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Redfin CEO Glenn Kelman at the Technology Alliance annual luncheon in Seattle. (GeekWire Photo / Kevin Lisota)

Both Zillow Group and Redfin have evolved from just trying to simplify residential real estate, to controlling the process from start to finish by buying and selling directly to consumers. But the Seattle real estate rivals arrived at this destination with different motivations.

At an event in Washington D.C. held by the U.S. Department of Justice and Federal Trade Commission that fittingly focused on competition in real estate, Redfin and Zillow broke down their reasons for jumping into home buying and selling. Redfin made the move more than a year ago with Redfin Now, while Zillow just embarked on the journey recently and is still in the middle of its first sales.

Kathleen Philips, Zillow’s chief legal officer, says she was skeptical when Zillow jumped into home buying and selling through the expansion of its Instant Offers program. However, she quickly learned there was a significant demographic that would rather take a little less money on a sale for the convenience and certainty of completing the process quickly.

“It sounds incredibly obvious, but it took us a long time to focus on the fact that once someone starts shopping for a home, particularly once they have identified the home, all they care about is getting into that home,” Philips said. “They actually don’t care about their old home anymore … We think this is an alternative that some consumers want, and that’s why we’ve launched this.”

Kathleen Philips.

Zillow listed its first home for sale in the suburbs of Phoenix last month. It paid $410,000 for a house it is looking to sell for $425,000. Zillow CEO Spencer Rascoff has said the company’s goal is not to make a ton of money on each and every home but to target small profits on a huge volume of sales.

More than a year after launching Redfin Now, the company recently expanded the amount of home value it is willing to keep on its books from $10 million to $25 million. Reflecting on the program, Redfin CEO Glenn Kelman said getting into direct sales creates an interesting dynamic, where the company is on the opposite of the negotiating table from the customers it is trying to help. On one side is an agent who might even be associated with Redfin telling sellers to hold out and sell for more via traditional means. Redfin on the other side is telling customers to take the easy money, even if it’s a little less, and Kelman says about one in 10 want the easy money.

Kelman said a primary drivers for his company’s entrance into direct home sales was the lack of access to credit for consumers. Kelman says his company, through Redfin Now, has basically become a bridge for buyers from the old home to the new one.

“The problem is that 10 years ago it used to be that you could borrow money for your next house, while you owned your current house,” Kelman said. “Now, you as a consumer can’t. But even though credit has become tight for consumers, it has become ridiculously easy for businesses. So we are basically a provider of credit, and that to me is why consumers are paying that extra amount.”

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