Many companies are responding to today’s shift in consumer demand by launching their own instant-offer, cash-offer and trade-in programs.

This story was republished with permission from the author.

Following the rise of iBuyers during the decade, 2021 has seen the emergence and rapid growth of power buyers — companies empowering buyers with services like cash offers, bridge financing and trade-in programs. Like iBuyers, these companies are transaction-focused, but most critically, target buyers instead of sellers.

Power buyers leverage their balance sheets to purchase homes on behalf of their customers (turning offers into all-cash offers or as part of a trade-in program).

The focus on buyers is achieving a high product/market fit: Orchard and Homeward saw 150-plus percent growth in 2020 and over 300-plus percent growth into 2021. With high demand for housing and low supply, buyers need products to stand out from the crowd. Cash offers and trade-in programs are providing that advantage.

The mortgage advantage

Financial products aimed at homebuyers give power buyers industry-leading mortgage attach rates. That is in stark contrast to the major iBuyers, which have struggled to attach mortgage.

When it comes to attaching mortgage, it appears to be more effective to target buyers earlier in the process. Which is why the iBuyers are evolving their model to offer cash-offer and trade-in programs (ex: Opendoor’s cash-backed offer).

The shifting landscape is causing disruptors and incumbents to adjust their strategies. Many companies are responding to this shift in consumer demand by launching their own instant-offer, cash-offer and trade-in programs.

Digging deeper into power buyers

There’s a lot more to unpack in the world of power buyers. My latest free report goes into this topic in detail, and the video above provides a crisp overview.

Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.

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