The hot new thing in the SFH market is “iBuyers”. The “i” stands for “instant”, not “internet”.
What is an iBuyer?
There are lots of answers:
- “An iBuyer is a real estate investor that uses an automated valuation model (known as an AVM) and other technology to make cash offers on homes quickly.” p35
- “An “iBuyer” is the catchall term for online real estate investors who seek to reduce transactional property costs via digital tools.”
- “iBuyers are companies that purchase homes outright, directly from the owner. The seller doesn’t have to pay an agent, list the home, stage it, market it, or even show it to potential buyers.”
- “The term iBuyer describes a company that buys homes for all-cash online. The company then sells the house. They use highly technical data crunching, like automated valuation models, or AVMs, to determine things like a home’s worth, the asking price, and potential profit. The iBuyer model is a relatively new entry into the residential real estate market, and it isn’t yet available in all cities.”
- “An iBuyer is different from a traditional real estate broker because they use an AVM – automated valuation model.An AVM allows an iBuyer to instantly give you a selling value for your home.”
Number 3 best explains the rationale for the existence of iBuyers. Convenience, relatively quick sale (no waiting for buyers), “guaranteed” price. Are they crooks or saviors? Our outstanding real estate broker Jeff Sutherlin of eXpRealty explains the iBuyer appeal in this video.
Thanks for the great analysis and summary, Jeff. They offer convenience and you pay for it via (for now) a lower price to you. Call Jeff at 602-370-7174 or visit his website, FaceBook or YouTube site for more informative, fun videos on the real estate market today.
Jeff mentions 6% of sellers use some type of iBuyer services. The chart below from “Morgan Stanley Research” shows iBuyer actually buying 1% of the home transactions now (2019), rising to 5% in 2030.
The iBuyer landscape and players are changing daily. Here’s a list of current iBuyers. It is all going to the commoditization of SFH as I discussed in ‘MayDay for the 6% Commission’.
To get an in-depth look and actual experience with iBuyers we are going to look at and try out a related phenomenon: The Rise of the iBuyer Aggregators.
iBuyer aggregators offer to present your house to several/many iBuyers and report back the results in a standardized format that has all the numbers “normalized” so you can compare the offers.
iBuyer aggregators rightfully claim the following advantages for using their services:
- You save time by only having to apply to one site.
- They normalize the results so that you can compare the offers “apples to apples”.
- You protect your privacy by not giving out your personal data (address, phone number, email) to multiple iBuyers who will end up repeatedly trying to contact you. And you won’t have to deal with multiple contacts; more time savings.
There are multiple iBuyer aggregators. Here is a current list I’m looking at in alphabetical order:
To investigate the iBuyer experience and iBuyer aggregator experience we will submit the TMP Valencia house to the above iBuyer aggregators and compare the experience.