- Ibuyer platform uses Facebook Messenger to collect home information.
- While in beta, the company will base offers on Zillow's Zestimate.
- Company puts all contracts under individual LLCs and sells to investors.
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A request for an offer launches Facebook Messenger, followed by a bot that starts a loose home valuation process, which consists of users selecting images of rooms in declining states of quality that resemble the condition of the same rooms in their home.
For example, kitchen A is brand new and modern, kitchen C resembles an off-campus freshman apartment and kitchen B is somewhere in the middle; you chose which photo best represents your kitchen. The process is the same for a bathroom, garage, roof and backyard.
It also asks for uploads of the actual rooms, but that step that can be skipped.
If a seller doesn’t accept an offer, they can choose to contact an agent. Offerai will earn a referral fee from agents who buy leads for a specific ZIP code.
When a seller accepts an offer and goes under contract, the company puts it under a manual microscope to fully assess its actual quality and market value.
If it checks out, the company blankets the contract under an LLC (the LLC is the buyer) and pitches it to a network of investors from around the country.
When a home doesn’t pass Offerai’s standard for resale, it uses an escrow holdback until the home can be fixed or dressed up enough to attract an investor. Escrow holdbacks aren’t popular with lenders, but investors are more willing to deal with them.
Offerai founder and CEO Jack Burns told me over the phone that he’s basing his model on Zillow’s Instant Offers platform, which was launched in May. In fact, offers given during beta are based on Zillow’s Zestimate. After beta, the company will use a proprietary valuation model.
In response to a request for comment regarding Offerai’s use of its Zestimates, Zillow said:
Offerai will soon sell an instant offer widget for $99/year that agents can put on their website to claim their own leads. The “I’ll sell it or buy it from you” model is not an uncommon method for earning listing leads.
“The iBuyer train is coming,” Burns said. “What we’re doing with the widget and the leads is giving agents a way to participate in it.”
For leads to be of value to agents, Offerai will have to get homeowners interested in wanting to know what their home is worth. Burns said they plan to advertise extensively on Facebook in order to compete with companies such as Zillow and Opendoor (the CEO is no doubt acutely aware of his well-heeled competition, if similar website designs are any indication):
Opendoor currently leads the pack of this new breed of heavily-funded, tech-driven investors offering transaction processes they say are more convenient, more predictable and less painful for sellers than the sometimes long drawn-out process of selling a home on the open market. Innovation continues to heat up in this space; in addition to Offerai’s debut, Atlanta-based startup Knock announced its new trade-in home model on Jan. 22.
However, I don’t believe iBuyers will take over the industry by replacing agents. I envision a future where traditional brokerages and iBuyers coexist, giving more choice to consumers; CarMax and traditional car dealers have made it work. Maybe Offerai will be in the race when that time comes.
More consumer choice is good for everyone.
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