Andrew Shader’s Take on Redfin’s Virtual House Flipping Feature (and Why It Closed)
House flipping, while full of financial risk, can be a lucrative venture if you choose the right property and have the right strategy to build value. As a real estate pro whose goal is building value for his investments, Andrew Shader knows how much of a difference a bit of additional value can make when transforming the sales potential of a home.
Like many aspects of business, house flipping (as well as real estate sales at large) have entered the digital space. This means that if you have the proper tech know-how, you can flip houses right from your home.
In fact, many well-known real estate platforms, such as Redfin, have created their own software for this very activity and made it easily accessible to the public.
What Is Redfin?
Much like Zillow and Apartments.com, Redfin is a major real estate platform that helps property sellers and landlords connect with owners and tenants and vice versa. The site is free to use, and it helps people of all lifestyles and budgets find the right property to buy or rent.
Additionally, sellers can tailor their listening to their exact specifications, making it easier to connect with their ideal buyer or renter.
What Is iBuying?
iBuying was the snappy title for Redfin’s house-flipping service that allowed companies to purchase homes through the platform and then flip them for profit.
On the outside, this seems like an ideal, streamlined way for companies to acquire properties and flip them, something companies and individuals have been doing for decades. Unfortunately, the reality of iBuying was too much financial risk for Redfin to take on in good conscience.
Why Redfin Shut Down iBuying
Home flipping involves huge amounts of capital, not just when the home is originally bought in its pre-renovation state but also after the renovations are complete and the home is to be sold for a much greater price. According to Redfin, the iBuying feature simply involved too much risk and wasn’t worth the financial strain on the platform.
Redfin stock has been plummeting over the last year, dropping nearly 92% in the past few weeks alone. It’s clear to see that Redfin isn’t in a place to be financing any extra features to their site, especially ones like iBuying that involve such hefty transfers of funds and extensive liability.
Zillow, a similar platform to Redfin, also featured a home flipping option for users before shutting it down not long after launch. At the end of the day, while these features could have been useful in theory, they simply don’t seem to be worth the risk for property sales and rental sites like Redfin and Zillow.
Expert Advice from Andrew Shader
As an entrepreneur turned real estate investor and developer, Andrew Shader brings his prior experience into his current work to create a truly unique strategy. He helps his clients add significant value to their homes, increasing property value by 60% or more.