Redfin, Opendoor Team Up for iBuying Option
SEATTLE – Real estate brokerage Redfin announced that it’s partnering with iBuying giant Opendoor in select markets to allow homeowners to get instant offers on homes they want to sell.
iBuyer companies purchase homes directly from consumers. They generally say they’ll purchase the home at fair market value, allowing sellers to bypass listing it publicly on the MLS, though sellers usually pay higher fees for the convenience.
Opendoor is currently the largest firm in the iBuying space, but real estate brokerages, such as Keller Williams and Coldwell Banker, are increasingly piloting their own instant offer programs.
The Redfin-Opendoor partnership “is a risky, capital-intensive business to buy all our customers’ homes,” said Glenn Kelman, CEO of Redfin, to MarketWatch. But he believes that some home sellers will appreciate the convenience and option of bypassing the traditional sales process.
Redfin already offers an instant offer service called RedfinNow, but the partnership with Opendoor will allow it to expand into markets where the service isn’t currently available.
Under the partnership, home sellers in Phoenix and Atlanta can request an Opendoor offer through Redfin’s site and mobile apps. Home sellers will have the opportunity to compare listing their home on the open market with a full-service agent versus skipping the process by receiving an instant offer from Opendoor.
The companies will decide later whether to expand the partnership into additional markets. Redfin says it also will continue to expand RedfinNow.
“Every homeowner should have a choice between putting a home on the market via a Redfin agent or taking an instant cash offer,” Kelman says. “No matter how fast RedfinNow expands, there will always be homes we can’t buy because it’s so hard to match our capabilities and capital with the market’s ups and downs. Just as traditional agents are our partner, for brokered sales our own agent can’t handle, Opendoor is our partner for giving customers reliable, competitive offers on homes we ourselves can’t buy.”
However, recent studies have called into question the iBuying model.
A recent MarketWatch analysis of multiple transactions involving iBuyers shows that the instant offers, on average, tend to be 11% less than offers received by owners who choose to sell their homes on the open market, when fees and other costs are factored in.
Source: “New Redfin-Opendoor ‘iBuying’ Partnership: Another Transformation in How You Sell Your House,” MarketWatch (July 11, 2019) and “Opendoor and Redfin Partner to Provide More Options to Home Sellers,” Redfin (July 11, 2019)
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