Sean Black, the former Trulia executive and current CEO of online homebuying and selling company Knock, believes the U.S. real estate market is in for a serious realignment: on Tuesday he told attendees of the Inman Connect New York 2019 event that within five to 10 years, 50 percent of all sellers will be offloading their homes to a company that makes fast, all-cash offers such as his, rather than to an individual buyer.
“People need that certainty,” Black said. “They need that convenience.”
Black believes that when it comes to high-end real estate, homesellers will still turn to agents as they have for generations past. But he thinks that mid-priced and lower-priced housing markets will see a significant amount of properties sold to institutional investors and other online, all-cash homebuyers (a.k.a. iBuyers) including Opendoor, Offerpad, Zillow Offers, and others.
“You can go anywhere in the world and buy the same cup of coffee at Starbucks for $4, but you can’t use the same agent twice in two years and have the same experience,” Black said.
Offer Now provides cash offers with a flexible close, but can also be used as a lead generation tool for the brokerage’s agents, when the seller opts not to take the lead.
“I think Realtors are going nowhere,” Lamacchia said.
With the housing market starting to turn — many areas of the country are seeing reduced sales and slowing price growth — there are a number of questions about the viability of programs like iBuyers, which rely on investor cash, and usually attempt to re-sell homes they acquire quickly on the open market.
But Black thinks a down market will actually be a benefit to companies like Knock, which Black calls a home trade-in company, rather than an iBuyer (Knock has a program that encourages sellers to find the next home they want, which Knock can then buy on their behalf and transfer to them later).
“We built this model for a cyclical market,” Black said. “This model ends up working better in a sideways market or a down market.”
Knock recently raised another round of $400 million in venture capital funding and Black said the goal is to continue to grow the platform to at least five new markets this year, and eventually nationwide.
Katie Smithson, the director of enterprise service from W+R Studios – which offers a program through its Cloud CMA that connects sellers with an investor for a cash offer – agreed with Black and believes a down market will actually provide an opportunity.
“When the market turns, maybe that’s a situation where I need to get out of this home quickly and downsize,” Smithson said. “That’s where you provide an opportunity for the seller.”
Lamacchia said one of the most interesting things he’s learned during the first month of his real estate brokerage’s iBuyer experiment is that people aren’t selling at a lower price with a quick close – his company can close in as little as 14 days – out of desperation.
“It’s more a desire for convenience than it is desperation,” Lamacchia said.
That matches the experience of many other agents and real estate professionals whom have spoken to and written to Inman.