Author Topic: RedfinNow  (Read 603 times)

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Offline irvinehomeowner

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RedfinNow
« on: December 05, 2018, 08:09:51 AM »
I think someone mentioned this in another thread but "Search" couldn't find it.

I just noticed this while on Redfin, but on the side it's showing me a cash offer from RedfinNow on a property we sold several years back. The offer is in a range that is 15-25% over what we sold it for.

I'm actually shocked at that offer because that means the house would sell for more than that... Irvine is so expensive.

If I were to sell today, I wonder if I would use them if their offer was high enough. It would erase the hassle of prepping/listing/showing/negotiating but how much less would you make? I think if you have enough equity, it's a good option and helps remove most of the headache with selling.

I think it's a little misleading the way they market it as the service fee is 7.2% which is actually higher than the standard 6% (nowadays 5%) realtor commissions. It even says "no repairs" but the fine print says you could pay up to 1% in repairs.

Has anyone used RedfinNow or know someone who has?
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Offline Soylent Green Is People

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Re: RedfinNow
« Reply #1 on: December 05, 2018, 09:52:33 AM »
The companies who are buying these homes for eventual rental or resale are setting themselves up for ruin. Not a bad thing if you are selling, but best to take advantage of it now if you plan on selling. Here's a case in point.

I had a refinance customer sell this home through one of these services:

https://www.redfin.com/CA/Rancho-Santa-Margarita/94-San-Bonifacio-92688/home/5063845

It closed in August at $667,000 and re-listed in September at $735,000. If you've been inside this property, you'd see the "flip/remodel" was done at the lowest possible cost. Example: The builder original kitchen cabinets appear to have been painted with a can of Krylon....

At time of the September listing there were model match homes selling at $715,000. Their $735k list was a dream price to start. Flash forward to December. There is a 200SF larger home walking distance away listed at $695,000. Days on market? 224. It's not going to sell at that price, likely needing another $15k in price reduction to get anyone interested.

The company that bought 94 San Bonafacio is been spending $$$ every month to maintain the home. Property taxes are due, further eroding their investors margins. I'd guess it will be converted to a rental soon because the real price is $680k. Add in the commission/carry costs and it's a complete loser. Now multiply this scenario by 20-30 homes. At some point in time the cash drain becomes unsustainable,

To USCTrojan's point below, the cost to sell is significantly higher than those of a traditional Realtor sale. Most commission splits range from 4-5% with other transaction costs running 1-2 percent. Let's take the high range of 6 percent. RedfinNow and OfferPad costs are likely to end up in the 8 to 9 percent range. If you don't want to have a series of open houses, or if you need to sell in an instant, your price of convenience has to be figured in before taking that step:


https://redfinnow.zendesk.com/hc/en-us/articles/115008109088-How-much-does-RedfinNow-charge-


https://www.offerpad.com/faq/sell-your-house/

In a rising value / sellers market these operators do very well. In a flat to declining market, they are BK candidates. If you're ready to sell, and if the price they offer works.... why not? If you're buying one of these homes, know that their margins are slim to none and negotiating for a better deal might not happen. Yes, they've made their 7-9%, but their burning it quickly with VC interest charges, property tax expense, repairs, etc. Corporate level capitulation on value has to set in firmly before you'll see realistic prices for these kinds of listed properties. By that time, will these companies still exist? Not sure.

My .02c
« Last Edit: December 07, 2018, 08:18:37 AM by Soylent Green Is People »

Offline USCTrojanCPA

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Re: RedfinNow
« Reply #2 on: December 06, 2018, 10:27:19 PM »
The companies who are buying these homes for eventual rental or resale are setting themselves up for ruin. Not a bad thing if you are selling, but best to take advantage of it now if you plan on selling. Here's a case in point.

I had a refinance customer sell this home through one of these services:

https://www.redfin.com/CA/Rancho-Santa-Margarita/94-San-Bonifacio-92688/home/5063845

It closed in August at $667,000 and re-listed in September at $735,000. If you've been inside this property, you'd see the "flip/remodel" was done at the lowest possible cost. Example: The builder original kitchen cabinets appear to have been painted with a can of Krylon....

At time of the September listing there were model match homes selling at $715,000. Their $735k list was a dream price to start. Flash forward to December. There is a 200SF larger home walking distance away listed at $695,000. Days on market? 224. It's not going to sell at that price, likely needing another $15k in price reduction to get anyone interested.

The company that bought 94 San Bonafacio is been spending $$$ every month to maintain the home. Property taxes are due, further eroding their investors margins. I'd guess it will be converted to a rental soon because the real price is $680k. Add in the commission/carry costs and it's a complete loser. Now multiply this scenario by 20-30 homes. At some point in time the cash drain becomes unsustainable

In a rising value / sellers market these operators do very well. In a flat to declining market, they are BK candidates. If you're ready to sell, and if the price they offer works.... why not? If you're buying one of these homes, know that their margins are slim to none and negotiating for a better deal might not happen. Corporate capitulation has to set in firmly before you'll see realistic prices for these kinds of listed properties. By that time, will these companies still exist? Not sure.

My .02c

The buyer/flipper on this home is gonna learn the hard way that they paid way too much for this home to try to flip it.  I'm thinking they were using comps from 6-9 months ago to buy it for $667k.  It's funny how stubborn they are on not dropping the listing price when superior homes are priced lower in the tract.
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Offline USCTrojanCPA

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Re: RedfinNow
« Reply #3 on: December 06, 2018, 10:28:31 PM »
I think someone mentioned this in another thread but "Search" couldn't find it.

I just noticed this while on Redfin, but on the side it's showing me a cash offer from RedfinNow on a property we sold several years back. The offer is in a range that is 15-25% over what we sold it for.

I'm actually shocked at that offer because that means the house would sell for more than that... Irvine is so expensive.

If I were to sell today, I wonder if I would use them if their offer was high enough. It would erase the hassle of prepping/listing/showing/negotiating but how much less would you make? I think if you have enough equity, it's a good option and helps remove most of the headache with selling.

I think it's a little misleading the way they market it as the service fee is 7.2% which is actually higher than the standard 6% (nowadays 5%) realtor commissions. It even says "no repairs" but the fine print says you could pay up to 1% in repairs.

Has anyone used RedfinNow or know someone who has?

So basically pay 8.2% to sell them my home?  Uhhh yeah, that's a bit on the high side.
Martin Mania
AgencyOne
CA BRE License # 01799007
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!

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Offline Soylent Green Is People

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Re: RedfinNow
« Reply #4 on: December 07, 2018, 07:14:52 AM »
I had omitted that this selling pathway isnt "Free" or "zero commission" and modified my OP to include the source data on cost information.

It's expensive for the owner who will pay full freight when exiting the property. If the price of convenience is within your tolerance range these services might work for you, but at a very pretty penny. If a traditional agent can sell a $1m home at an average cost of 6% and these services will sell at a 9% average, that $30,000 between the two is breathtaking.

Cost of sale with a traditional Realtor is far less than these other "disruptor" methods. I do not believe any of these companies will exist within 6 months given the present market conditions. If you're going to try one of these companies, you'd better hurry.
« Last Edit: December 07, 2018, 08:23:13 AM by Soylent Green Is People »

Offline Liar Loan

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Re: RedfinNow
« Reply #5 on: December 07, 2018, 01:24:21 PM »
Cost of sale with a traditional Realtor is far less than these other "disruptor" methods. I do not believe any of these companies will exist within 6 months given the present market conditions. If you're going to try one of these companies, you'd better hurry.

I think in the case of Redfin, they needed to do something to show a profit.  After going public, they were flush with cash and had all this extra capital to buy a lot of homes.  Why not create a captive audience for the brokerage service?  It's classic entrepreneurial thinking, so give them credit for that.

The problem is that neither the brokerage nor this new flipping business is profitable, and that's coming off a red hot housing market that just turned south.  What are they going to do now that housing may face a prolonged correction?
« Last Edit: December 07, 2018, 01:29:23 PM by Liar Loan »

Offline Soylent Green Is People

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Re: RedfinNow
« Reply #6 on: December 07, 2018, 02:20:04 PM »
Redfin's Q4 filings will make for an interesting read.

 

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