Redfin quietly launched a new feature that lets homebuyers without an agent make offers on homes directly through its website, bringing back an initiative the company first tried more than a decade ago.
The new Redfin Direct program kicked off in Boston about six weeks ago and is part of what CEO Glenn Kelman calls the tech-powered brokerage’s second act of changing how homes are bought and sold. The program allows buyers to begin the process of buying a home directly through the website and go through a 55-question form to build a competitive offer.
Kelman acknowledged the new program for the first time on a call with analysts Thursday. The goal is to get more offers for sellers who list their homes with Redfin. Kelman doesn’t see the program expanding to a large majority of its listings — most buyers will still want and need an agent — it creates another way for people to buy homes.
The so-called “Buy-It Button” is another example of Redfin’s push to fix the complicated and expensive process of buying a home, an increasingly popular target among real estate tech companies.
“This is something we’ve always wanted to do, but we had to get the listing share, the buyer audience to really build a marketplace where we could put these together,” Kelman said in an interview with GeekWire.
For homes Redfin is listing in Boston a box has appeared notifying customers that they can put in offers directly. Instead of paying a commission to the buying agent, often around 2 to 2.5 percent of the purchase price, the seller pays an additional 1 percent fee to Redfin on a Redfin Direct sale.
Of the 122 Boston Redfin listings that have accepted an offer since March 28, the company said, five were Redfin Direct offers. Another 12 of those listings rejected a direct offer, though they were competitive. Redfin said 77 percent of the offers were within 5 percent of asking price and 30 percent were cash offers.
“This isn’t some bozo patrol; it isn’t an offer that a listing agent wouldn’t love to have,” Kelman said.
Redfin tried this program 13 years ago, but it was unsuccessful. At the time, Redfin didn’t have the huge volume of listings it does today — 25,000 in 2018 — nor the tech capabilities to make direct offers feasible.
Kelman said the company spent the intervening years building up listings and enhancing its technology offerings. Redfin’s tour scheduling tool as well as its Fast Offers software that gathers data on sales are both integral to Redfin Direct working the second time around.
Redfin will next expand the program to Virginia. To bring the service to a new market Redfin has to gather extensive data about home sales, so expansion will happen slowly.
Redfin has agents on both the buyer and seller side. And while Redfin Direct threatens to disrupt the work of those buyer agents, and a major part of the business, Kelman claims the agents themselves are the ones most fired up about the feature.
“The call was coming from inside the house,” Kelman said.
Redfin’s first act as a company was defined by gathering a critical mass of listings and traffic. Now it is kicking off the second act, changing the homebuying process.
Another part of that effort is RedfinNow, the company’s initiative to buy homes directly from customers and sell them to others. While it’s cross-town rival Zillow has gone all-in on the concept, Redfin sees it, like the new direct offers tool, as one in a series of initiatives to try and solve the complex home sales process.
“It is a tool in our toolbox, it just isn’t the whole toolbox,” Kelman said of RedfinNow.