The revolutionary iBuyer model — in which companies aim to streamline residential real estate transactions by offering all-cash offers, fast financing and quick, flexible sales to residential real estate sellers and buyers — is transforming the residential real estate brokerage industry. It was the top trend in the 2020 Swanepoel Trends Report released in December (t3trends.com).
What may have started as institutional investors providing money to sellers for quick sales has gradually evolved into a proliferation of alternative finance models in residential real estate, something more appropriately called iFunding. The model has expanded to cover synchronous sellers – those sellers who are also buying a new home at the same time – and buyers with services such as home trade-ins, and guaranteed and cash offers. These services address a demonstrated consumer want and need: a simple, streamlined and certain home sale transaction.
Because the models involve financing, companies naturally are looking to secure ancillary business in addition to the transaction. The nation’s leading iBuyer companies – Opendoor and Zillow Group – for example, both have rolled out mortgage and title divisions in recent years.
To help brokers better understand this rapidly changing environment, T3 Sixty hosted a panel of brokers and iBuyer specialists to discuss its role in helping the industry deliver an end-to-end, hassle-free real estate transaction for consumers. The panel included Helen Hanna Casey, CEO, Howard Hanna Real Estate Services; Lennox Scott, Chairman and CEO, John L. Scott Real Estate; Jason Gesing, CEO, eXp Realty; Dianne Moore, Broker, Opendoor Brokerage; and Paul Hagey, vice president and executive editor, T3 Sixty. Jack Miller, president and chief technology officer of T3 Sixty, facilitated.
Throughout the discussion, commonalities began to emerge as key takeaways for addressing the iBuyer trend as a traditional brokerage.
Education is key -- for agents and consumers
The iBuyer value proposition is both new and enticing to consumers, but not necessarily counter to what brokerages already provide consumers. Brokerages can take advantage of the new model by owning the conversation, educating consumers, on behalf of their agents, about the pros and cons of iBuyers and presenting themselves as valuable options as representation should they go the iBuyer route.
Brokerages also need to proactively educate their agents about the model, so they are ready to provide accurate, valuable insight to their clients.
IBuying isn’t a new concept
Panelists expressed that consumers have always had a demand for this kind of transaction and brokerages have addressed it over the years in a variety of ways, including through bridge loans and guaranteed offers. IBuying takes these programs to a new level with modern technology and a “simple, easy” end-to-end transaction message. In addition to the fast financing, iBuyers represent a new consumer-direct real estate transaction play.
Evaluate and streamline your systems and processes
If there is a demand in your market for iBuyer transactions, do the current systems and processes you have in place support them? Will they scale if and when demand increases? Panelists pointed to these as valuable questions brokerages should ask themselves.
In markets where iBuyers are active, some panelists said they have begun educating their agents and clients and taken advantage of iBuyer aggregators such as Zavvie. Others are introducing bridge loan services or developing networks of private investors to offer services that compete with the iBuyer value proposition.
Affiliated services play an integral role in the model
Panelists agreed that one-stop shopping has always been important to clients whether buying or selling. IBuyers are hammering the streamlined end-to-end transaction message, but essentially have the same constraints all brokers with ancillary businesses have dealt with for decades. Some of their value proposition centers on better messaging not necessarily better execution.