You’ve heard of iBuyers, right? One of the big dogs self-exploded themselves this week when Zillow cancelled their Zillow Offers program, but there are plenty of other players who have raised a ton of money and remain in the space.
The arrival of online “instant buyers” offering to pay cash directly to consumers for their homes has disrupted the real estate industry in the markets in which they’re operating.
Chances are…if you’re a real estate agent, you are weary of things that can disrupt your business.
So here’s the question…
Will iBuyers be to real estate agents what Uber was to taxi drivers? Or what Amazon was to brick-and-mortar stores?
“Not on my watch.” says Eddie Berenbaum, Co-founder and President of CENTURY 21 Redwood Realty. “That said, we have to be hyper-aware of what iBuying is trying to accomplish, which is removing pain points in the traditional sales process, and enable our agents to deliver a superior product.”
Here’s the truth… things occasionally go awry during the home sale process.
Perhaps the most valuable service that a skilled real estate agent delivers is navigating their clients through the numerous hurdles that need to be cleared during the home sale process.. Mortgages fall through. Appraisals come in low. Contingencies can ruin a transaction. Cleaning, updating and staging a home takes time and money (note: for most homes they also create an extremely high ROI).
iBuyers alleviate pain points, but limit options
Because they “buy” instead of “broker,” iBuyers have more control of the sales process than their real estate agent counterparts. “This control of the process can be extremely expensive to the Sellers, though,” warns Berenbaum. “When a seller works directly with an iBuyer, they eschew the expert representation that our dedicated agents provide their clients throughout every step of the transaction. The home inspection process alone should dissuade any seller from wanting to work directly with an iBuyer.”
The iBuyer Scene
With Zillow's exit, the 2 remaining major players on the national iBuyer scene are Opendoor and Offerpad. These companies spend a lot of money promoting themselves on a direct-to-consumer basis, but they’ll all work with real estate agents as well. A growing number of companies have sprouted up recently with their eyes set on removing friction, albeit from a different perspective. EasyKnock, who gives sellers access to their equity to pay off their mortgage and buy their next home while also allowing the market to set the final sales price, and Ribbon, who will buy the seller’s next home for cash and then rent it to them until their home sells, are two of these companies.
How real estate agents can compete with iBuyers
It’s all about perspective. “Many people look at iBuyers and see competition. I see them as leads that may want to place offers on our listings.” says Berenbaum. “While I don’t believe that most of our clients’ innate preference is to sell their memory-filled home to a private-equity fueled corporation, I am quite sure that they want to know what they’ll pay for it.”
Introducing Redwood Offers
“As the popularity of the iBuying concept expands in our region, which we serve, we want to make sure that our agents are able to review all options with their clients. With that in mind, we created Redwood Offers, the DC region’s first iBuyer portal,” explains Berenbaum. “By offering iBuying solutions through Redwood Offers to the D.C. market, we are able to keep our agents at the center of the conversation while identifying motivated sellers. This is an information goldmine for agents, but from a service and lead generation perspective,” says Berenbaum.
Here’s how it works.
- Consumers request an offer on redwoodoffers.com, or an agent requests an offer on behalf of their clients via Redwood’s back-end system.
- The seller will instantly receive an Automated Valuation Model (AVM) which is used as a benchmark for what their home is worth “sight unseen.”
- A Redwood agent will present the seller with a variety of options, which could include:
- Offers from iBuyers or iBuyer-like companies, such as EasyKnock
- If the property is not in turn-key condition, the agent could suggest sharing the home with Redwood’s database of local investors, giving them 72 hours to place bids on the property
- A Comparative Market Analysis showing what the home would likely sell for in conjunction with Redwood’s marketing
We call it Redwood Offers, but what we deliver is Redwood Options.
“At Redwood,” says Berenbaum, “We’re always looking into the future to prepare for what it will take for our agents to thrive. iBuyer offers are the next big innovation in our industry, and I don’t want our local consumers going to Opendoor or Zillow to request an offer. I want them to go through Redwood Offers so they can be connected with one of our agents and know all of their options.”
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