Ygal Arounian: Thanks Glenn. That’s helpful. And maybe a follow-up to the comments you were making about home prices might be softening you’re seeing some signals, can you expand on that a little bit what the signals you’re seeing are, and obviously that’s a really good thing for affordability but sliding home prices also come with various other consequences for those that are looking to sell their homes, so just wanted to get maybe some expanded thoughts on that point? Thank you.
Glenn Kelman: Well first of all, I do see falling home prices is the only way to break the log jam, so we can argue about the social benefit of having affordable housing that’s a mixed bag in American politics because so many homeowners want to see their prices remain high. But for Redfin, just commercially, and for any broker that depends on home sales sure, we might make one percent less revenue per transaction because commissions are a percentage of the sale price, but transactions are not going to go up in a significant meaningful way until prices become more affordable. The basis for our believing that that could start to be happening are the following. And I want to caveat this by saying, this is the last element added to the script, the most hotly debated, some of it’s just based on my own personal conviction.
But I think something might, there might be a disturbance in the force as they say. So number one, we’ve just had more listing consultations lately. So generally demand has been pretty good on the Redfin side as we emphasize we’ve had traffic, and good pull through from traffic into inquiries. But that’s been especially strong on the sell side, which is unusual. We’ve really been inventory locked for a long time. Number two, price drops have been strong, they’re always strong in the fall because there’s a bunch of inventory that didn’t sell and it gets marked down but it’s stronger this year than at any point since 2015. And then the last part, is just anecdotal, and it’s based in part on my own long experience here at Redfin, that once there is any drop in prices at all that brings more sellers out because right now they think well time is on my side if I wait till next year maybe interest rates will ease and prices will either be the same or higher but if suddenly you get in a world where whoa, I want to sell now because the market might get worse.
I think that’ll get sellers off the fence. So look there’s a world where you know a catastrophic drop in prices really freezes up the market too. But I think, some soft fitting and home prices is just like soft fitting and prices and the economy across the board. It just gives the economy which has been overheated a little breathing room.
Ygal Arounian: Thanks Glenn. That’s really helpful, certainly agree on the affordability point. Thanks.
Operator: Our next question is from John Campbell with Stephens. Please proceed with your question.
Jonathan Bass: Hey, this is Jonathan Bass on for John Campbell. You guys have obviously done a great job turning the rentals business around. I’m hoping you can help unpack some of that strength we’ve seen. So how much of it would you accredit to help and then maybe share gains versus the macro?
Glenn Kelman: Some of it is undoubtedly macro, but that business is just executing better because I actually think the conditions were better six or twelve months ago than they are now. And sales productivity is just through the roof. So John’s done a really good job getting that sales for us to execute. We’re generating more demand where it matters the most, just lining that up against the customers we have who need demand. So I do think there’s just much better execution than there was before and because there was so much foundational work that we had to do with the brand and renaming the company rent and unifying the code base between apartment guide and rent.com. We just now have a very clear field to do some things where Redfin has deep conviction that it can drive traffic.
So sometimes you make speculative bets where you wonder well anyone really like this. But when it’s just firing up the email campaigns and doing link building and working with recommendations which have worked over and over again to bring people back to the site it gives us good confidence that we can keep it going. So we just inherited a business that was broken in some ways coming out of bankruptcy and we fixed it. And now I think, we can build on that to go on the attack.
Jonathan Bass: Got it. Thank you. And then, maybe if you could dig a little further into what you guys are doing or what you guys need to do to hit those mortgage in title attach rate goals?
Glenn Kelman: Some of its just basic sales execution. It takes time, but you go from market to market you meet the sales managers. You meet the agents. Sometimes there are agents who consistently are never recommending the equity, there are sales managers whose whole teams are like that. You sit down and talk to those teams about whether you’re really doing what’s right for the customer or if another lender is sending you baseball tickets every month. So some of it is that. What’s impressed me about Bay Equity, is just, I thought those guys might rest invest and get very short-term oriented and they’re just animals. They are thinking about all sorts of long-term ways to make lending fundamentally better to lower our cost basis to make our product more competitive.
We just got a great team of people there and we are really confident that we offer better service than other lenders and a better rate. So it’ll take time but that number is going to keep going up. It can never go up to like 50% or 75% because money is a commodity and there are always going to be some lenders who have a pre-existing relationship with a customer and decide to buy the business. But it can be much higher than it is now and we’re just going to keep grinding it up.
Jonathan Bass: Got it. Thanks.
Operator: [Operator Instructions] Our next question comes from Jay McCanless with Wedbush. Please proceed with your question.
Jay McCanless: Thank you. Good afternoon everyone. So wanted to find out when you talked about possibly deferring some of the costs you normally spend in the first quarter to for sale later in the year. Any type of commentary about what percentage maybe of OpEx that would be in a normal year, or is it going to come out of out of your cost of goods sold how should we think about that?
