In response to the COVID-19 pandemic, brokerages across the world are shifting how they do business. One segment that’s been particularly affected is the iBuyer business. Several of the largest iBuyer companies in the U.S. have paused home-buying efforts, citing coronavirus concerns. Others, primarily those tied to more traditional brokerages, are continuing their services.
This could impact sellers who are experiencing financial hardship and wish to sell at instant-offer prices to eliminate no-longer-affordable mortgages. However, according to data from Point2Homes, buyer interest has fallen dramatically, with Google Trends showing a 23 percent drop (over a week) in real estate-related searches, such as “real estate.” Additionally, on the Point2Homes platform, a dip in traffic shows falling interest in home-buying, selling and renting—traffic fell by 35 percent earlier this month.
Here’s how each major iBuyer has responded to COVID-19:
Recently, Zillow Group announced it would be pausing home-buying in all 24 markets where Zillow Offers currently operates. The decision was a direct response to local public health orders related to COVID-19, according to the company.
“Our top priority is ensuring the safety and health of our employees, customers and partners. Given the concerns for public safety and rapid developments by governments that restrict local real estate activities, we determined it was prudent to pause our home-buying to preserve our capital,” said Zillow Group CEO and Co-Founder Rich Barton in a statement. “We plan to restore Zillow Offers full operations once health concerns pass and local health orders are lifted. In the meantime, we are working to support our customers and partners in these uncertain times when home has never been more important.”
While Zillow plans to continue selling homes through Zillow Offers, it is suspending all plans to expand into other markets. Homes continue to be marketed, with the company prioritizing technology such as Zillow 3D Home, which allows Zillow’s broker and Premier Agent partners to offer virtual showings and consultations. In terms of inventory balance, Zillow Offers currently holds 1,860 homes, down from 2,707 at the end of 2019.
“Zillow Group is well positioned to navigate these unprecedented times. We already slowed our pace of acquiring homes over the past month, while our pace of home sales in the quarter accelerated. We have a strong balance sheet and cash position, and are taking proactive steps to reduce spending to offset the important financial support we’re giving our industry partners so we may continue to best serve our mutual customers,” added Barton.
Recently, Redfin announced via a Form 8-K filing with the Securities and Exchange Commission that its iBuyer arm, RedfinNow, would be pausing making offers on homes.
“From the beginning—repeatedly, insistently and despite growth pressure from all sides—Redfin has said that we aspire to be the most disciplined iBuyer. In every earnings call and press interview about iBuying, we’ve said that we see iBuying as part of a portfolio of options we give homeowners, reserving for ourselves the flexibility to feature different options at different times,” said CEO Glenn Kelman in a statement.
“Nothing has changed about this position. We remain as committed as ever to giving homeowners the option of an instant offer, but only when we can know what a fair price for an offer would be. With whole cities shutting down nearly all commerce, no one can say what a fair price is right now, so we’re not making any instant offers,” he added. “We expect to be making instant offers again soon, but only when the market becomes more predictable. Our discipline today is the discipline we’ve always had, and that we’ve always said we would have.”
In a blog post, Kelman said that “home-buying demand took a big hit, with year-over-year growth dropping from nearly 27 percent in January and February to 1 percent growth over the past seven days.”
Offerpad has also temporarily shut down its instant offers program. A message on its website reads:
“Due to health concerns for customers and employees, and to ensure we are complying with proper local municipalities, protocols and CDC requirements related to COVID-19, we are not currently sending offers to new sellers directly. Interested sellers can still request an offer, which will be delivered when we resume our core business of instant offers.”
Offerpad did not respond to a request for comment.
According to its CEO and co-founder, Eric Wu, Opendoor is also temporarily pausing its offers; however, the company is continuing to sell off its inventory.
“While we’ve temporarily paused new acquisitions, we still have Opendoor homes on the market that are being purchased,” an Opendoor spokesperson tells RISMedia.
A recent blog post from Wu includes details about the iBuyer’s change in protocol and steps it is taking to close existing transactions.
“Though major parts of our experience are virtual and self-service, there are still elements that require real-world interaction from our teammates, including home assessments and home repairs. Thus, we made the decision last week to prioritize the safety of our customers and teammates by temporarily pausing new offers,” said Wu in the blog post.
In terms of sellers who are currently in contract with Opendoor, the company is requesting that customers expedite their closing or delay it until stay-at-home mandates are lifted. Customers can also cancel their deals if they’d like. For listing homes, Opendoor says it is partnering with local agents who are offering “creative solutions to list virtually.”
“We’ll continue to put our customers first and work hard to ensure we can continue to help customers move with ease and convenience with everyone’s health and safety in mind,” said Wu.
In response to the spread of COVID-19, Realogy’s iBuyer arm, RealSure, is also pressing pause on its cash offers.
“RealSure was designed to provide home sellers peace of mind with a more flexible real estate experience anchored by assurance and expert guidance. Helping home sellers get the best value for their home is important to us, and with the volatility of the current market, we do not believe that RealSure can now provide the value the program was designed to deliver,” a spokesperson at RealSure tells RISMedia. “Therefore, to maintain the integrity and future of RealSure, we made the difficult decision to suspend all cash offers at this time. We remain committed to RealSure as a great resource for agents to provide flexibility and assurance to home sellers, and are actively monitoring the market with the goal of restarting the program as soon as possible.”
Keller Offers, the iBuying division of Keller Williams, announced it was making modifications to its programs to “prioritize safety and to manage delays caused by the changing conditions related to the coronavirus,” according to a statement from the Keller Offers Team.
At this point in time, Keller Offers has not paused its home offers, and the company has said it has no immediate intentions of doing so.
“At Keller Offers, we remain focused on providing value to our Keller Williams agents as they work tirelessly to be the voice of certainty for their clients in a very uncertain time,” Gayln Ziegler, COO of Keller Offers, tells RISMedia. “We take each day’s events and pivot as necessary to ensure the safety and well-being of our clients, partners and employees while working to provide a level of certainty consumers need now more than ever before.”
The iBuying segment of eXp Realty, Express Offers is keeping its program open, focusing primarily on managing expectations, says RJ Jones, EVP of Growth and Finance for eXp World Holdings.
“We are still up and running, bringing this service to as many people as possible but managing expectations that the likelihood of price match is probably lower right now, factoring in the emotions and what’s going on in the economy,” says Jones.
Because eXp Realty is a virtual brokerage to begin with, Jones says that its iBuyer branch has an advantage over other iBuyers who are halting business operations, because they are modeled with thin profit margins and are more directly impacted by government restrictions.
“We are already remote, and all our agents have been operating in such a way that there is no interruption in the way we do our business,” says Jones. “I think iBuyers are going to continue being a force in the market, providing home sellers with the options to evaluate offers and make great decisions.”
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Liz Dominguez is RISMedia’s senior editor. Email her your real estate news ideas at firstname.lastname@example.org.