Web-based real estate brokerage Redfin is expanding the availability of its instant offers service via a partnership with iBuying company Opendoor.
The partnership, announced last week, will allow homeowners who sell their homes on Redfin’s platform to get instant offers on their properties.
The way iBuying works is that companies like Opendoor buy the homes directly from consumers, at what they say is a fair market value price. The benefit for homeowners is a quick sale, though they usually have to pay higher fees and may miss out on a bigger offer they’d receive if they list their home normally.
Opendoor is said to be the largest iBuying company around, though it faces competition from real estate brokerages such as Keller Williams and other listings platforms such as Zillow.
“It’s a risky, capital-intensive business to buy all our customers’ homes,” Glenn Kelman, CEO of Redfin, told MarketWatch about the partnership. Still, Kelman said he believes that some home sellers will appreciate the convenience and option of bypassing the traditional sales process.
Redfin already has an instant offer service called RedfinNow, but it is only available in a few select markets. By partnering with Opendoor, Redfin can offer the service to many more homeowners.
For now the offer is being made available in Atlanta and Phoenix. Homeowners there can request an offer from Opendoor via the Redfin site or mobile app. They can then compare the offer they receive with their home’s estimated value, and decide if it’s a worthwhile option.
The companies will late evaluate whether they’ll expand their partnership into additional markets. Redfin says it also will continue to expand RedfinNow separately.
“Every homeowner should have a choice between putting a home on the market via a Redfin agent or taking an instant cash offer,” Kelman said. “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.”
Meanwhile, 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.