iBuyers are emerging in cities across the nation. As the trend grows, so does the concern among real estate agents worried that iBuyers will reduce the need for agents.
An iBuyer is a company that uses technology to make sellers an offer on their home instantly. Their goal is to purchase a property quickly and then resell the home for profit, usually within a week or two. Unlike flipping a house, iBuyers might perform light maintenance like replacing the carpet or paint, and then resell the home for a low-margin profit.
Significant players in iBuying include Opendoor, Zillow, and Offerpad. Local investors are also joining in on the iBuyer movement.
The convenience factor of iBuyers is appealing – sellers don't have to organize showings or open houses, and the process is simpler, faster, and less stressful – compared to a traditional home sale. Houston Agent magazine's Accelerate Summit 2019 revealed that "studies show that 80 percent of sellers would entertain an iBuyer offer," according to Toni Nelson, director of strategic initiatives for Better Homes and Gardens Real Estate Gary Greene in Houston.
The downside of iBuyers is that they typically offer lower sales prices for homes. For the sake of convenience, some sellers may take a lower price, while others will put the house on the market to see if they can sell it for higher.
In the age of iBuyers, agents must familiarize themselves with the phenomenon to stay relevant. Here's what they need to know about iBuyers and how they can stay ahead of them.
Although iBuyers offer consumers numerous benefits, real estate agents remain skeptical about how they can help them add value to their clients' lives. Since consumers can buy and sell a home directly through an iBuyer, this gives the impression that the goal is to replace agents. However, for many iBuyers, agents play an essential role in the process.
When dealing with an iBuyer, agents have more certainty and spend less time on the transaction. The property sells before even going to market, which means there's very little work involved and no cost for marketing.
Working with an iBuyer, however, does have disadvantages. If a client accepts an offer with an iBuyer, the agent will only receive a referral fee from the iBuyer, instead of their full commission – despite having paid for the lead. Additionally, agents aren't advertising the property with open houses or yard signs, so they miss out on potential marketing opportunities.
Rather than fear iBuyers, agents should look for new ways they can differentiate themselves in the market. Here's how agents can compete with iBuyers:
Ideally, real estate agents should have a solution for every customer need. For example, if a customer needs a quick sale, an agent should be able to provide a service that helps them do that. They can be proactive by getting clients an instant offer so they can see it and have that data point. If agents don't have a solution for the iBuyer space, Zillow or Opendoor will be first to approach homeowners and guide them through the process.
Many agents are afraid of iBuyers and try to avoid them. However, consumers want options. They may choose to work with a real estate agent, decide to sell with an iBuyer, or decide to sell themselves. Working with an iBuyer gives customers another option to consider and choose what's best for them.
iBuyers aren't going away anytime soon. Embracing reality, some agents have decided to join in on the iBuyer action. Agents who have the option to do so may consider buying and reselling a property themselves.
Ignoring the fact that iBuyers exist altogether isn't the best approach for agents. Instead, they should be upfront with clients and address the possibility of instant offers. Let sellers look at all their options before helping them decide which is best for them.
The more an agent learns about iBuyers, the better equipped they'll be to guide clients through the process of selling their home. Being familiar with iBuyers positions them as the expert. Agents can then give home sellers the information they need to make the best decision for their particular situation – whether it's selling a house to an iBuyer – or the traditional way.
In part, it's the technology behind iBuyers that appeals to customers. It's what makes the transaction process faster and easier all around for sellers. Agents can learn from tech-driven iBuyers by finding ways to integrate technology into their own business. For instance, they can offer customers the conveniences of remote property tours, chatbots, or digital notaries to improve the overall experience.
iBuyers aren't showing any signs of slowing down. Instead of fearing that these companies will replace them, agents should make the trend work in their favor. Agents that focus on adopting a learning mindset and finding ways to differentiate themselves will continue to be relevant in the age of iBuyers.