Real estate has historically been regarded as a complex and challenging industry for many consumers. In the past, people had no way or ability to buy or sell their house without professional assistance. There wasn’t necessarily a desire for those things either, but times are changing. Modern consumers are more educated and proficient in new technology, giving them leverage in any potential purchase and fostering a greater sense of independence than they previously enjoyed. Through due diligence and online research, homebuyers and sellers now take cues from industry-leading organizations, experts and experienced consumers to inform every purchase. A richer understanding of the industry and a greater sense of a home’s value now put consumers squarely in the driver’s seat.
Organizations and experienced real estate minds have taken notice. Some are now providing consumers with more options to fit their needs and give them the control they are seeking. When change occurs in a business market and old standards are replaced (often with the implementation of new technologies), the consumer is the winner. Real estate is the latest example.
Technology has radically reshaped virtually every industry. Until recently, this technological transformation largely missed the world of real estate. Only in the past five years have individuals and organizations begun to offer consumers more choices that satisfy their needs, speak to them in a way they now expect, and give them the control they’ve become accustomed to. Recognizing this wave of consumer-driven real estate, these new organizations are pioneering a different model that more closely addresses and adapts to the needs of their customers.
Real estate is changing quickly. It’s not to say iBuyers will completely replace agents and the traditional method—I’m not suggesting that this is a zero-sum game. In order to build upon the innovative solutions that benefit consumers, all parties may need to leave room for creative collaboration, or at least coexistence. The industry will likely get to a point where the roles of a traditional real estate agent and brokerage are different from what they have been—they’ve already begun to shift with evolving demands from homeowners and buyers.
In turn, whether consumers use these platforms or not, the existence of iBuyers improves the general consumer experience by requiring more from traditional real estate. Similar to what has happened in the automobile industry—where new tech-enabled companies entered with novel offerings to make car buying better for consumers—the traditional auto industry has responded, and dealers now offer more enticing benefits to consumers who continue to purchase with them. Those who work with these new companies benefit from a smoother experience that offers more flexibility and automation than traditionally available. Consumers who continue to buy the other way also benefit as the traditional industry improves and provides new solutions to keep pace.
A successful and healthy business industry is transparent and shaped by the consumer. If the consumer wants to sell and buy homes on their mobile device or computer, they need to have that option. But as with any evolution of industry, there are those who cling to the traditional mindset and dismiss the change. In real estate, some have attempted to disparage these new consumer avenues as a passing trend, but the evidence this movement has lasting implications is overwhelming. Proptech companies, real estate tech businesses, iBuyers will thrive because these models meet the new demands of a growing body of consumers. Perhaps the most convincing indications that this is a lasting change are the rapid growth of these new companies, rampant consumer adoption, and major business model shifts by prominent industry leaders.
We are in the beginning stages of this new movement and proptech companies are meeting the demand. According to industry analyst Mike DelPrete, iBuyers in 2018 accounted for 0.2 percent of all U.S. real estate transactions and 6 percent of the market in the biggest iBuyer locale, Phoenix. Objectively, it is a small fraction of marketshare, but this has been an option for less than five years. Companies are reaching new markets for the first time, and many people are just now being exposed to the terms “iBuyer” and “proptech.” As consumer awareness of this technology grows, it’ll be more widely adopted.
Real estate is evolving, and as a ubiquitous industry that plays a significant role in our economy and is directly involved in the lives of many American consumers, this tech-enabled niche—although often misrepresented—is garnering attention beyond its current footprint. This shift and the conflicting conversation around it could foreshadow the industry segment’s potential and perhaps future prominence in the real estate industry, as well as added value to consumers of traditional real estate along the way.
As chief marketing officer at Offerpad, Darrin Shamo is a key architect of the Offerpad brand, elevating the organization’s position as a high-touch company that delivers the best customer experience in the industry. Previous experience includes marketing leadership at DoorDash, Zappos (Amazon), and Coupang.
From what I am hearing, MANY sellers are being taken by this NEW concept… THE FEES ARE NOT ALL DISCLOSED AND THE SELLER IS BEING RIPPED OFF !! Not working very well here in Texas at this point.
After doing some brief research, it seems to me the ibuyers would be something like,
a first off market cash offer. If it’s good enough, a seller may be inclined to take it. But if a seller wanted top dollar and had time, may go the “traditional” route.Then there is the questions, how close ibuyer offers are to each other vs actual market selling price. Unfortunately, we are just starting the process of generating that data. But, I think once they have the algorithms right, it’s just a matter of time.
If these “trade in” markets work out for them, you may never need an agent. Just schedule a viewing in their app, go view, and click yes or no for their “trade in”.
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Consumers should really be the ones on the lookout. A Seasoned and Experienced Real Estate Agent is the most valuable Tool in the Bag.
Are the Consumers just supposed to listen to what the Internet says?? Last time I checked, neither ZILLOW, Trulia, REALTOR.com or any others have been in YOUR local, viewing Your Home or any other Inventory. Can’t wait to see what happens when the market turns a little.
Best advice Ice is to Contact Your Local Professional Real Estate Agent one with a Proven Track Record, not just an Algorithm
I buyers and companies like offerpad are the current rage. People use them for the ease and not wanting to show and maintain the property. They have hidden fees of around 8% of the price. They will also ask that every single item be repaired on the home inspection. The market is shifting where ibuyer companies are trying to sell all the inventory in house and avoid a buyers agent showing the house. My agents contact me all the time that these companies are slow to call them back or not call them at all to show or find out about properties. They would rather receive the buyer calls and send a flunky agent out and pay them $50 to show the property to a potential buyer. The buyer has no clue they are unrepresented in the transaction. This is all the latest and greatest. A couple of these companies have already pulled out of markets. Wait until the market shifts and turns into a buyer market. The margins they are receiving are already very small with little room for an adjustment in the market. The end result for many of them is to pump up the business, build it and sell it off to an Apple, Google or other deep pocket tech company just like when Apple bought all the music services. Nothing will take the place of relationships with your clients, a human answering the phone and taking care of clients. Those that continue that practice and ethics will thrive in the future.
As long as valuation, visibility, and lack of disclosure are centered in one niche of our business the un or in tended consequences will be that the consumer is manipulated into believing the fairness of this alternative. It has grown at the rate it has not because people desire to sell at steep discount or even need to but rather because they have been led to believe that there is no substantial difference.
Comment I feel this article is ridiculous. All it will do is open up the industry to lawsuits. When you have people trying to buy and sell something and have no education in doing so you have created a real problem. That is why Realtors have had to have some much education over years and are required to have Continuing Education requirements every two years.
I see how the houses are prepared for market after being bought at discounted price. Sometimes they put on a new roof. They usually have a fresh but sloppy paint job, new flooring of the lowest quality, and almost nothing else done to add curb appeal. Furthermore some of the companies that now own the house, usually will not do any repairs. Caveat Emptor!
That being said, it is great for inherited property, especially if the heirs live out of state. Another scenario is divorces or folks that just have to move in a hurry and don’t have the time to deal with preparing a house for sale.
Comment: So this is an affirmation advertisement for the author’s company?
I guess that’s the new paradigm for creating the illusion.
IBuyers prey on the uneducated and those who need a quick sale. They charge significantly more than traditional real estate agents do and will typically offer less than the home would sell for otherwise. The consumer is at a huge disadvantage with nobody on their side in one of these transactions. Just because it might be easier to sell your home this way doesn’t mean its the better option. These companies are in business to make money, and they do that by charging you more and paying you less for your home.
Comment: So true and so overwhelming! But we make the best of each day.
This is the 1st article I have seen in what I agree is a rapidly changing industry and one that I fear will cause the destruction of what was a very professional and rewarding industry for both the Realtors and their Clients. I am closing in on the end of my career but I have deep empathy for those younger Agents who will lose their jobs. Rex Reiley Remax Allegiance
The most valuable statement in this article is about how iBuyers will cause traditional agents to up their game. We need to get better at conveying our value and the process to our clients in a Features vs. Benefits format. Many times we make it look too easy because we are so good at what we do! Like fsbo’s, there is a place for the iBuyer concept and those who want that experience should have a place to go. However, many of us have offered a quick sale plan to those sellers who want it. iBuyer isn’t really new.
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Be mindful that this is NOT an objective overview of a new trend. The author is the chief marketing officer of Offerpad! Of course he will assert that this is the direction we are all heading, since it is his job to promote their marketing scheme. Remember who you are, and your value in this business.