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What is iBuying?
What is iBuying?
iBuyers are Internet real estate companies who purchase and sell homes directly to and from homeowners 'through' technology (online).
They have the potential to eliminate the need for a real estate broker.
Constellation of iBuyers
Constellation of iBuyers
Similar to the way in which the NAREB shaped the mortgage and home sale industries at the turn of the 20th century, iBuyers are forging a new path forward.
PropTech & iBuying
PropTech & iBuying
In the first half of 2019, investors put over $14 billion in real estate tech companies
In the first half of 2019, investors put over $14 billion in real estate tech companies
It goes like this: Customers send Zillow details about their house, and Zillow responds with a cash offer. The customer can either accept Zillow's offer, use a local agent arranged by Zillow, or opt out entirely.
If Zillow buys the home, it makes modest improvements, and tries to resell.
Zillow envisions selling your home will one day be like trading in your car at the dealership!
While Opendoor and Redfin helped to establish the iBuyer industry, Zillow Offers has rapidly gained ground in 2019 as it expands to new markets.
Phoenix and other sun belts cities mark the region where iBuying got it's foothold, with the Wall Street Journal referring to Phoenix as the "petri dish" of the iBuying experiment. iBuyers initiated programs in this region because homes are less expensive and relatively homogeneous, thus making it easier for algorithms to assess market values and trends.
A few figures for perspective:
A few figures for perspective:
If Zillow was the buyer in 5 percent of transactions in the country’s biggest housing markets, the business would generate more than $1 billion in annual profit
Zillow could take in additional $800 million a year in fees for making home loans, a new division they recently started up.
The three main iBuyers in Phoenix—Zillow, Opendoor, and Offerpad—bought roughly 4,700 homes last year, or about 4.5 percent of the market, according to the University of Colorado’s DelPrete.
Some predict the iBuyers will soon get to 20 percent of sales in the Phoenix market.
In fact, there are now so many players making “offers” that another company, HomeLight, recently unveiled an Expedia-like comparison-shopping tool to make it easy for homeowners to get the best price.
Zillow hopes to be in all 50 states by the end of 2020
To get an idea of how big of an opportunity this is, consider the latest numbers from the National Association of Realtor's (NAR) Existing Home Sales report:
NAR estimates that 5.4 million homes will be sold this year, with a median sale price of just about $270,000. If Zillow manages to capture just 1% of those sales (54,000 homes), the revenue will be $14.5 billion. Last year, Zillow did $1.3 billion in total revenue
Standard iBuyer Underwriting
Standard iBuyer Underwriting
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