We’ve all heard of them: Opendoor, Offerpad, and Zillow. These instant offer companies, or iBuyers, have an increasingly strong presence in the real estate landscape, which is leading many across the industry to fear the worst.
This development raises a basic question: Are these huge corporate iBuyers going to put the regular real estate agent out of business?
The threat is undeniably real: iBuyers have become a dominant force in the market in major metro areas. To give you an idea of what I mean, they account for at least 15% of every real estate transaction in the Dallas-Fort Worth market, and in nearly every one of those, they’re cutting the traditional buyer’s and seller’s agent out of the deal completely.
As an agent, your concerns are well-founded. However, I also think we have a great opportunity before us, so today I’d like to share three ways you can not only respond to the iBuyer threat, but also come out on top and create more opportunities for yourself.
1. Become the iBuyer. The iBuyer companies I previously mentioned are initially making offers at 80% to 85% of the after-repair value, but it doesn’t stop there: They’re also deducting holding costs, selling costs, and repairs that need to be done on the home. When all is said and done, their offer is more likely 70% to 75% of the home’s market value. But acting as the iBuyer yourself, you can outcompete Zillow, Opendoor, and all the rest by offering the seller an 80% to 85% bottom line. Once the seller accepts, you have an incredibly valuable asset on your hands that you can either flip for quick money or hold onto long-term.
2. Build an investor network to find “iSellers” and connect them to one of your iBuyers. This will actually open up a whole new arena of iBuyers for you. Start by reaching out to your sphere of influence, and identify those within it who are frustrated with long-term stock market volatility and apprehensive about investing their 401(k) dollars. As an alternative, give them an opportunity to invest in a hard asset in their own community: the iSeller’s home.
3. Purchase an iBuyer’s listing or introduce them to an iSeller. Though it might not be your first choice, you can purchase an iBuyer’s listing and expect about a 3% commission. You can also introduce your iSeller to an instant offer company and charge a bird dog fee. What is this fee and how would a situation like this come about? If one of your listings is stagnating on the market or you’re aware of a seller who’d be interested in a quick, cash closing, you can carry that opportunity to the feet of an iBuyer, and they’ll pay you a 1% commission simply for introducing them to the seller.
The bottom line is yes, the iBuyer threat is real, which is why now’s the time for education and action. Speaking of which, I’m teaching a class this upcoming week that will go much more in-depth on how we as agents can profit from the iBuyer phenomenon.
If you have any questions or if you’d like to have a conversation about the iBuyer threat, please don’t hesitate to get in touch with me. I’d love to talk strategy with you and help however I can!