Problem solved? Techie brokerage Redfin is on its way to resolving a regulatory issue that it ran into in Massachusetts following the early May announcement of Redfin Direct, the company’s ambitious pilot program that lets would-be homebuyers in a few selected markets (Boston for now, Virginia later) to place offers on homes listed for sale by Redfin on its website without a buyer’s agent.
The problem first arose earlier this month, when the Massachusetts’ Board of Registration of Real Estate Brokers and Salespersons learned that Redfin Direct was failing to provide provide the commonwealth’s “mandatory agency disclosure form” to would-be buyers disclosing that Redfin is acting as the seller’s agent, and therefore have no fiduciary duty to the prospective buyer. A spokesperson for the board told Inman that Redfin was in violation of state real estate regulations and could possibly face fines.
At the time, Redfin CEO Glenn Kelman told Inman that Redfin has a “more comprehensive” agency disclosure form it requires all prospective buyers to sign, when going through its Redfin Direct online offer-making process.
That process also requires buyers to fill out a 55-question form on the brokerage’s website before submitting their offer, after which, the offer terms are reviewed by the listing agent and seller. Redfin presented its own disclosure form after the 55 questions, which the board said was not good enough.
“The Mandatory Agency Disclosure Form must be given to a prospective buyer or seller at the time of the first personal meeting between the prospective purchaser or seller and the broker or salesperson for the purpose of discussing a specific property. In this instance, the Board has asked Redfin to ensure that the disclosure is provided at the time of the filling out [of] the questionnaire/application,” a board staff member told Inman via email.
However, in response, Redfin now says it will now offer both its own disclosure form and the one required by Massachusetts at the same time in a single PDF, according to Redfin spokesperson Mariam Sughayer.
“Redfin will incorporate the Massachusetts Board’s form into the early stages of the online offer tool before the buyer fills in any offer terms,” Sughayer told Inman via email.
Asked when during the questionnaire process the disclosures would appear, she said, “We are still determining the exact placement of the disclosures.”
The change will be implemented within two weeks — most likely sooner — and Redfin has agreed to give the state board a preview of the new online flow prior to launching it publicly, she added.
“We agreed to a timeline with the Board and are working towards it quickly,” Sughayer said.
Redfin also agreed to ensure that unrepresented buyers who submit offers on Redfin-listed homes offline will also sign the state form.
“We will audit our internal field processes to ensure that if we do meet with unrepresented buyers at a listing, that we are providing the MA form at private showings and the standard ‘tent card’ disclaimer at open houses,” Sughayer said.
The disclaimer notifies prospective buyers that Redfin represents the seller and not the prospective purchaser unless the purchaser signs an agreement for representation with Redfin.
Both Redfin and the Massachusetts Board indicated that they are working together to resolve the disclosure issue.
“The Board has discretion to impose a fine in situations like this. As long as Redfin takes corrective action and cooperates with the Board, the Board is unlikely to take an action against Redfin. The Board will continue to monitor the situation,” the agency said.
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