According to our latest zavvie Seller Preferences Report, iBuyers rebounded last year, increasing business fivefold year-over-year during an historic seller’s market.
Even as skeptics asked, “Who needs an instant offer from a tech company if you can sell your house on the open market faster than you ever thought possible for more money than you ever expected?” iBuyers registered a breakout year in 2021.
The numbers should silence doubters. Despite a major iBuyer exiting the market (Zillow), Opendoor, Offerpad and RedfinNow significantly increased their purchasing activity.
Collectively, iBuyers purchased more than 71,000 homes in 2021, about a 1.3% national marketshare. That compares with about 14,000 homes purchased in 2020, when the pandemic temporarily paused iBuying.
It’s time for agents and brokers to stop questioning whether iBuying is good or bad, and start asking if clients could benefit from considering an instant offer as one of several options.
The Rapid Rise of Power Buyers
As iBuying came roaring back, real estate market conditions in 2021 were perfect for Power Buyers, which experienced spectacular growth. It was a year when consumers continued to embrace Power Buyers and iBuyers, and reported very high satisfaction with their experiences across the board.
What 2021 tells us is that both solutions are here to stay, and that Power Buying—including “buy-before-you-sell” bridge solutions and “cash offer” options—could eventually become the norm in residential real estate. Already, these options for homebuyers are catapulting the growth of Power Buyers and their accessibility to consumers during the last 12 months.
Many of the leading Power Buyer firms reported record growth. Ribbon said demand for its Cash Offers increased 10x in 2021. EasyKnock, a nationwide operator, more than doubled its business over the year. Knock expansion exploded from three markets at the end of 2019 to 71 markets in 2021. Homeward kicked off a 20-state expansion plan. And Flyhomes launched a national expansion of “Flyhomes for Agents” by rapidly rolling out in several states.
The data show that consumers gained a huge advantage when working with a Power Buyer versus using a traditional mortgage with a loan contingency.
Buyers using a mortgage needed to make offers on seven houses before winning the bid. Using a “Cash Offers” program, homebuyers averaged just 1.1 submitted offers before successfully purchasing a home.
That’s why cash offers are continuing to drive Power Buyer growth. Many Power Buyers are reporting a 2x to 10x increase for cash offers in Q4 2021 versus Q4 2020.
Offering All the Options
We expect the popularity of Power Buyers to accelerate and iBuyers to continue to expand. It’s why modern brokerages and agents need to offer their clients all the latest selling and buying options.
You can check out all the latest Power Buyer and iBuyer trends in our newest zavvie quarterly report for free at zavvie.com/seller-preferences.
Stefan Peterson is chief data officer and co-founder of zavvie and author of its popular Seller Preferences Report, the first review of its kind, covering all the selling solutions available to homeowners throughout the U.S.