Last week I saw a minor news item that seems not only tailor made for stressed-out would-be home sellers in San Francisco, but maybe cannon fire in the battle between real estate websites (recently dismissed in this space as time-sucking fantasy portals) and actual flesh-and-blood Realtors: Redfin announced it was expanding its RedfinNow home-buying service — the kids call it “iBuying” — to Seattle and San Francisco. After toiling away in secondary markets since 2017, RedfinNow was poised to enter the big leagues.
Are these the first signs of the revolution? Why should we bother selling our house with a Realtor when big bucks are just a hassle-free click away? And what timing by RedfinNow, entering the San Francisco market at a point when selling your home is suddenly no longer a backboard-shattering slam dunk. What stressed-out seller wouldn’t consider this option?
As we discussed last time, real estate portal sites like Redfin (Zillow, Movoto, Trulia, etc.) aim to “revolutionize” the real estate industry through technology. That the revolution would result in Realtors losing their spot at the center of real estate transactions was a stated goal of Richard Barton when he founded Zillow in 2006. Consumers already have access to information that was traditionally the exclusive property of licensed real estate agents; is RedfinNow, which eliminates the need for an agent entirely, the death blow?
To quote the great Pee Wee Herman, “everyone has a big but,” and here’s mine: This is a great service for a limited audience of sellers. In short, it works if you’ve got to get rid of your house yesterday, for whatever reason, and you’re not too particular about how much money you make, a very sophisticated and legitimate version of the “Cash For Your Home!” flyers people find in their mailboxes, a solution for anyone whose decision to sell their home is made out of expediency — or even desperation.
Here’s how it works: you go to RedfinNow, request an offer, upload some photos and a few days later your offer arrives. If you like the offer, you pick a closing date within 30 days, wait for an inspection and close the deal, hassle- and worry-free.
The catch is that RedfinNow, much like Doorstead, the property management service I wrote about a few months ago, trades convenience and certainty for profits. They’re up front about this, even recommending on their site that sellers “seek independent representation,” and that they “may be able to sell (their) home on the open market for more than RedfinNow’s offer price.” RedfinNow, like Doorstead, will ultimately cost you money.
Beyond this, there are the tertiary issues of repairs and closing costs, which are traditionally the capitol Realtors use in the final stages of a transaction, chestnuts passed back-and-forth by agents to close the gap between their clients during a “normal” deal. With RedfinNow, recommended repairs become work orders paid for by the seller, then added to closing costs and subtracted from the bottom line.
There’s no flimflammery happening here. RedfinNow lays it out on its site, estimating that the costs of the service will knock 6 to 15 percent from your (already reduced) profits, while a Realtor will cost between 6 and 12 percent. But again, this is the trade you make, and it’s a trade that works for a certain type of seller. But will that seller fit into RedfinNow’s guidelines for doing business in San Francisco?
Right now, I’ll say no. Eligibility, which is limited to single-family homes or townhouses built between 1930 and 2018 and valued between $300,000 and $1.2 million, is not realistic in a Victorian city where single-family homes make up just 30 percent of total housing and have a median value of $2.2 million.
We can assume that this is a pilot program and that RedfinNow has plans to expand that criteria into something more realistic, but for right now, unless you’re heading into witness protection and just need to unload your house right now, RedfinNow probably isn’t an option. Right now, any hubbub over RedfinNow expanding into San Francisco is essentially moot.
But this is no scam, and this is nothing to be taken lightly.
It’s a very specific solution for a very specific buyer but it could become something more. And while it’s not a death blow for Realtors, it is a shot across the bow, the latest delivered in the humans vs. technology war.
Larry Rosen is a San Francisco-based writer, editor, podcaster and recovering former Realtor. He is a guest columnist and his viewpoint is not necessarily that of the Examiner. The Market Musings real estate column appears every other week.