RE/MAX and Redfin have called it quits this week after just two months of agreeing to swap customer referrals between the two brokerages in the U.S. and Canada. Through Redfin’s Partner Agents program, they agreed to refer customers to agents and brokerages in its program. But RE/MAX backed out of the agreement after Redfin’s announcement that it plans to launch a new tool called Redfin Direct nationally. The new service allows unrepresented buyers to instantly buy properties online.
“We had briefed RE/MAX on the technology prior to announcing the partnership, but RE/MAX became concerned that Redfin Direct would undermine the standing of North American buyers’ agents,” Glenn Kelman wrote in a letter posted at Redfin’s website about the end of the partnership. “Redfin understands this concern. … But we also have a duty to get as many offers for our customers’ listings as we possibly can, and to give those listing customers the best value.”
Just like iBuying is allowing sellers to get instant offers on their homes from tech-powered companies, Redfin wants to give buyers the option to purchase a home instantly online. Home buyers can bid on properties directly through Redfin’s website. The company first tested the program in Boston and recently announced its plans to roll out the program in stages across the country.
In response, RE/MAX announced they would dissolve its exclusive referral agreement with Redfin.
“RE/MAX strongly believes the role of a real estate agent in the homebuying and selling process is more important than ever,” RE/MAX wrote in a statement. “Consumers faced with the largest most complex financial transaction of their lives should have a knowledgeable professional to guide and advise them. We believe real estate agents provide this essential service to a successful buying and selling experience.”
Redfin’s ‘Instant Buying’ Tool
In March, Redfin began accepting online bids from buyers who did not have an agent in Boston. Sellers who accepted the offer paid a lower commission if selling to an “instant buyer” on the site. From late March to early May, 120 homes were listed through Redfin’s pilot program; five were bought via online bids, the company said.
Kelman says Redfin Direct is more than a “buy button for real estate.” He says customers are prompted to read through a 55-question guide that details how to prepare the offer and are given advice on things like financing and inspections.
But after the trial run in Boston, Kelman told The New York Times he was convinced there was enough demand for an “instant buying” type of program to roll out nationally.
“We’re going to expand one market at a time,” Kelman told The New York Times. And the market may have evolved enough for it. In 2006, Redfin had placed a “buy” button next to its website listings to allow buyers to bid online. However, the option failed to gain traction at the time and was later removed.
Kelman says the idea is not to eliminate buyers’ agents. The goal is to offer homeowners more offers on their home, he says. Also, the growth of e-commerce since 2006 may mean the public is more open to the idea of buying a home instantly online.
Still, Kelman told The New York Times he believes that agents will continue to handle the vast majority of home purchases.
In an open letter posted on Redfin’s website, Kelman says that even though the formal partnership between Redfin and RE/MAX has ended, Redfin will continue to work with RE/MAX agents who enroll in their partner program. Redfin, however, can now enroll partner agents from other brokerages to serve Redfin.com visitors in the U.S. and Canada, in markets where the brokerage does not have a presence.
Kelman also detailed more about the Redfin Direct tool in an open letter posted on the Redfin blog.