Headlines have been dominated by iBuyers for years, but there’s a much bigger story in the real estate market today: More sellers are using the services offered by a group of innovators and disruptors known as “Power Buyers.” They all share one common denominator: they dramatically increase the consumer’s home-buying power.
Unlike iBuyers, Power Buyers are already operating nationwide, empowering cash-strapped buyers with all-cash offer options, helping sellers become buyers before they sell and providing sale-leaseback or home trade-in solutions.
Their growth rates are astronomical. Power Buyer Homeward saw 150%-plus growth in 2020 and over 300% growth into 2021, according to real estate tech strategist Mike DelPrete, who coined the term.
The zavvie 2021 Seller Preferences Report found that demand for cash offers at Ribbon increased by 10X in the first half of 2021. EasyKnock saw its Q1 2021 business up 70% over Q4 2020. And Knock’s growth exploded from three markets at the end of 2019 to 49 markets by the first half of 2021.
The Rise of the Cash Offer
The biggest trend we’re seeing among Power Buyers is their all-cash offer options. This is especially true in smaller markets where national iBuyers aren’t present.
The National Association of REALTORS® notes that in 2021, one in four home sales were all-cash during the most competitive spring real estate market in 50 years. That’s up from 15% a year ago.
More cash offers are also being made to purchase vacation homes: 61% are all-cash sales compared to 50% in past years.
Power Buyers are helping brokerages turn every qualified homebuyer into a cash buyer.
Service Fee Advantage
Power Buyers’ service fees are lower than iBuyers, ranging from 0% to 3% depending on the firm and service. While the zavvie report shows that the average iBuyer fees dropped sharply in the first quarter of the year, from 7.6% in 2019 to 5.1%, they are typically higher than Power Buyers.
Power Buyers that charge no fees at the front end of the transaction are profitable by providing permanent financing. These Power Buyers are reporting mortgage capture rates at 70% or more.
How Brokers Can Tap Into Power Buyers’ Services
The bottom line is that Power Buyers provide an opportunity for brokerages to offer this new option and keep their agents at the center of the sales transaction. The modern brokerage offers more choices to sellers and buyers by delivering their clients all the options. This includes the services and advantages that both iBuyers and Power Buyers bring to the table.
Learn more about how your brokerage can tap into the services Power Buyers offer at zavvie.com.
Lane Hornung is CEO and co-founder of zavvie, a technology company empowering modern brokerages and agents by making it easy to provide today’s consumers every selling and buying option. Hornung is also CEO and founder of 8z Real Estate.