It was a quick divorce from a two-month romance. And to be honest, sort of a head-scratcher.
In mid-March, RE/MAX, the 40-year-old, Denver-based national real estate franchise broker announced a unique partnership with Redfin, the tech-focused brokerage that has morphed over the years, from trying to wipe out the Real Estate agent to employing them with discounted commission fees. The partnership gave RE/MAX agents exclusive access to Redfin’s agent referral program — albeit at a discounted rate (25 percent versus 30 percent of the agent’s commission, the standard for referral fees) — in 5,000 U.S. ZIP codes and throughout Canada, where Redfin recently launched its highly navigated home search website.
Ostensibly this was done, RE/MAX leaders claimed, to partner up with an online brokerage.
“Redfin is a good complement to the RE/MAX model, given their online presence and our offline presence,” Kerri Callahan, RE/MAX’s chief financial officer, said to Inman News in March.
Leaders of both companies were crowing about reciprocal revenue potential, but the honeymoon ended on Monday.
Redfin’s launch of a new program that would essentially cut out buyers agents altogether had one unanticipated result: RE/MAX withdrew from its corporate partnership with Redfin.
“Redfin has the utmost respect for RE/MAX as a company, for its agents and leaders. RE/MAX agents who already work as Redfin’s partner agents will continue to be our partners, and RE/MAX agents can continue to enroll in our partner program, but Redfin can now enroll partner agents from other brokerages to serve Redfin.com visitors in the U.S. and Canada,” the company said in a statement.
Why would RE/MAX pull the plug?
Redfin Direct, the new service piloting in Boston, will allow Redfin’s listing customers to get offers direct from unrepresented buyers. Redfin Direct’s goal was to give the seller a competitive offer requiring a 2 percent (total!) commission – 1 percent to the Redfin listing agent and a 1 percent transaction fee. We asked Dallas agents to wax on about this last week.
This would, in effect, wipe out the buyer’s agent to save consumers money. That did not go over well with RE/MAX head honchos, including CEO Adam Contos, who had an apparent change of heart after supporting Redfin Direct just last week.
Monday he said of RD: “That program goes against every value RE/MAX has had for more than 45 years,” Contos said in the letter announcing the end of what would have been a two-year partnership. “I feel very strongly and passionately about that, as does our Board of Directors and my leadership team.”
Redfin said they understood, even though they had been open about the new technology. They basically said they understand the fears of Realtors, as the company also employs “thousands of licensed professionals and believe the vast majority of homebuyers need professional advice, and will happily pay for it.”
But here is the money quote: “We believe in consumer choices; our mission is to redefine real estate in consumers’ favor.”
The big question, then, is at what point will real estate be re-designed in consumer’s favor but without the agent? Here is Redfin’s statement.