RE/MAX and Redfin announced a new partnership today that will give RE/MAX agents exclusive access to Redfin’s agent referral program — at a discounted rate — in 5,000 U.S. ZIP codes and throughout Canada, where Redfin recently launched its home search website.
On the surface, the two seem like unlikely dance partners. RE/MAX is a massive franchisor with a more than four-decade history and Redfin is a newer, tech-focused brokerage that employs agents as employees and aims to disrupt the traditional listing fee.
“We just looked at it an opportunity to provide another value add for our network in terms of marketing and referral opportunities,” Karri Callahan, RE/MAX’s chief financial officer told Inman. “Redfin is a good compliment to the REMAX model given their online presence and our offline presence.”
Redfin’s Partner Agent referral program allows agents from any brokerage to advertise services on listings in areas currently unserved by one of Redfin’s approximately 1,390 in-house lead agents (at least according to the time the company last reported their number, in 2018). Like other referral and lead generation programs, the Partner Agent is displayed prominently on the listing.
If a RE/MAX agent closes the deal from the referral lead, Redfin gets 25 percent of the commission — in other existing partner areas, that fee is 30 percent. To qualify to sign up, an agent must have closed at least five transaction sides in the past 12 months and at least 15 transactions overall.
Each referral is only sent to one agent, who has an hour to accept that lead. After an hour, it’s sent to a different Partner Agent. To stay in the program, the RE/MAX agent needs to accept an undisclosed percentage of referrals.
Redfin’s existing Partner Agent program will continue to exist outside the areas where it has an exclusive partnership with RE/MAX, on an individual brokerage-by-brokerage basis.
RE/MAX agents can also negotiate their own commission fee and won’t be beholden to Redfin’s low-fee commission offerings. Agents will gain access to Redfin’s proprietary system Partner Tools to manage their referral clients and progress in the buying and selling process.
Redfin first approached RE/MAX about the idea, Callahan told Inman. Redfin’s reasons for targeting RE/MAX as a partner were many, according to Chelsea Goyer, Redfin’s vice president of recruiting, partners and multiple listing service relations.
“It’s well known that RE/MAX agents are more productive than the industry average,” Goyer said. “It just makes sense to pair with a brokerage the size of RE/MAX, the background, happy customers, great agents.”
In a statement, Redfin CEO Glenn Kelman echoed Goyer’s sentiments.
“The RE/MAX agents who are already our partners get some of the highest customer- satisfaction scores in our program,” Kelman said. “Our own research has shown that RE/MAX agents are more likely to stay at their brokerage than agents at any other major traditional brokerage, and it is well known that RE/MAX agents are far more productive than the industry average.”
“Happy customers, happy agents, with significant experience at every stage of a sale: these were the reasons that we concluded a RE/MAX partnership would lead to better service for customers browsing Redfin.com and Redfin.ca in the areas where Redfin doesn’t employ one of our own agents,” Kelman added.
The initial partnership will last two years and the two sides will revaluate if it should continue beyond 2021.
Unlike other referral platforms – Opcity, Zillow’s Premier Broker, Rocket Homes – Redfin is actually a brokerage. Goyer sees no issue with the company sending business to a competitor. Redfin pulled in $25.8 million in revenue from its existing Partner Agent program in 2018, according to its most recent year-end earnings report.
“The partner program has been a really lucrative business for Redfin and for the participating agents,” Goyer said. “I don’t think there’s any issue with it.”
The partnership also won’t be an impediment to Redfin’s continuing growth on the brokerage-side, according to Goyer. It will help expand Redfin’s consumer-facing presence and RE/MAX will serve areas where Redfin won’t necessarily grow right now, like more rural areas.
“This is not going to prevent us from growing,” Goyer said. “I think this is going to do quite the opposite.”
Redfin currently has no plans to hire local agents in those 5,000 exclusive ZIP codes, where the company has access to MLS data. There’s nothing in the agreement, however, that prevents Redfin expanding into one of those areas. In that case, Redfin would refer customers to Partner Agents when a local agent doesn’t have the bandwidth to serve that consumer.
Since 2009, over 30,000 customers that started their home search on Redfin have bought or sold a home with the help of a Partner Agent, according to Redfin.
Redfin announced earlier this year it was expanding its brokerage services into Toronto, Canada, with Vancouver soon to follow. With that launch came a national listing website. In every area outside of Toronto and Vancouver, RE/MAX agents have the exclusive opportunity to advertise on those listings. In Canada, RE/MAX says it’s the national marketshare leader.
RE/MAX’s breadth of coverage will give greater visibility to Redfin’s nascent Canadian listing site. Redfin declined to share with Inman recent traffic numbers for its Canadian listing site, but noted it had approximately 125,000 listings across the country.
It could also help Redfin expand its listings website outside of Canada and the United States, if it eventually comes to that. RE/MAX is also in other markets, where Redfin may or may not decide to expand its listing site, Goyer told Inman.
RE/MAX has approximately 85,000 agents in the United States and Canada and 40,000 agents outside of those countries.
In the United States, the exclusive agreement covers 5,000 ZIP codes spread across the country, but with a high concentration in California, Texas, Minnesota, Wisconsin and New England. Currently, there were no Partner Agents serving those ZIP codes.
Outside of those ZIP codes, RE/MAX agents and other brokerage agents can continue to be Partner Agents, but will pay the usual 30 percent fee, same as all other Partner Agents.
RE/MAX LLC receives not benefit other than the potential impact of affiliated agents closing more deals, Callahan told Inman. The agent pays the referral fee directly to Redfin and RE/MAX does not take a cut. But RE/MAX was able to use its size to leverage group buying power and get its agents that discounted rate.
RE/MAX is continuing to work on its own consumer-facing website and app after the acquisition of booj, that may someday put the franchise giant in direct competition with Redfin for viewers. But that’s not a concern right now for RE/MAX.
“Right now we just see this as another value add that we can offer to our agents and our network,” Callahan said. “We’re still focused on everything we’re investing in from a technology perspective and right now, think that they’re complimentary.”