When iBuyers first appeared, they took the real estate market by storm as they spread to markets throughout the United States. However, the spread of iBuyers slowed to a virtual stop as COVID-19 began wreaking havoc on the industry. Now, iBuyers are beginning to make their resurgence.
Recently, we hosted a panel during one of our Secrets of Top Selling Agents webinars to discuss what real estate agents should know as iBuyers make their way back into the world. The panel featured the CEO and Broker/Owner of the Boston-based Lamacchia Companies, Anthony Lamacchia, real estate expert Kenny Klaus, and WAV Group founding partner, Victor Lund.
The Return Begins
iBuyers are not available in all markets, but they are present in more than 25 markets across the country. The Phoenix, Ariz., market, which is known as the “Ground Zero for iBuyers,” has seen an especially strong return of iBuyers.
While iBuyers are making their way back into the market, they are coming with some new fees. Before the COVID-19 outbreak, fees for iBuyers were around 5 percent – 6 percent, but now, iBuyers are now requiring fees around 7.5 percent. In addition to higher fees, iBuyers are also making more conservative offers due to the COVID-19 outbreak.
With the market being incredibly unpredictable right now, it makes sense that companies are making more conservative offers.
What’s Changed After the Hiatus?
As iBuyers make their way back into their respective markets, Lamacchia notes that they are taking the same approach, but in a more cautious way. When iBuyers began their resurgence, they seemed to take a more cautious approach, but now it looks like they’re prepared to go full force once a few choice events have passed.
There are two events that will play a part in how the return of iBuyers will play out: the hopeful eradication of COVID-19 and the upcoming presidential election. Contingent upon how these events go, the housing market will react in a positive or negative manner according to Lamacchia. As for where the market stands right now, there are fewer sellers and much less inventory.
Is There More or Less Opportunity Out There?
For iBuyers to go back to normal, there has to be an opportunity in the real estate market for them to continue. Lund shared that the opportunity depends on the housing market. When it comes to the housing market, Lund shared that the success of iBuyers depends on if housing does well or if the market comes to a halt. To be frank, he states that the iBuyer model will be a failed business model due to the overhead of costs of the iBuyer program.
Klaus states that the opportunity rests in the hands of the agent or the company that is making the digital offer. Whoever can build the better relationship and support the best interests of the client will be the one to win the deal.
Overall, Klaus feels that iBuyers will continue, and while they might not be profitable now, they could be profitable in the future. He also predicts that iBuyer programs may become more competitive as time goes on.
The Long-Term Strategy
iBuyers aren’t going away anytime soon, so what’s the long-term strategy for the companies that are investing their capital in iBuying?
Lund suggests that iBuyers are planning to have real estate agents removed from the transaction and bring consumers to a point where iBuyers offer additional benefits to them such as a home warranty.
Lamacchia argues that the companies backing iBuyers are here to stay because of the amount of technology behind them. However, if they keep going on how they are conducting business, they will fail unless they begin to offer large discounts.
Klaus does not believe that there is a way to know for sure what the long-term strategy is. He does suggest that large iBuyer companies will buy out smaller iBuyers to eliminate some of the competition.
iBuyers Are Lead-Generating
Not everyone is willing to accept an iBuyer offer. Lamacchia mentioned that there have been times when he has made an iBuyer an offer on a home, which has created an opportunity for him to sell the home as a normal sale. Klaus suggests that you have to have full transparency with your clients when giving them their options.
He also suggests becoming the expert on iBuying so that you can be the one to guide buyers and sellers in the direction that will best fit their needs.
Overall, it’s safe to assume that iBuyers are here to stay and as they make their resurgence in the market; they certainly have plans in place to ensure their businesses last. To watch the Secrets Webinar recording, join the Secrets of Top Selling Agents Facebook Group or click here.
Joe Sesso is director of Sales and national speaker for Homes.com. For more information, please visit marketing.homes.com.