While tech and innovation have become fixtures in real estate, the lifeblood of any brokerage and transaction has always been the agent.
Even as perceived “disruptors” make inroads into the market, the agent has served as a line in the sand that separates brokerages from several emerging business models.
That line has arguably been blurred as Offerpad, one of iBuying’s most prominent players, is hiring real estate agents as full-time staff under the radar. In an emailed statement sent to RISMedia, the company confirmed that it has roughly 200 in-house agents called “solutions experts.”
“The best way for us to deliver the Offerpad experience is to have our agents fully devoted to our mission and core values as employees,” says Jennifer Dohm, vice president of communications for Offerpad.
According to Dohm, the pool of salaried agents accounted for as much as 20% of Offerpad’s employee base in 2021 and are responsible for guiding Offerpad customers through the home-buying and -selling process.
A better-known aspect of the Arizona-based tech company’s business model is that it also partners external agents with clients interested in exploring a cash sale to Offerpad, which yields a 3% referral fee to the iBuying company.
According to Dohm, Offerpad has recruited agents from various backgrounds and experience levels in real estate.
“Our Solutions Experts play a vital role in helping Offerpad understand the local market dynamics in each state and city we operate in,” Dohm says.
Offerpad offers its customers a mix of services that include its instant offer product “Offerpad Express” and its “Flex” service, where clients can list their home with the iBuyer and have a cash offer as a backup option.
Solutions Experts represent the client throughout the Flex process, according to an Offerpad filing with the U.S. Securities and Exchange Commission.
“The customer will either sell their home directly to a buyer, or we will purchase the home under our initial cash offer,” read the SEC filing.
The document notes that the company earns a service fee if a customer sells a home directly to a buyer using “Flex.” Offerpad also disclosed to the SEC that the option generates higher margins for Offerpad than its instant offer product despite accounting for less than 1% of its total revenue in 2020 and 2021.
According to Jim Wible, Offerpad’s national solutions director, the iBuyer pays its salaried agents a base salary and full benefits that the company makes available to other full-time employees.
“Thousands of customers turn to Offerpad for a better way to buy and sell a home, giving a solutions expert like myself the opportunity to earn much more than I would at a typical brokerage,” he says.
Aside from a base salary, being a solution expert offers a complete benefits package that includes medical, dental and vision coverage, a 401(k) matching program, 40 paid volunteer hours annually, Mileage reimbursement, 11 paid holidays a year and flexible PTO.
“If the customer wants total control and flexibility, we get them a competitive cash offer with Offerpad Express,” Wible says. “If they want to try selling on the open market for the maximum sales price, we provide custom listing solutions with Offerpad Flex.”
While the company touts a “competitive compensation” in its email to RISMeda, the lion’s share of solution experts’ pay comes from commission.
As Offerpad looks to increase its “Flex” offering across its platform, its team of in-house agents will likely play an essential role in that task.
When asked if Offerpad was planning on hiring additional agents in the future versus continuing to partner with agents, she indicated that increasing both aspects of the company’s business model were priorities for the iBuyer.
“As we continue to grow, we’re always looking for talented and knowledgeable real estate professionals that are excited to join Offerpad’s mission to provide your best way to buy and sell a home,” she says. “We will continue to deliver on that promise by ensuring we have the appropriate number of solutions experts to meet buyer and seller demand.
“Additionally, Offerpad’s Agent Partnership Program empowers agents with more selling options to meet the unique needs of their clients,” Dohm continues. “Offerpad has always partnered with external agents, and we will continue to actively build relationships with local agents and real estate brokerages in the states and cities we operate in.”
iBuyers have created a mixed bag of challenges and concerns that real estate professionals have wrestled with since the tech companies started carving out their niche in the market. For many industry pundits, the companies have sparked debates over a possible existential threat to agents that still exists to this day.
“They hurt the industry in the way they disrupt the relationship between the client and the agents,” says Scott MacDonald, broker/owner of RE/MAX Gateway. “Then the bigger issue is that we have an inventory shortage throughout the country.”
According to MacDonald, when iBuyers buy houses, one in five are sold as a single-family rental, making it more difficult for people to purchase homes.
MacDonald says the salaried position that Offerpad established provides an easier way for some agents—specifically newer agents—to make a living today and stay in real estate as business tightens.
“They’ve never been in a competitive market like the one we are in right now,” MacDonald says. “If you like the real estate business and want to stay in the game, you would go and work for a company…where you’re salary-based, and then the business is handed to you basically on a silver platter, so you’re selling a wanted commodity today with a low inventory.”
Offerpad’s move to bring agents on staff doesn’t surprise Josh Harley, founder and CEO of Fathom Realty, who says the decision was a smart play by iBuyers looking to improve their market share.
“Their path to profitability has been weak at best, and therefore there will be constant pressure to squeeze out better margins in any way they can,” Harley says. “There is a significant amount of outside capital backing these iBuyers, and while growth is important, growth means nothing if there is no profit to return.
“iBuyers need agents from all brands to bring them deals, and I doubt that will ever change,” he continues. “They just cannot hire enough agents to fill that need. However, when it comes time to turn around and sell those listings, they will be able to use their own agents to reduce their costs in order to recognize greater returns.”
Stefan Peterson, chief data officer and co-founder of zavvie, echoed similar sentiments, adding that it makes sense for Offerpad to have in-house agents as the company looks to compete with traditional brokerages and its contemporaries in the iBuying space.
“It’s not surprising that they have found an effective way to do that by working with their own employee agents—for when consumers go direct to Offerpad—as well as great local REALTORS® who bring their own clients to Offerpad,” Peterson says.
Jordan Grice is RISMedia’s associate online editor. Email him with your real estate news ideas at firstname.lastname@example.org.