On the heels of our first-ever Agent Appreciation month, Inman is leaping into February with our Residential Finance theme month. Join us as we investigate how buying and selling a home is changing, from companies backing consumers in new ways to integrated services that handle the entire transaction.
IBuyers have been called everything from a disruptor to the apocalypse for the real estate industry. When iBuyers first came on the scene, many agents and brokers feared the results the phenomenon would bring and the impact it would have on home prices, commissions and their professional futures.
Over recent years as iBuyer platforms have rolled out in markets around the country, agents have had a chance to see first hand how this new option would play in their market. What are they seeing on the ground?
Understand how to respond
According to Spring Hill, Tennessee, agent Elizabeth Leanza of Realty One Group Music City, the biggest problem agents are having is coming up with adequate answer when potential clients ask about iBuyers. She said that sellers are inundated with iBuyer marketing and are naturally curious.
“As real estate professionals, we seem to have only one argument as a means to protect ourselves and provide value: “Oh, but they’re going to charge insane fees!”
“But what if money isn’t truly the bottom line for some sellers?” Leanza asked. For many sellers, having the freedom to bypass repeated showings and to be able to close when they want may be more important.
“Does it look like we have their best interests in mind, or does it appear we just care about our paycheck?” Leanza asked. “This is why the iBuyer has become more and more appealing to our current homesellers.”
Instead, Leanza suggests that agents help interested clients explore iBuyers and find out if that option is truly the best choice for them. The lower profit margin will be enough to dissuade most, while they will see that the agent is truly focused on the seller’s needs rather than their own commission.
In addition, Leanza said that many iBuyer platforms pay finder’s or referral fees to agents who send a client their way.
“I believe as long as the market continues in its upward climb, the iBuyer is not going anywhere anytime soon,” she said. “We can choose to learn to work with it and figure out a way to get a piece of the pie, instead of going hungry.”
Use iBuyers to educate the consumer
According to Raleigh, North Carolina, agent Uriah Dortch of Realty Raleigh, his hot market has seen a “massive increase of iBuyers swarming in the area. It has most likely crushed typical real estate brokerages across the region with iBuyers accounting for nearly 10 percent of all transactions here and their numbers are constantly growing.”
For Dortch, the secret to iBuyers’ success in his market is the prevalence of homes in decent condition requiring minimal work, resulting in a quick profit.
“The problem we see with them is that they aren’t for every homeseller,” Dortch said. “Homesellers with properties that are heavily damaged or need significant work will still call us to buy their homes because Zillow, Opendoor, etc., have decided their homes aren’t worth offering on.”
Dortch sees iBuyers as an educational tool, helping to create a conversation with potential clients about their options when selling their home. “I fully welcome this change in mindset and encourage homeowners to do their full research before submitting their property online for an offer,” Dortch said.
Develop your own platform
“In the Atlanta market, iBuyers were gaining market share over the last three years, but now every broker out there has their own iBuyer platform. Because of this, I don’t believe the traditional iBuyers will continue to gain additional market share.”
Bradley’s solution to compete with iBuyers is a pre-sale renovations model wherein his brokerage carries the cost of needed renovations until closing, when they are paid back from seller funds.
Still, Bradley thinks that iBuyers have a place in the market, saying, “I do think we need iBuyers, as some sellers want to take the fastest route possible to closing on the house, even though they are giving up equity.”
Big city brokers see less impact
Most brokers in large markets like New York City say they see little or no impact from the iBuyer phenomenon. According to Chicago agent Jose Hernandez with Coldwell Banker, there has been “no major impact here in Chicago. These programs might work in small or rural areas, but there’s no way they can work in a high-density, high-demand market like Chicago or any other large city.”
Hernandez sees little or no value to either homeowners or Realtors from iBuyer programs.
“I think they are an encroachment. We had an agent who presented a couple offers from the iBuyer program; the offers were approximately 10 percent below asking price, and their fees were not even included yet.”
Hernandez believes that with very few exceptions, most sellers in his market are more interested in garnering the best possible price for their property. His advice to homeowners?
“Always hire a Realtor who’s familiar with the neighborhood and type of property they are looking to sell and always interview at least three agents.”
What are you seeing in your market? Please share in the comments below.
Christy Murdock Edgar is a Realtor, freelance writer, coach and consultant with Writing Real Estate. She is also a Florida Realtors faculty member. Follow Writing Real Estate on Facebook, Twitter, Instagr