CEO Glenn Kelman said Thursday that while most people reject the cash offers, they still help sell more houses
Redfin CEO Glenn Kelman said Thursday that most people who receive offers from his company’s iBuyer program ultimately reject those offers, though he argued that the program still helps sell more houses.
Kelman made the comments during an earnings call Thursday, during which he repeatedly stressed the importance of Redfin Now, which buys houses for cash. However, when asked about specifics on the program, Kelman revealed that most home sellers don’t actually accept the cash offers.
“Most customers who get a Redfin Now offer don’t take it,” he said.
He also said that the program’s pricing “approaches a 10 percent discount once you include all the costs and fees. But there are many customers who want to see that, and we believe that offering that choice increases the total number of homes that we sell.”
Kelman also seemed to acknowledge during the call that Redfin faces challenges when it comes to figuring out how to make cash offers both profitable for his company and worthwhile for consumers.
“Of course what we can pay for a home, and whether it’s a good deal for both the owner and Redfin Now, is still a tricky business,” he said. “In the fourth quarter, for example, a worrisome end-of-year market limited the number of homes we bought and increased the number we sold.”
The comments underly the highly competitive, and still somewhat unpredictable, iBuying model that is currently sweeping through various U.S. metro areas. In addition to Redfin Now, other prominent players include Zillow’s Instant Offers, as well as dedicated iBuyers such as Opendoor, Offerpad and Knock.
While these iBuyers have garnered headlines and investment in recent years, numerous open questions remain about how they might fare in a market downturn. Most iBuyers also limit their offers to a relatively narrow class of properties — typically newer homes in relatively affordable cities — and it remains to be seen if the model can grow beyond a niche product.
The iBuying sector also raises questions about how many sellers are actually willing to slash the price of their home in order to sell it quickly. Kelman’s comments seem to suggest that at least in Redfin’s case, the answer is, not enough.
Still, Kelman said that Redfin plans to continue investment in its iBuyer program, which currently operates across most of Southern California as well as in Dallas, Texas. Kelman said Redfin Now will likely expand to as many as five new markets in 2019, and that agents have been “clamoring” for it.
“Giving customers the option of an instant offer seems here to stay,” Kelman said.
Credit: Inman.com
Category: Technology
A new survey reveals that millennials plan to retire by the young age of 56
As soon as many Americans begin working, they simultaneously begin planning their ideal retirements too.
According to a survey of 2,000 respondents by Provision Living Senior Living Communities, 52 percent of Americans say they think about retirement four or more times per week and the average ideal age for retirement is 60 — although millennials plan to retire earlier (56) than their baby boomer counterparts (64).
More than 78 percent of respondents say they’d like to stay stateside with Miami, San Diego, Denver, New York, and Orlando being the top five locales for retirees. Twenty-one percent said they’d like to live abroad with Italy being the top choice.
When it comes to their dream home, respondents said they’d like a one-story ranch near a coastal or beach setting. Millennials plan to have a bigger home at 1,890 square feet while baby boomers would like a property no bigger than 1,500 square feet.
Although these Americans have big plans for retirement, how close are they to actually making it happen? On average, respondents said they’d ideally like to have $610,000 in savings, with millennials saying they need more to retire ($687K) than baby boomers ($574K).
But, when asked how much they’ll realistically have in retirement savings, respondents, on average, said they’ll only have $276,000. By age group, millennials said they’ll have at least $357,000 in savings — $129,000 more than baby boomers.
Recent academic and consumer reports from groups such as the Harvard Joint Center for Housing Studies and companies such as Houzz and Zillow have highlighted baby boomers’ needs as they begin planning for retirement, with the greatest concerns being financial stability and accessibility.
The Harvard Joint Center for Housing Studies’ Housing America’s Older Adults study revealed that baby boomers are delaying retirement — Americans aged 65 to 79 have experienced 10 percent increase in wages over the past five years, signaling the fact that they’re staying in the workforce longer.
Despite that uptick in wages, JCHS says 9 million households aged 50 and over are barely raking in $15,000 per year, making the goal of having $574,000 in savings impossible.
Beyond affording retirement, baby boomers are increasingly looking for accessible housing, which includes ramp access, one-story home layouts, and bathrooms with safety bars and lower shower clearances.
Credit: https://www.inman.com
DocuSign passes Zillow’s market cap, and NAR is reaping the rewards
DocuSign, the cloud-based electronic signature platform, is skyrocketing in value and even overtook real estate tech giant Zillow Group in market capitalization, according to public stock data from Yahoo. The National Association of Realtors (NAR) is reaping the reward of the prudent investment through its venture arm, Second Century Ventures (SCV).
At the close of the trading day, Zillow Group’s market capital – the market value of a public company’s shares – sat at $8.56 billion with DocuSign at $8.66 billion. See the market caps below from Yahoo Finance.
SCV invested in DocuSign nearly a decade ago and sold 28 percent of its 5.6 million shares – netting NAR a $20 million windfall – when DocuSign went public in April. But its remaining shares continued to balloon in value.
When DocuSign went public, it opened its first day of trading with a market cap of roughly $4.4 billion.
A spokesperson for NAR told Inman that SCV sold an addition 1.2 million shares on September 18. SEC filings were not immediately available, but Jackson Square Ventures, also an early investor in DocuSign, sold that same day at $55 per share, which would have netted SCV $66 million.
SCV would roughly still own 2.832 million shares in the company, which is currently trading at $52.35 – a value of slightly more than $148 million. Not bad for what was reported as an initial $5 million investment.
Zillow breaks into lead referral business
The new pilot program, which launches in Florida under Premier Broker, will give Zillow a cut of the commission as brokerages generate leads with no upfront costs.
Zillow is testing a new referral service in Florida that could shake up how it does business, and for the first time in the company’s history, earn a piece of the real estate commission pie — a step it has avoided since the company launched 14 years ago.
The pilot program, which will operate under the umbrella of Zillow’s Premier Broker lead-generation platform, allows brokerages to receive a limited number of leads with no upfront cost. Brokerages then pay a portion of the brokerage commission once a deal is closed — which Zillow refers to as a “performance advertising expense.”
A Zillow spokesperson declined to comment on what the portion of the commission will be, but noted it could change as testing continues.
Greg Schwartz, president of media and marketplaces at Zillow Group, wrote in a blog post introducing the new program that the change comes as a response to broker feedback.
“You told us that it’s sometimes disruptive to pay for advertising in advance and you would advertise more if we could change the timing of the payments,” wrote Schwartz.
Premier Broker is launching first in Florida with two partners: NextHome and Keyes Realtors. Brokerages in the state that are interested in participating are encouraged, in the post, to contact the company.
“Helping our members work with more buyers and sellers is our primary focus,” James Dwiggins, CEO of NextHome told Inman. “Ongoing marketing costs can be expensive for most brokers and agents, so a fee for success allows every dollar earned to be a win.”
“We are always open to exploring new partnerships that benefit our agents, and with our continuing expansion of offices across the country, we are positioned to provide the coverage Zillow is looking for in piloting their new program,” Dwiggins added.
Right now, Zillow only has plans to launch the pilot in markets that are underserved by Premier Broker and Premier Agent — where there aren’t enough advertisers to meet the demand of home shoppers. The new program is not intended to displace Premier Agent or Premier Broker, the former of which is a top revenue earner for Zillow and a program that’s currently being updated.
“We see this as a win-win for homeshoppers in these underserved markets and for Premier Broker clients,” Schwartz wrote. “Prospective buyers and sellers will receive responses from our Premier Broker clients, and broker partners will be able to take advantage of a pricing system that makes sense for their bottom line.”
The new program would put Zillow in direct competition with Opcity and the newly launched Rocket Homes, referral services powered by major companies. Opcity was recently acquired by Move Inc., a subsidiary of News Corp and the operator of realtor.com, and Rocket Homes is a sibling company of Quicken Loans.
Real estate’s new disruptors: The ‘PayPal Mafia’
A group of hard-charging, investor-entrepreneurs who have built some of the world’s most iconic tech companies have launched a multi-pronged assault on the real estate industry. A striking number come from two groups: the so-called “PayPal mafia” and private equity behemoth Blackstone Group.
Their combined wealth, experience and commitment to mutual support should cause market incumbents to take their projects seriously, despite the long history of failed bids to fundamentally change the real estate business.
Serving as financiers, managers or a combination of the two, these Silicon Valley and private equity vets — at least four of whom are controversial libertarian billionaires — have helped reshape a number of industries, and they are determined to do the same to real estate. Tying together the fortunes and industry ambitions of many of these players are three real estate startups in particular: Opendoor, Roofstock and Bungalow.
At least five of this coterie, including Opendoor co-founder Keith Rabois and Gawker-slayer Peter Thiel, all hail from the “PayPal mafia,” a group that built the online payments giant PayPal, and later moved on to found or provide key financing to some of the world’s highest-profile tech companies, including YouTube, Tesla Motors, LinkedIn, Yelp, Facebook, Yammer and Palantir Technologies.
A number of others cut their teeth with Blackstone, the private equity behemoth that showed it was possible to buy and manage tens of thousands of single-family homes. Other worthy mentions include former Uber CEO Travis Kalanick and Silicon Valley investor titan Marc Andreessen.
The PayPal mafia
In his critical book of Silicon Valley hotshots,”The Know-It-Alls,” author Noam Cohen described the PayPal mafia as a group of “self-styled survival-of-the-fittest free-marketers commit[ed] to a strategy of collective risk and mutual support.”
To understand how the clique can turn startups into rocket ships, consider LinkedIn. The social network was founded by PayPal mafia member Reid Hoffman; got financing from members Peter Thiel and Keith Rabois; and received office space from another former PayPal colleague, Cohen wrote. Hoffman later paid this help forward to the group of PayPal vets who created YouTube with financing and office space, according to Cohen.
“My membership in a notable corporate alumni group in Silicon Valley has opened the door to a number of breakout opportunities,” Hoffman has said.
Read it all at Inman
Zillow gets broker’s license in Arizona, but has ‘no plans’ to represent homebuyers and sellers
The Arizona Department of Real Estate is requiring the license so the Seattle tech giant can keep operating its Zillow Offers homebuying and selling service in the state.
Zillow is getting a broker’s license in Arizona, but it has no plans to begin hiring real estate agents anytime soon, and it will continue to rely on other brokerages to represent it as it wades further into homebuying and selling transactions, according to Errol Samuelson, the chief industry development officer at Zillow Group.
Samuelson made the comments in an interview with Inman on Monday, regarding Zillow’s just-announced acquisition of Mortgage Lenders of America, a mortgage lender that will help Zillow expand beyond its initial informational and home search purposes and provide home searchers with more services to convert them into homebuyers, directly on Zillow’s popular namesake website.
The Arizona Department of Real Estate (ADRE) contacted Zillow in April 2018 when it first launched Zillow Offers,the company’s direct-to-consumer homebuying and selling platform, in the state. The ADRE said that Zillow needed to be licensed as a broker in the state to operate the program, according to Samuelson. The agency administers broker’s licenses for two-year-periods.
“We came back to them and explained — and they understand — that we are not the broker of record when we do these deals,” Samuelson said. “We use local third-party brokerages to represent us when we buy, we use local third-party brokerages when we sell.”
Despite the explanation, ADRE said it felt it was necessary for Zillow to get the license, so the Seattle-based company complied, Samuelson said.
“It’s not going to change anything about the way we operate the Zillow Offers program,” Samuelson said. “We’re still going to keep using local agents and brokers representing us as the brokers of record. We’re still going to use our representatives to list our properties.”
“We’re not going to have Zillow employees listing properties, we’re not going to have Zillow employees representing buyers and sellers,” Samuelson added. “This is strictly about getting paperwork in place.”
Zillow has actually held broker’s licenses in the past, Samuelson confirmed. When it acquired Trulia and RealEstate.com, those acquisitions came with licenses, and when the company first started, it had some licenses. Over the years, Zillow let those lapse. The company is licensed as a brokerage in Texasand perhaps other states, Zillow spokesperson Kate Downen told Inman via emai. Inman has asked where else the Zillow is licensed as a brokerage and why the company is licensed in Texas and will update this story when we hear back.
“Zillow has had broker’s licenses off and on over the course of 11 years and it hasn’t really changed our perspective in that — we don’t have any plans to become a brokerage in the sense of representing buyers, representing sellers, having agents that list,” Samuelson said.
“As we expand Zillow Offers expands, if Zillow needs to gets licensed in other states, it will comply on a case-by-case basis,” he added.
Zillow just sent the ADRE its letter letting the state agency know the company is complying today and Zillow is not sure how long the licensing process will take, Downen said.
Asked what exactly Zillow Offers is doing that Arizona says requires Zillow to get a real estate license and what policy or law the state agency cited that compelled Zillow to become licensed, Zillow declined to comment.
“The laws about this are really broad. They’ve asked that we get a license, and we’re complying,” Downen said.
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