13 Opendoor is already expanding its offerings to home-buyers.
According to one analyst, by 2021, iBuyers could account for 10 percent of the existing home sale market. 10 Homeowners looking to maximize the sales value of their largest asset may elect to work with a traditional real estate agent/broker.Īlthough iBuying is still a fairly new segment of the real estate industry-sources estimate it comprised just 0.2 percent of total transactions in 2018 11 and roughly five percent of sales in the markets where iBuyers operate 12-it could become a game changer. 9 Also, the price at which iBuyers purchase the house is usually not as much as the house would fetch if it were sold traditionally. Working with an iBuyer program can simplify the home-selling process, but consumers pay for the convenience: iBuyers charge a higher fee than a typical real estate agent, generally ranging from 6 percent to 13 percent of the purchase price. “That will trickle through the entire housing market, all the way up to the new home builders.” 8 “If we can do this seamlessly, it starts to increase the number of people that come to the new home market and the number of transactions,” Miller says. A less stressful home sale will make homeowners more apt to move up to a new home.
He compares the process to the way that car buyers can trade in a vehicle at a dealership when it’s time for an upgrade. “When we take friction out of the transaction side of the business and create that transaction with ease in a condensed period of time, we take the fear out of buying a home,” Miller explains. It also offers advantages to consumers who want to sell their existing home and purchase a newly built one in a single transaction and wait to move out until their new home is completed.Īfter working with Opendoor as the company’s New Home Trade-Up Program pilot partner, Stuart Miller, executive chairman at Lennar Corp., says the novel approach to new home sales could have dramatic implications for the housing industry. 3 And the owner selects the closing date, which can be as soon as a week after signing the iBuyer contract. In an iBuyer real estate transaction, there’s no need for the homeowner to hold open houses, consider multiple bids, or wait for a buyer to work out financing. When the sales transaction has closed, the iBuyer assumes the burden of owning, marketing, and reselling the home. If the homeowner accepts the offer, the iBuyer conducts a free, in-person home inspection. If the home qualifies, the iBuyer works with local market experts to develop an estimate of the home’s value and submit an all-cash offer (at an algorithmically determined “fair market price” 2 this process can take anywhere from less than an hour to two days). Homeowners in participating markets can request a no-cost, no-obligation offer by entering their address online, answering questions about the home, and submitting photos. iBuyers-large real estate companies, including Zillow, Opendoor, Offerpad, and others-use technology to radically simplify the selling process. Proponents of an emerging trend, iBuying, tout it as a more convenient and less stressful alternative to a traditional home sale. 1 Selling their existing residence as part of the transaction can add to homeowners’ anxiety. Little wonder, then, that about 40 percent of Americans say that home-buying is the most stressful event in modern life. For most people, buying a home is likely the largest single purchase they will ever make.
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