Late last year, online real estate brokerage Redfin promised to expand its all-cash homebuying program Redfin Now, and now fruits of that promise are starting to take shape: The company has officially launched the program in Los Angeles, California.
Redfin says it began making cash offers on homes in L.A. in late 2018 and homeowners across the metro area can now visit its website to request one, the company said Wednesday.
The company had previously been operating Redfin Now in other parts of Southern California, including San Diego and Orange County, but also revealed this week that it has closed on 150 homes across the region. Redfin Now has been active since at least the summer of 2017, according to company filings.
It was unclear how many of the homes Redfin has purchased to-date through Redfin Now are located within the L.A. metropolitan area, though the company did say in a statement that it “has already purchased properties” the city.
Redfin Now is among a raft of competing online homebuying programs dubbed “iBuyers” that have launched in recent years. Like other iBuyers, Redfin Now presents homeowners a quick, all-cash option that can close in days and avoid the hassles of showing or taking the chance on the open market, and charges sellers with a 7 percent fee on homes that it purchases. Redfin then re-lists the homes for sale on the open market.
In a statement Wednesday, Redfin’s chief growth officer Adam Wiener said the iBuying program is a good option for homeowners who want “to avoid the time and stress of selling a home.”
Redfin’s other services, including its listing agents, were already available in Los Angeles.
So far, 2019 is shaping up to be a big year for iBuying in L.A. In addition to Redfin, Opendoor — the biggest and best-established iBuyer in the market — said last month that it plans to launch in Los Angeles this year.
And earlier this month, the founders of real estate tech startup My Home Agent launched their own iBuyer — initially dubbed Go iBuyer but now renamed “Commersh” — that focuses on multifamily investment properties.
The various expansions into Los Angeles are notable because the city’s housing market is unlike those where iBuying has so far flourished. Cities like Phoenix and Atlanta that have an abundance of relatively affordable, relatively modern, relatively architecturally similar homes.
In L.A., by comparison, the median price of an existing home hovered above $ 500,000 in 2018, which is roughly double the target range for iBuying in more affordable cities. In well-known areas such as Beverly Hills, Santa Monica and West Hollywood, the median price is many times higher still.
And while L.A. does have many post-War suburbs, much of the central part of the city — in other words the area with the largest population and best-known landmarks — is filled with homes built in the 1920s.
Making a major play in Los Angeles, then, could eventually require iBuyers to move into these more complicated markets. The city consequently represents a test case to see if the iBuying concept can successfully diversify or if it’ll be relegated to gobbling up newish, cheap houses on the less-desirable fringes.
Redfin did not immediately respond to Inman’s questions about what houses it is targeting in Los Angeles, and other iBuyers have likewise not publicized a detailed strategy for the region.
What is clear, however, is that iBuying will remain a dominant trend in 2019 and that Redfin, true to its promise last year, is doubling down on what it believes will be a growing sector.
“If you need the cash from your current home to buy your next home, are relocating and need to sell quickly, or want to avoid the cost and stress of preparing your home for the market and keeping it pristine for showings,” Redfin Now’s L.A. market manager Orlando Jimenez-Ford said Wednesday in a statement, “Redfin Now is an ideal option.”