Even though it only accounts for 0.2% of the national real estate market, iBuying is a growing trend, with billions being invested since 2014.
In this post, we will discuss the growing iBuying trend and why traditional real estate firms should develop agent-centric iBuying programs.
iBuying is here to stay
iBuying is a new model where sellers can sell their property directly to a real estate firm rather than having to wait for a consumer buyer. There’s a virtual model for iBuying (like OpenDoor or Zillow) where you put your information into an online form and receive a price for your place within seconds. This is super trendy right now because sellers don’t have to wait for a buyer—they can sell now—and the real estate firm takes on the risk of selling.
Now, this isn’t for all sellers: There’s a certain class of properties that this makes sense for. The properties that work best are those in comparative markets, which is why iBuying is starting in developments like tract homes, where properties have the same model, you know how much another, similar property recently sold for, etc.
How iBuying changing the real estate market
To put it simply, iBuying is causing traditional real estate companies to rethink their model and strategy. Even though iBuying is a small percentage of all real estate sales, it shows that in today’s digital environment, there are disruptive models that can pop up at any time, forcing more traditional brokerages to innovate.
Source: Mike Delprete, the iBuyer Report
While 6% might seem like a small number, it is almost exclusively lost market share for traditional brokerages, and iBuying is growing fast. Traditional brokerages need to adapt or continue to lose market share to iBuying and tech-enabled brokerages.
The central role of estate agent’s role in iBuying
Traditional firms have a decision to make: do they simply follow new, trendy programs or do they embrace their strength—their agent network and define a new iBuying model?
Many will probably face pressure from decision makers to simply copy innovators like OpenDoor—but anyone can do that. The unique advantage traditional brokerages have is their agent network, and there’s a unique opportunity for agents to play a role in iBuying.
With an agent-centric model, a real estate professional can see and assess the property, completing the initial valuation more accurately in-person instead of it being self-reported by the seller online.
Advantages of an agent-centric iBuying program
Having an agent complete an iBuying assessment will provides more accurate price than self-reported assessments completed by homeowner. It will also be more reliable than an online valuation, and the seller will be more likely to get a better price because virtual iBuyers must be conservative with their assessment because they only have self reported data at the start of the process. Once a visual inspection is completed, virtual iBuyers typically go down in price or keep their price the same, thus providing an advantage for agent-centric iBuyers to more accurately price the property at the start of the transaction.
Adding an agent option to your iBuying program can also help you differentiate from the competition. The agent provides flexibility for the seller to choose an iBuying sale or a traditional listing.
It also means you’ll be able to compete in multiple markets—where iBuying is attractive (e.g. tract homes) and where it’s not (more diverse and/or volatile markets). And if the real estate market in question is prime for both iBuying and traditional home sales? Even better! Sellers will have access to valuations of both programs.
Most important, an agent-centric iBuying program means agents will still be at the center. After all, this is still a person-to-person business; an agent can make an all-too-impersonal iBuying experience much more personal. By having agents at the heart of your program, you get to maintain the strength of the relationship part of the business.
Technology + Agents = iBuying efficiency
Ultimately, interactive content is very important to the property assessment and valuation. While the agent is doing a professional review of multiple characteristics of the home, s/he can employ 360° photos and virtual tours to allow more technical experts who’ve seen thousands of properties to make the final assessment.
For example, maybe a real estate agent will rate a kitchen as a B during the initial assessment. However, when he later provides a 360° photo to a home valuation expert, he’ll learn that those appliances, lay out, and updates actually qualify that kitchen as an A. This type of interactive content enables a second layer of expertise, as well as an opportunity for brokerages to continue to leverage their own team of experts.