, which is we’re taking a look at the macro environment here and just be really being really careful about spending those dollars into a housing market that is not super strong right now. And so mostly what you’ll see us doing, again, is spending less as the year goes on, on marketing. And then just in terms of Q1, what worked well, how that’s gone, this is really tried and true within Redfin, which is we compete really well for website visitors.
Our teams just do an excellent job of having the right information, the right data structures, the right initiatives, to allow consumers to find information, but also for search ranking sites to have a good view on the quality of the information that we provide. And so, competing for traffic in that way is the most important thing that we did in the first quarter and it’s the most important thing that we do frankly all the time.
Dan Lee: Got it. And just as a follow-up and I’m sorry to keep going back to the representation agreement and around the commission piece, but how do you plan on positioning like who’s going to pay for the fee when you roll out the representation agreement? It does feel like there’s a lot of different views around like actual implementation that goes going to be paying for the buyer agents. So just curious to hear how you’re thinking about this as you plan to test the agreement in June.
Glenn Kelman: The question is somewhat moot because the buyer’s agent is going to be paid out of the proceeds from the sale in most cases. So we could say that the buyer is paying that because he’s the only one bringing a checkbook to the closing table. We could say the seller is paying that because that’s money that would otherwise been wired into his account. It’s just being deducted from the proceeds. And from the agent’s perspective, what’s important is that the buyer doesn’t have to pay for this out of pocket in advance of a transaction essentially that it can be financed.
Dan Lee: Got it. Understood. Thank you.
Operator: And the next question comes from the line of Jay McCanless with Wedbush Securities. Please proceed with your question.
Jay McCanless : Thanks for taking the questions. The first one I had, the pullback that you talked about, Glenn in traffic and foot traffic in April and into May, have you seen that same type of decline in sign and save markets? Or is it too early to tell since I think you said in the comments that you went fully live with that on March 7?
Glenn Kelman: Yes. I can only presume that the pullback has been universal across sign and safe markets and non-sign and safe markets. Remember, we’re not talking about fewer Redfin buyers per se. We’re talking about on our own listings when we host an open house, how many people are coming through that open house? They could be neighbors, they could be buyers represented by other brokers, they could be buyers represented by Redfin, but most of them are just going to be members of the general public or customers of other brokerages. And I think what we’re really trying to say here wasn’t a comment on what portion of home sales are we going to represent the homebuyer. Sign & Save is helping with that. I think we’re commenting on how many people want to buy houses generally and houses that used to get eight or 10 offers are now getting two or three, houses that got two or three offers are now sitting for an extra week.
We’re seeing more price drops just over the past eight or 10 days. The data that we have that not everyone can access aside from the anecdote from our agents about what happened this weekend is number of people who were touring, who didn’t end up writing an offer, number of listings that after a week or two weeks didn’t withdraw from the market because they’d accepted an offer, number of listings that dropped their price. So before sales goes down, what you see is activity in the market go down in ways that we can track a little bit better and we saw that go down a little bit. So that’s in line with the interest rate increase. And the only thing I would say contra to that is just that the signals have been mixed. Like we had a crappy week last week and then we had an awesome weekend.
It’s just crazy right now where things look really bad and then they look really good and then they look really bad and then they look really good. So I think the consumer will settle down a little bit. It’s kind of netting out to, you know, to what we think is going to happen across the year and we’re pretty comfortable with it, but lots of mixed signals.
Jay McCanless : Got it. And then, second question, I know you all published the details around the lawsuit settlement. Could you just remind us what other potential lawsuits are out there that you might need to settle? And I guess in terms of the SITC or suit, any impact we need to be mindful of as it relates to Redfin?
Glenn Kelman: We think the settlement was worthwhile. It’s small relative to what other brokerages paid consistent with our having been a consumer advocate. There are two other cases that are out there that name Redfin, they are much earlier stage instead of being on behalf of sellers, they are on behalf of buyers, our defenses are really good.
Jay McCanless : Okay, great. Thank you. That’s all I have.
Operator: At this time, there are no further questions. And I would like to turn the floor back over to Glenn for any closing comments.
Glenn Kelman: We just appreciate you sticking with us through thick and thin. This business has gotten meaningfully better and ain’t the same old song. Even though the housing market is bad, Redfin has put our shoulder to the wheel and we think we’re going to keep taking share and we think we’re going to have a good year. So, appreciate you listening to all these crazy questions and all of our crazy scripts over the past year, but we’re pretty excited about 2024. Thanks everybody.
Operator: Ladies and gentlemen, that does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
