Normally, it wouldn’t be such a big deal with investors about a real estate company like Redfin (NASDAQ:RDFN) expanding its compensation programs. But that’s what it’s doing, and investors didn’t take it well at all, sending Redfin down nearly 1.5% in Friday afternoon’s trading.
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The new agent compensation plan, known as Redfin Next, got its start back in October of 2023. Now, it’s coming to 25 new markets and giving agents some new opportunities along with it. Under Redfin Next, agents can get splits up to 70% for deals they source themselves, and have their business expenses covered in the process. Redfin Next now covers over 140 agents in the Redfin Next sphere of influence thus far, and more will likely come on board in August when the new plan takes effect.
A Strange New Market
Those agents will need plenty of help, too, because we’re moving into a very strange new market for real estate. A different report from Redfin noted that there are some locations in the United States seeing rent rates decline as property owners can’t actually fill vacancies. The “Sun Belt”—or much of the southern half of the United States from Southern California all the way across to Florida and up into North Carolina—is proving tough to connect renters to properties.
Basically, with the pandemic and the rising interest in remote work, construction ramped up to accommodate the interest. But with return-to-office mandates flooding the field, the demand for Sun Belt properties is in decline, and that’s leaving Sun Belt renters in a better position.
Is Redfin Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on RDFN stock based on one Buy, 12 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 29.9% loss in its share price over the past year, the average RDFN price target of $6.83 per share implies 9.3% downside risk.
