More and more companies that use technology to quickly buy and sell homes — so-called iBuyers — are popping up everywhere.
Even some independent brokerages are getting in on the game. They’re using software and investor networks to deliver bids from cash buyers for homes. They may then present those offers alongside the option to list a home on the open market. But it may be difficult for them to serve up offers that are competitive with those from Opendoor, Zillow Offers and other big iBuyers — unless the brokerages are getting their cash offers from those very companies.
Tru Realty is one brokerage with an iBuyer arm. The division now uses 12 callers to make 40,000 calls a week, Tru Realty CEO Sarah Kirsch Richardson said Monday on a panel entitled “How to Build an iBuyer program” at Inman Connect Las Vegas.
Only a tiny proportion of those — 30 to 50 a month — turn into deals. In those cases, Tru Realty will either buy the homes itself, or arrange for their sale to a buyer in Tru Realty’s investor network.
The homes that Tru Realty purchases itself turn into listings where its agents can hold open houses to drum up new business.
Some sellers who turn down offers from Tru Realty will instead agree to listing appointments with its agents.
Those sellers may choose to list with Tru Realty on the open market. Or they might even choose to receive a cash offer from Opendoor or Offerpad through Tru Realty (rather than an offer from Tru Realty as a buyer or from its network of other investors). Tru Realty agents might present both options at listing presentations.
“We kind of play good cop and bad cop,” she said. The iBuyer side of her brokerage will tout the merits of accepting a cash offer, while its agents might push for listing on the open market.”
Dallas-based JP & Associates Realtors is another brokerage that’s concocted an iBuyer service. Through a partnership with Offerai, an offer-request platform that JP & Associates Realtors has invested in, the firm can seek out cash offers from a network of investors and other buyers, said the brokerage’s founder, JP Piccinini, during the Connect panel.
The program empowers the firm’s agents to offer the option to list on the open market or to sell to a cash buyer at a discount. If the seller chooses the second option, the agent will collect a 1 or 1.5 percent commission, while the cash buyer — rather than the listing agent — will pay the buyer’s agent (if one is involved at all.)
“I don’t know why everybody isn’t doing it,” Piccinini said.
Both Richardson and Piccinini say iBuyers have shown that a sizable share of sellers are willing to net considerably less money in exchange for more convenience.
One question for brokerages that want to compete directly with iBuyers — with their own cash offers — is whether the offers that they muster are on par with those from the big iBuyers.
Though it has happened, “we rarely have beaten Opendoor and Offerpad,” Richardson acknowledged.
Piccinini said the investors in his iBuyer’s network typically won’t purchase a home for more than 15 percent below market value.
That could be less than what the major iBuyers would pay, even when factoring in the service fee that those iBuyers charge.
But at JP & Associates Realtors, their iBuyer service is really about creating the “opportunity to sit at the kitchen table” with the seller.
“If we get the listing appointment, we’re going to win that listing over the iBuyers,” Piccinini claimed.
He also noted that another advantage of presenting a cash offer from his brokerage’s iBuyer program. The offer tends to be so low that, “when they hear what the retail price will be [if they sold their home on the open market with JP and Associates], you can typically list a little lower.”
Tune in to watch the full panel discussion video: “WATCH: How indie brokers are using iBuyers to compete.”