Redfin beefed up its iBuyer program Wednesday, announcing that it has hired its first-ever “national head of renovations” for RedfinNow.
Aaron Noe
Aaron Noe will join RedfinNow from American Homes 4 Rent, where he had been a senior executive for seven years. Noe’s previous position involved overseeing a “portfolio of over 45,000 homes, which his team acquired, renovated and managed,” Redfin said in a statement.
At Redfin, Noe will deal with renovations on homes the company buys through its fast-growing instant cash offer program. In the company’s statement, Noe said that he looks forward to “using my experience and creativity to streamline our renovation process so that we can bring this convenient home-selling option to more consumers.”
Redfin spokesperson Alina Ptaszynski confirmed to Inman in an email Wednesday that Noe is stepping into a new position at the company that had not previously existed. She also said that the hire is “part of our long-term commitment to expanding the RedfinNow business.”
Glenn Kelman
Redfin has repeatedly stressed the importance of its iBuying program in recent months. In it’s earning call last month, for example, CEO Glenn Kelman said the company expects the program to weather any market softening. He added that Redfin remains “committed to the long-term expansion of RedfinNow.”
One quarter prior, the company also announced it was expanding the program, putting it in greater competition with rivals such as Opendoor and Zillow.
Though it was not immediately clear Wednesday how Noe planned to streamline the renovation process at RedfinNow, his hiring hints at the razor thin margins and competitive field that iBuying has become in 2018. Though business models vary, iBuyers typically purchase livable middle class homes, do minor repairs, then try to resell them at a profit. But unlike traditional flippers, iBuyers often pay relatively close to market value for homes, meaning that delays or inefficiencies quickly eat into profits.
Brad Berning
On Wednesday, Brad Berning — an analyst with Craig-Hallum Capital Group who has studied iBuyers — told Inman that in the long run iBuyers may not actually make any money on their sales, and instead will need to rely on things like title and mortgage services to be profitable.
“The home flipping part of the business probably is going to be a break even part of the business,” Berning said.
Still, iBuying has proven incredibly attractive to old and new companies alike. Opendoor kick started the industry five years ago, and rival startups have since sprung up all over the country.
Redfin launched its iBuyer program in 2017 and was soon followed by rival Zillow.
In addition to iBuying, Redfin also operates a concierge service that handles basic renovations on homes listed with the company. Redfin charges a 2 percent fee for the service, double the price of its more conventional listing option.
It was not immediately clear Wednesday if Noe would be involved in the concierge offerings, though his hiring certainly suggests the company sees ample room to expand the profits it generates from repairing homes.
In a statement, Quinn Hawkins, head of RedfinNow, described Noe as bringing “operational chops to build our home renovations program.”
“We’re excited about what we can accomplish,” Hawkins said, “by combining our experience with Aaron’s background in renovation and property management.”