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In what may seem like a surprising partnership between two would-be competitors in the burgeoning iBuyer market, Opendoor and Redfin are joining forces to buy homes in Phoenix and Atlanta.
The companies announced this week that homeowners in those two cities will now be able to request a direct offer for their home from Opendoor through Redfin’s website and mobile apps.
“With this partnership, home sellers will have the opportunity to compare listing their home on the open market with a full-service Redfin agent to receiving an instant offer from Opendoor and skipping the process of listing altogether,” the companies said in the announcement. “By presenting a complete set of selling options, Opendoor and Redfin are empowering homeowners to make the best decision based on their needs and situation.”
According to the companies, homeowners in Phoenix and Atlanta will be able to request an instant offer from Opendoor as part of their home sale inquiry on Redfin.
From there, a Redfin agent will meet with the seller, advising them on the home selling process, what their home is likely worth on the open market, and will present them with Opendoor’s offer.
At that point, they can either choose to sell directly to Opendoor, or they can list their home with Redfin for a 1.5% listing fee.
The homeowner can also choose not to meet with a Redfin agent and take their Opendoor offer directly through the site. But either way, Redfin will receive a referral fee for each customer who decides to sell to Opendoor.
“Every homeowner should have a choice between putting a home on the market via a Redfin agent, or taking an instant cash offer,” Redfin CEO Glenn 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,” Kelman added. “Just as traditional agents are our partner for brokered sales our own agents can’t handle, Opendoor is our partner for giving customers reliable, competitive offers on homes we ourselves can’t buy.”
Redfin will also place Opendoor’s listings (the homes the company has bought and is reselling) on its site and mobile apps, increasing the visibility of those properties to more buyers.
The partnership between the two companies is interesting because Opendoor and Redfin both buy act as iBuyers, buying houses directly from owners, repairing or improving them, and then turning around and selling them back into the market.
Redfin launched its direct homebuying program in the first quarter of 2017, but did not make the program public until later in that same year.
RedfinNow began as an experiment, launching in the Inland Empire region of Southern California in January 2017 before expanding to San Diego in June 2017. Redfin later expanded the direct buying program to Orange County.
Then, late last year, Redfin said that it was “deepening its investment” in the program and planned a “long-term” expansion of the program beyond those first few markets. The company later expanded its homebuying operations to Dallas and Denver.
Redfin still plans to continue expanding its direct buying program, but instead of launching its own version of it in Phoenix and Atlanta, the company is partnering with Opendoor to provide that service to its customers instead.
Opendoor has expertise in buying homes in Phoenix, given the Arizona city was the company’s first homebuying market in 2014.
Since then, the company has expanded significantly and raised money hand over fist. The company’s most recent capital raise of $300 million placed the company’s valuation at nearly $4 billion.
And given Phoenix’s apparent abundance of iBuyers, Redfin is choosing to partner with Opendoor rather than join the crowded marketplace.
“Redfin and Opendoor are bringing together the reach of the most visited online brokerage with the scale of the largest iBuyer service to deliver a comprehensive service for more customers,” said Eric Wu, founder and CEO of Opendoor.
“Both companies are focused on making the experience of buying and selling a home simple and hassle-free,” Wu continued. “By working together, we can amplify our efforts and give customers more choice when making one of the biggest financial decisions of their lives.”
According to the companies, they are launching in Phoenix and Atlanta and will then “evaluate expanding to additional markets.”