iBuyers have been cropping up all over the country, often causing agents to worry about their place in real estate. In the most recent Secrets of Top Selling Agents webinar, Kenny Klaus tells listeners some of the best ways to work with iBuyers in “Competing With iBuyers: They Are Here to Stay!”
Klaus is an iBuying pioneer whose goal is to help agents coexist with the iBuyer phenomenon. Throughout his webinar, he urges agents not to hide the fact that iBuyers are out there, and to use them to provide benefits to your sellers. He also encourages agents to use them as a tool in the industry, as agents are still the ones who build relationships with the clients.
iBuyer Basics: The Good and the Bad
iBuyers are functioning in an expanding market, especially in rental markets where homes are selling quickly. However, at this time, they usually avoid dealing with luxury properties. The point of iBuyers is to purchase a home with a quick, all-cash close, complete some light maintenance, and then resell the property for a profit. The iBuyer market works on convenience, as sellers don’t have to set up and show a home. In fact, according to Klaus, “over 40 percent of people who transact in their buy box requested an offer from an iBuyer.” Currently, the major iBuyer names are Zillow, Opendoor and Offerpad, but local investors are also joining in.
Overall, the consumer should be the one who benefits the most. As a seller, iBuyers offer so much convenience. Sellers are able to pick the closing date and have the potential to search for their new home while their current one is already under contract. In addition to this, there’s no need to make the majority of renovations or repairs, as the agency will take care of it. It also eliminates the need for showings or open houses, which can save clients a great deal of time and stress. Because it’s technology-driven, the process is made as convenient as possible. Clients upload photos of their home and they receive an immediate offer.
On the other hand, iBuyers characteristically offer lower sales prices. Some sellers will take a lower price for the convenience, but others will want to take the home to market to see if they can sell for more. Sellers still pay the traditional closing costs, including title, escrow, HOA and transfer fees. When compared to agents, iBuyer fees are still higher than a typical agent’s commission. If your clients are considering taking an iBuyer’s offer even when less is being offered, one tip Klaus gives is to bring play money to the meeting and show your clients what they’re leaving behind if they take the option. This will help them visualize what they may be giving up for the sake of convenience.
How iBuyers Affect Agents
As with any tool, there are advantages and disadvantages when dealing with iBuyers. Initially, iBuyers can help reduce the time spent in a transaction. There isn’t the issue of waiting for all of the moving parts to come together. Instead, iBuyers take away the uncertainty of when everything will be ready. There is also no cost for marketing and very little work involved to sell the property, since it’s sold before it even goes on the market.
However, there are disadvantages, as well. If clients go with an iBuyer, agents will only receive a referral fee from the iBuyer company rather than their full commission, even though they have paid for the lead. There are also the lost marketing opportunities, as agents are not advertising through the property with yard signs, open houses or brand visibility.
How Agents Can Compete With iBuyers
- Lead the Conversation – Don’t try to hide the fact that iBuyers exist and are willing to purchase your client’s home. Instead, introduce it as a tool that could be helpful, but may not be, either.
- Agent Transparency – Earn your client’s loyalty by telling them that you’ll check the iBuyer’s price offer and compare so that they’re getting the best option available. Otherwise, it can look like you’re trying to hide the information.
- Offer Lines of Credit – If your seller needs financial help either repairing something or bridging another financial gap, see if there is a way for you to work with a company to create a bridge there.
- Leverage Your Relationships – If your clients need a roofer or a painter, use your contacts to help them find the right person for the job.
- Be Your Seller’s Advocate – Your job is to work for your client by keeping their best interest in mind.
- Pump Them Up – Show your sellers that putting a little extra time and effort into showing their home can turn into a big gain and potentially get them a better offer on their home.
- Be the iBuyer – If it’s an option for you, it could be a great opportunity for you to buy the property.
To learn more of Klaus’ tips, join the Secrets of Top Selling Agents Facebook Group here. For more free real estate education, including best practices, visit the Secrets of Top Selling Agents website.
Mark Mathis is vice president of Sales for Homes.com. For more information, please visit marketing.homes.com.