In Atlanta, iBuyers paid 3 percent to buyer agents in 2019. In the fourth quarter of 2020, this value fell to 2.5 percent.
While the increasing scrutiny of asking prices caused a slowdown in the number of homes Redfin bought through its iBuyer platform RedfinNow in the fourth quarter of 2020 due to the steep price increase, the same price increase also resulted in the company posting the highest profit ever made iBuyer sales.
Another factor, however, according to Redfin CEO Glenn Kelman, is that “Redfin and other iBuyers have lowered how much we pay the agent who represents the buyers of our offerings.”
“In Atlanta, where more than one in four homes is sold by a business rather than a consumer, the typical commission an iBuyer pays to a buyer agent dropped from 3 percent in the fourth quarter of 2019 to 2.5 percent in the fourth quarter of 2020, ”Kelman announced in the company’s fourth quarter earnings report.
Redfin wasn’t the only one to publish the best unified economy for its iBuyer platform in the company’s history. Zillow also announced for the first time that it was making money on the homes he bought and sold – although the entire home buying and selling segment of the company was not profitable.
Since iBuyer like RedfinNow is signaling to buyers that they are willing to pay a lower commission, Kelman believes the move could actually “create the price pressures that an efficient broker like Redfin has been betting 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 on allegations that certain rules of the trading group illegally restrict competition for brokers – has led to a number of company publication the buyer’s brokerage commission offered on each listing.
Both RE / MAX and Redfin have already taken the proactive step to publish the brokerage compensation of buyers in 65 markets where the local multiple listing service has made this data available.
“Now that the DOJ and NAR agreement allows sites like Redfin to post the commission for each listing, we expect consumers to see what iBuyers is doing and follow suit,” Kelman said.
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