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iBuyer Companies: The Rise of OpenDoor, Zillow, Redfin, DirectOffers: What Does It Mean for the Real Estate Market?

iBuyers like Zillow and OpenDoor are changing the way we buy and sell homes by making it faster and easier. They use technology to quickly evaluate and make offers on homes, skipping many of the traditional steps like fixing up the house and negotiating.

This means you can quickly find out what your home is worth and sell it without the usual delays. While these companies are modernizing home selling, regular factors like the economy still affect the real estate market. As this trend continues, the old methods of long contracts and high fees with brokers are becoming outdated, leading to quicker, more efficient home sales.

The Players

1. Zillow — Seattle-based Zillow opened for business in 2006. Marketing itself as a central clearing house, this company offers services relative to more than buying and selling. Zillow also directs customers to resources for renting, renovation and home financing.  They recently came out with Zillow direct offers but its only available in limited markets: Phoenix, Las Vegas, Atlanta, Denver and Charlotte with plans to be in Dallas, Raleigh, Houston and Riverside in the near future.

2. OpenDoor — Planning on expanding to 30 metropolitan statistical areas, OpenDoor now does business in 20 regions of the U.S. At six years of age, OpenDoor has transacted 50,000 deals and now employs 1,800 professionals across the country.

3. Knock — There is a niche market on which Knock focuses: the simultaneous sell-purchase transaction. In fact, under the right conditions, Knock will buy a new home on behalf of a customer for whom this company sells the current one. Launched in 2015, Knockaway, Inc. does business as Knock.

4. Redfin — This is an iBuyer committed to combining mapping technology with buyer advocacy. Founded in Seattle in 2006, the Redfin name stands for “real estate defined.” This particular iBuyer promises lower commission charges than the typical six percent.

5. Entera— Entera unlocks access to all on and off market properties from every source: MLS, iBuyers, auctions, pocket-listings, portfolios and more. Our comprehensive database of 225,000+ homes is updated in real time.  Entera’s recommendation engine uses rich proprietary transaction data and artificial intelligence tools to match you to your ideal home. 

6. Point Acquisitions —  Last but not least – Yours Truly… Our company is one of the very first players entering the commercial i-buyer market with a presence in Philadelphia, North Jersey (Essex, Hudson, and Bergen Counties) in addition to the secondary and tertiary markets of New York City ie: Bronx, Brooklyn, Harlem, and Queens.  We pride ourselves upon 24-48 hour offers in all asset classes: Multifamily, SFR portfolios, Vacant Land, Commercial, Industrial, and Office. Point Acquisitions has plans to enter the South East in 2020 starting in Florida with more markets to come in the future. Within only two years we have become the fastest growing commercial real estate buyers in our respective markets.

How They Work

The new iBuyer companies propose to take the blood, sweat and tears out of selling a property. The headaches of fixing, staging, negotiating and making it legal are a drain on time and emotion. Visiting an iBuyer’s website and answering a few questions about the property in question can result in an offer the very next day. The attractiveness of the offer can depend, all real estate offers are a function of price and terms but it gives the seller an idea of what the house is worth as-is based on technology known as Automatic Valuation Models (AVMs). From there, sellers can still retain a realtor if they decide the old fashion way is preferred or make any necessary modifications or concessions; or simply accept the iBuyer — “i” for “instant” — offer as it stands.  The best part about it is that you don’t have the 1-year exclusive many agents and brokers insist upon and you save significant money with not paying the standard real estate commission that ranges from 5-6%

Do iBuyers Change the Way Real Estate is Conveyed?

The swiftness with which iBuyers can bring in an offer is definitely a new phenomenon. Traditional brokers and agents recognize that a glacial pace for negotiating and contracting will become increasingly less tolerable as iBuyers proliferate and increase in technological capacity. Still, the old-fashioned camp can play on its traditional strengths. Once an instant offer is accepted by a seller, the iBuyer sends out an inspector to evaluate the property condition. 

How Do and Will iBuyers influence the Real Estate Market?

Although iBuyers can change how properties are sold, real estate markets are still driven on demographics, the economy, government policy and interest rates.  Whether or not realtors/brokers will be part of the real estate market future is uncertain, however, one thing’s for sure, the antiquated model of year long exclusiveness and high commissions will soon be a thing of the past.

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About The Author

Jesse Shemesh

With a wealth of experience in nurturing diverse commercial real estate investment portfolios across multiple markets, I actively engage in the development and execution of deals spanning all asset classes. My expertise lies in collaborating with strategic partners, including corporate real estate professionals, fund managers, developers, and investors, to source, identify, and entitle opportunities. At Point Acquisitions, we take pride in our unique, proprietary platform that specializes in property acquisitions, generating a steady stream of organic deal flow that sets us apart from the competition. As a seasoned professional in the real estate industry, I am dedicated to creating lasting partnerships and delivering exceptional results for all stakeholders.

Disclaimer

Please note that Point Acquisitions is not a tax expert or tax advisor. The information on our blogs and pages is for general informational purposes only and should not be relied upon as legal, tax, or accounting advice. Any information provided does not constitute professional advice or create an attorney-client or any other professional relationship. We recommend that you consult with your tax advisor or seek professional advice before making any decisions based on the information provided on our blogs and pages. Point Acquisitions is not responsible for any actions taken based on the information provided on our blogs and pages.

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