While increasing scrutiny on offer prices — due to high price appreciation — led to a slowdown in the number of homes Redfin purchased in the fourth quarter of 2020 through its iBuyer platform RedfinNow, the same price appreciation also led to the company posting its highest ever gain on iBuyer sales.

Glenn Kelman | Photo credit: Redfin

Another factor, however, Redfin CEO Glenn Kelman revealed, is that “Redfin and other iBuyers have lowered how much we pay the agent representing the buyers of our listings.”

“In Atlanta, where more than one in four homes is sold by a business, rather than a consumer, the typical commission paid by an iBuyer to a buyer’s agent fell from 3 percent in the fourth quarter of 2019 to 2.5 percent in the fourth quarter of 2020,” Kelman revealed on the company’ fourth-quarter earnings call.

Redfin wasn’t alone in posting the best unit economics for its iBuyer platform in company history. Zillow also, for the first time, revealed that it was making money on the homes it bought and sold — although the company’s homebuying and selling segment as a whole wasn’t profitable.

As iBuyer’s like RedfinNow signal to buyers’ agents that they are willing to pay a smaller commission, Kelman believes the move might actually “create the price pressure that an efficient broker like Redfin has been banking on all along.”

A recent agreement between the National Association of Realtors (NAR) and the U.S. Department of Justice (DOJ) — after the former was sued over allegations that certain rules of the trade group place illegal restraints on Realtor competition — has led to a number of companies posting the buyers’ broker commission offered on each listing.

Both RE/MAX and Redfin have already taken the proactive step to publish buyers’ broker compensation in 65 markets, where the local multiple listing service has made that data available.

“Now that the DOJ and NAR settlement lets websites like Redfin publish the commission on each listing, we expect consumers to see what iBuyers are doing and follow suit,” Kelman said.

Email Patrick Kearns

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription