Opendoor, which pioneered a new way for homeowners to sell their abodes, is partnering with rival Redfin in a move meant to help both companies reach more customers in a still evolving segment of the real estate industry.
Atlanta and Phoenix homeowners who visit Redfin’s website will be offered the option of requesting a cash offer from Opendoor, alongside an opinion on what the home is likely worth on the open market, the companies said in a statement Thursday. The idea is to let the consumer choose between the convenience of an instant offer and getting more money by listing their home with an agent.
“The main impetus is demand from our customers,” Redfin Chief Executive Officer Glenn Kelman said in an interview. “We realized that almost every listing customer is going to want to compare the net proceeds from an instant offer. RedfinNow, no matter how quickly we expanded, wasn’t going to be able to handle that demand.”
Under the terms of the partnership, Opendoor will buy the house, make minor repairs and put it back on the market, paying Redfin a referral fee. The model, sometimes called iBuying, resembles a algorithm-driven spin on home-flipping. Redfin operates a similar service, called RedfinNow, in seven markets, and plans to keep expanding.
If the partnership with Opendoor is successful, the brokerage could refer some sellers to Opendoor in markets where it also buys homes through RedfinNow, said Kelman.
The partnership announced Thursday offers further validation of a business model Opendoor effectively invented when it was founded in 2014. The company has attracted $1.3 billion in equity funding from investors including SoftBank Group Corp.’s $100 billion Vision Fund, expanded into more than 20 markets and inspired imitators including Zillow Group Inc. and Keller Williams Realty Inc.
Lately, the company has been streamlining operations in what a spokeswoman described as an effort to make the model better for consumers. The new partnership lets Opendoor reach potential sellers who browse listings on Redfin’s website, which averaged more than 31 million monthly visitors in the first quarter. The companies didn’t disclose financial terms, but the arrangement may provide lower customer acquisition costs than more traditional advertising.
The partnership is “about providing sellers a one-stop shop, giving them the best set of choices, so they can make the best decision,” Opendoor CEO Eric Wu said. “The benefit to Opendoor is reach, and the benefit to Redfin is allowing their customers to understand the options.”