Don’t assume iBuyers are your adversaries. They can actually be tools to help you better serve sellers.
That was the argument Laura Brady, CEO of Concierge Auctions, a luxury home auction company, made Saturday at a technology session during the REALTORS® Conference & Expo in San Francisco. The ease of the instant offer route iBuyers provide, Brady said, matters more to some clients than profit, even though it’s a good bet that sellers would net higher offers through a traditional sale. iBuyers, such as Opendoor, typically charge a 6% to 12% service fee, which can significantly hit sellers’ bottom line.
“You have clients who are deal-seekers; they’re looking for value and want to protect their money at all costs,” Brady said. “And then you have clients who are looking for convenience because life is too short and time is precious. The iBuyers of today are speaking to this convenience factor.”
With more than half of sellers saying the selling process is stressful, according to industry surveys, promoting iBuyers as an option to your clients could demonstrate your understanding of their needs and your market, Brady said. “Some sellers can’t or don’t want to wait 60 days for their home to sell. They just want to move on with their lives as quickly as possible, and they want you to understand that,” she said. “In a good or bad market, there will always be sellers who want and need to monetize their properties more quickly.”
Additionally, the longer a home lingers on the market, the more its value declines because of public perception, Brady said. Instant offers are an avenue to avoid that problem.
Who Are iBuyers?
Brady gave a comprehensive profile of iBuyers so attendees could develop a better idea of their goals and how they operate.
They’re well-funded. Billions of dollars are being invested into iBuyers. Opendoor, which leads the field with the most market share nationwide, has $4.3 billion in capital, Brady said. However, not a single iBuying company is turning a profit just yet.
They’re not—and won’t be—everywhere. iBuyers are focused on markets where deals can still be had. So the most expensive cities, such as New York and San Francisco, don’t fit their business plan. iBuyers are most prevalent in:
- Las Vegas
- Orlando, Fla.
- Charlotte, N.C.
- Raleigh, N.C.
- Tampa, Fla.
- San Antonio
- Nashville, Tenn.
- Durham, N.C.
They’re growing exponentially. Right now, iBuyers make up only 0.2% of the national market. But they’re on track to do 20 times more business this year than last year, Brady said.
They’re looking at affordable price points. Most iBuyers are making offers between $200,000 and $250,000, Brady said. But that could change. “iBuyers aren’t in high price points yet, and it remains to be seen whether they will be,” she said.
They don’t want fixer-uppers. iBuyers are interested in moving properties as quickly as possible to shore up revenue. Therefore, they’re looking for homes that don’t need major remodeling. They tend to invest in minor cosmetic facelifts before turning the home around for resale. iBuyers are most prevalent in Phoenix for this reason. “Phoenix is filled with tract homes, which works well for their purposes,” Brady said.