Who says you can’t play nice with the institutional money? My recent podcast guest Dan Noma, who is both an institutional and iBuyer expert, gave me some great tips.
The explosion of iBuyers has been met with real estate agent resistance, worries about shrinking commissions, consumers not wanting to work with us and the fear that we’ll be replaced.
The problem is, when we focus so much on the disruption, we miss out on the massive opportunities. What sets our guest Noma apart is how he approaches iBuyers with a mindset of opportunity — not one of gloom and doom — and he’s reaping the rewards of that unique way of thinking.
What consumer and market trends are influencing the massive amounts of capital in the iBuyer space? How can we as traditional real estate agents leverage these offers to deliver more value to clients?
In the podcast, broker-owner of Venture REI, and co-founder of the iReal Estate Pro Certification, Noma, shares how he built a successful business around selling to institutional buyers and iBuyers and how we can take this model and implement it into our own real estate businesses.
If we’re presented with an idea and our response comes from fear, we’ll always have a negative connotation around it, Noma said in the interview.
The tech is built around serving the needs of the consumer, and as agents, we have to find where we play within that need, Noma said. Here are a few things agents should know.
IBuyers vs. institutional buyers
IBuyers buy and invest in a property to return it to the market as a resale. Institutional buyers do not return the properties back to the market as sales, but rather as long-term rentals, which are often traded on Wall Street.
How single-family units have turned into a big asset class
The cost of capital in real estate has gone from 6 percent to 2.5 percent, and the property can be rented out at full market value.
Many institutional buyers don’t want to invest in commercial properties anymore, so capital stacks are shifting from malls to single-family rentals. Additionally, investors can use debt as a vehicle. When they see appreciation, they can refinance the debt, pull out equity and buy more houses.
How we can leverage iBuyers to grow our real estate businesses
IBuyers give consumers convenience, and the option to sell with certainty, and that is driving the massive growth in iBuyer platforms. They are speaking to the consumer and focused on what’s in their best interest.
This is where real estate agents are getting left behind. We don’t present iBuyer options to our clients, when we should actually be facilitators of that information.
By presenting multiple options, we remove consumer doubt about us, and they are more likely to want to work with us.
A few of the takeaways on how we as agents can get involved that I took away from Noma include:
- Educate yourself on all the potential buyers in your market. There is more to these companies than just a number. Find out what incentives they might offer to your clients and what areas of town they tend to buy in more, and attend events held by these companies.
- Sign up for agent partner programs such as the one that can be found on Opendoor.
- Get an instant offer website of your own (included in iRep training that Noma spoke about). This empowers you to shop for all the offers in town on behalf of the client.
- Be transparent with your clients about their options.
- Become certified with iRep, and keep yourself involved in the tech as it changes daily
IBuyer markets have proven that consumers want convenience and want to be able to sell their houses on demand. Contrary to popular belief, this doesn’t have to spell disaster for us if we focus on aligning with the opportunities within the space.
There’s still a huge need for agents who can guide people through the selling process. To maintain our value, we have to become a part of the iBuyer conversation and find a way to play within that consumer demand.
Entrepreneurship is all about finding a need in the market and fulfilling it. Ultimately, if we keep our focus on doing what’s in the consumer’s best interest, we will win.