Redfin, the Seattle-based high-tech brokerage, is set to launch its iBuyer platform Redfin Now in Austin, Texas, in July, Inman has learned.
The expansion will likely transform the market into one of the most competitive iBuyers fields in the country. Opendoor, Zillow Offers and Offerpad, all of which deploy technology to offer homeowners a fast and certain sale by quickly buying and reselling their homes, already currently operate in Austin.
“It’s an attractive market given that a lot of the homes fit within our buy box as far as price point and the age of the inventory,” Redfin spokeswoman Alina Ptaszynsk told Inman.
Like other iBuyers, Redfin Now uses an automated valuation model to provide a cash offer on request to homesellers. If a seller accepts the bid, Redfin will conduct an inspection and adjust the offer depending on the results. Should the seller choose to move forward, they can close the deal on their timeline. The service charges a 7 percent commission rate, far more than its discount brokerage offering.
Redfin Now also operates across the California regions of the Inland Empire, Los Angeles, Orange County and San Diego, as well as in Denver and Dallas.
Unlike Opendoor and Offerpad, Redfin does not represent Redfin Now as a cheaper option than using a real estate agent. In a comparison of selling options distributed by Redfin at an annual conference hosted by the National Association of Real Estate Editors, Redfin says that Redfin Now pays a sales price that is “typically lower than listing [with a brokerage].”
In contrast, Opendoor and Offerpad suggest on their websites that they pay full market value and help sellers net more proceeds from a sale then they would if they used a traditional agent.
As illustrated in the cost comparison, Redfin can present its core discount brokerage offering to prospective customers alongside Redfin Now. Regardless of what option a consumer chooses, the company makes money.
Zillow Group also can provide two selling options to consumers — Zillow Offers or listing service from one of its agent advertisers. Like Redfin, it also doesn’t represent its iBuyer service to cost less than using an agent. Opendoor and Offerpad do not currently provide a listing brokerage option; they only buy and resell homes. The companies do, however, refer sellers whose homes they decline to buy to agents at outside brokerages in exchange for referral fees.
For its flagship listing service, Redfin typically charges sellers a commission between 3.5 percent and 4.5 percent, lower than a typical commission of between 5 and 6 percent. Meanwhile, 1 percent to 1.5 percent of that fee, the list-side commission, goes to the Redfin seller’s agent, while 2.5 percent to 3 percent typically goes to the broker that brings a buyer to the sale.
Redfin Now operates on a significantly smaller scale than some other iBuyers. But it’s growing rapidly.
The brokerage doesn’t appear to disclose the number of properties it buys and sells in SEC filings. But it does report the dollar transaction volume of homes it sells. In the first quarter of 2019, revenue for its properties division, which is the revenue Redfin rakes in by reselling homes, came out to $23 million. That’s up by a little over $3 million year-over-year.
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