Let's say you want to sell your house. You could go the traditional way — fix it up, stage it, and wait for onlookers to knock on your door until you get a good offer. Or you could turn to a growing number of companies called iBuyers for an instant offer and sell within days. These companies then take on the work of preparing the home, listing it, and selling it to someone else.
To date, tech companies like Zillow, Opendoor and Offerpad have dominated the iBuyer market, but there's a new entrant: Keller Williams Realty, the nation's largest real estate franchise.
“It's amazing how many people value convenience and simplicity, and are willing to give up some of their home equity to get that convenience,” said Gaylin Ziegler, operations manager for Keller Offers, a new division of Keller Williams, which plans to launch its instant offers service in Dallas-Fort Worth next month and expand to six to eight cities by the end of the year.
According to Ziegler, the reason is quite simple: “We decided it was necessary to do so.”
Billions of dollars are flowing into the iBuyer business, putting traditional brokerages on the defensive.
“Keller Williams is about brokering home sales,” said Brad Erickson, an analyst at Needham & Co. “If they see that a competitor is providing liquidity that's taking clients away from their own brokerage, that's a natural reason for Keller Williams to get involved.”
But how many people would accept a presumably lower offer rather than test the market, especially in a hot market?There were only about 25,000 iBuyer transactions last year, said Mike DelPrete, a visiting scholar and real estate technology strategist at the University of Colorado Boulder.
“That's 0.2 percent market share,” he said, “but that's on a national scale, and iBuyers aren't national yet.”
In Phoenix, where iBuyers have been in business for several years, they account for about 6 percent of sales, Delpreeto said, while 20 to 30 percent of serious sellers in Phoenix request an instant offer before putting their home on the market.
“Why not?” Del Prete says. “There's no risk.”
But he warned that once you're in the company's system, you become a lead.
“They know you're interested in selling your home, so a real estate agent will be knocking on your door, both figuratively and literally, trying to get their company to help sell your home,” he said.
And those leads may be more profitable for real estate brokers than flipping a home.
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