The past year has changed the way people buy and sell homes, with new buying and selling options gaining traction in the marketplace. In addition to the well-known iBuyers, these include a more recent category of companies such as EasyKnock, Homeward, Knock and Ribbon. The details of these programs vary, but one common denominator is dramatically increasing the consumer’s power as a homebuyer—hence our preferred term for these companies, “Power Buyers,” coined by global real estate tech strategist Mike DelPrete.
zavvie facilitates thousands of agent requests for Power Buyer and iBuyer offers each month. Analyzing the offer flow, we are most impressed by two megatrends that have important implications for real estate practitioners:
1. Power Buyers are enjoying 2X to 10X growth this year by solving the biggest marketplace problem: lack of inventory. This makes it hard for potential sellers to buy a house, creating a “chicken-and-egg” scenario. Power Buyers solve this for sellers by helping them buy without a loan contingency before they sell.
We conducted a study of offers made by one of our Denver partner brokerages, revealing that buyers with a loan contingency needed to make an average of seven offers before going under contract, while buyers utilizing a Power Buyer program had a 1:1 offer-to-acceptance ratio. For sellers and buyers, power buyers are a game changer.
2. The iBuyers are making stronger offers than ever. In fact, on average, their offers came in at an impressive 104.1% of market value during the first half of the year. Anecdotal reports from brokers across the country confirm that iBuyers are often making offers above prices expected on the open market.
At the same time, iBuyer service fees dropped from 7.2% in 2020 to 5.1% at the end of Q2 2021. Moreover, their average concession for home repairs fell from 3.6% to 1.9%. Combined, that’s 3.8 percentage points lower, equating to a 35% reduction in the consumer’s costs of selling to an iBuyer. That dramatic decrease brings the iBuyers’ fees in line with what sellers pay on the open market.
For agents, the takeaway is that iBuyers are making great offers, and these offers may be the best option for their clients. Agents who aren’t requesting these offers are missing out—and arguably not fulfilling their fiduciary duty to sellers.
Modern brokerages aren’t standing idle. They are proactively getting out in front of these changes and co-opting the Power Buyers, iBuyers and other options for selling and buying. By adapting to the changes in the marketplace, they’re getting more deals done.
These trends and others are presented in more detail in our mid-year Seller Preferences Report at zavvie.com/seller-preferences.
Stefan Peterson is co-founder and chief data officer of zavvie, a technology company that is empowering the modern agent by making it easy to provide today’s consumers all the selling options: iBuyers, bridge and open market. For more information, visit zavvie.com.