When iBuyers pushed the “pause” button in March as a result of market conditions and safety considerations, some predicted their demise. But the reverse is more likely: iBuyers may accelerate real estate’s bounce back post-COVID-19.
Every economist will tell you there are two key things that fuel a market recovery: liquidity and certainty. For real estate to roar back loud, we are going to need both. Uniquely, iBuyers bring both liquidity and certainty to the real estate business.
The top iBuyers—Opendoor, Zillow and Offerpad—are fully entrenched in this multibillion-dollar business. Their decision to pause was a savvy business choice based on market risk. They demonstrated the ultimate flexibility as they have complete control over the deals they make. They showed they could stop buying houses when they need to protect their assets.
And as market conditions improve, the strength that these well-capitalized iBuyers bring to residential real estate should help our markets rebound.
Every market needs liquidity. And iBuyers have capital. They will start buying again, and when they do, iBuyers will help bring liquidity to the market.
For sellers, iBuyers bring certainty to the real estate market. Sellers will know they have a guaranteed offer. Certainty is precisely what is needed to bring confidence back to the real estate market.
iBuyers also have inventory. They have houses they will need to sell. What do we need most? Inventory. It’s a win-win.
More iBuyer Advantages
iBuyers are not only going to survive once they release the pause button, but as Mike DelPrete points out, they are also likely to thrive.
DelPrete, a global real estate tech strategist and member of zavvie’s Board of Directors, is one of the leading experts on iBuyers. In addition to offering liquidity and certainty, he notes that iBuyers work well within the new normal for real estate.
“The iBuyer business model is uniquely positioned to thrive in a world of social distancing, where people are putting a premium on the ability to conduct business while limiting direct human contact,” he writes, adding: “At its core, the model allows consumers to sell and buy homes with limited human interaction.”
As the Market Turns
It’s true that iBuyers have never experienced a down market before. It will be interesting to watch them carry homes on their balance sheets much longer than they had anticipated. But the biggest ones are well capitalized, and Wall Street has demonstrated its long-term confidence in iBuyers.
Time will tell, but one thing is certain: As the iBuyers survive an economic event that doubters said would put them out of business, they will prove to everyone that they are here to stay.
I’m predicting that collaboration between “traditional” brokerages and iBuyers will actually accelerate in a post-COVID-19 world. The smart players will find new ways to work together and help the market rebound. #BeAroundForTheRebound
Lane Hornung is a founder of zavvie and broker/owner of 8z Real Estate in Colorado. A Stanford engineer, early internet pioneer and former agent, Hornung flew Cobra helicopters in the USMC, was a “Good to Great” (Jim Collins) researcher, and is a RE/MAX Hall of Famer.
