The coronavirus pandemic has shaken up the industry over the last few months, and the majority of iBuyers have not escaped unscathed. Several of the largest iBuyers out there have paused business in response to the pandemic-caused slowdown of buyer and seller activity, as well as public health concerns. But now that states are starting to open back up, and the latest National Association of REALTORS® flash survey says sellers and buyers are ready to get back out there, what does that mean for the iBuyer business?
Here’s how each major iBuyer has fared these last couple of months, along with the recent changes they’ve implemented as coronavirus infections slow and states begin to reopen:
On March 23, Zillow announced it would be pausing home-buying in all 24 markets where Zillow Offers currently operates. Currently, their website states the temporary pause still stands.
However, in the company’s May letter to shareholders, CEO Rich Barton said they are “actively planning to restart Zillow Offers home-buying, likely within the next few weeks.”
There are several factors that influence timing, according to the letter:
– Health and safety of employees, customers and partners
– Local orders and public health concerns
– Local housing market factors
– Confidence in their ability to consistently price and transact
Before pausing home-buying, Zillow Offers generated nearly $770 million in revenue from January through most of March—a 498.7 percent increase from 2019. The company had purchased 1,479 homes in those three months, selling 2,394 homes and ending the period with a surplus of 1,791 properties.
“While buyers and sellers retreated in mid-March as cities, counties and states began to shelter-in-place and close non-essential services, we are now seeing buyer demand return in markets across the country,” Barton said in the letter. “On Zillow, traffic and requests to connect to real estate returned to pre-COVID 19 levels in late April. At the same time, we’re seeing a rise in pending sales and new listings are edging up, indicating sidelined sellers are inching their way back into the market.”
Over the last couple of months, Redfin has struggled financially due to the coronavirus. The company’s ibuyer segment, RedfinNow, paused all home-buying in March. And in April, Redfin laid off 7 percent of its staff and furloughed 41 percent of its agents due to a drop in housing demand amid the coronavirus pandemic.
In addition, the company made several other cuts, including to remaining employees’ salaries, and by canceling the year’s planned bonus.
RedfinNow has begun purchasing again, relaunching in Austin, Denver and the Inland Empire east of Los Angeles, the company said in its Q1 2020 earnings call.
“In response to strengthening home-buying demand in late April, [Redfin] began to unwind some of the actions taken in March and early April. RedfinNow will resume making offers on homes in select markets in May,” said the earning’s statement.
The company also announced that it has asked approximately 135 employees to return from furlough to serve the renewed home-buying demand.
In March, Offerpad temporarily paused its instant offers program, citing health concerns and CDC mandates.
The company has announced it will begin submitting offers again on May 8 after implementing new health and safety standards with a Certified Safety Procedures certification from HealthyVerify, a health safety organization, in association with the Barrow Neurological Institute, that helps businesses minimize transmission of infectious diseases.
According to a statement from Offerpad, company-wide training is currently underway and will allow the company to provide home sellers with a streamlined and contact-less experience throughout the entire transaction.
“As we begin to re-energize our economy, I am pleased to see an Arizona-grown business setting the example for best practices nationwide,” said Arizona Governor Doug Ducey in a statement. “Thank you to Offerpad for prioritizing public health and safety as Arizona looks ahead to economic recovery.”
In March, Opendoor’s CEO and co-founder Eric Wu announced the company would be pausing home-buying but would continue to sell off inventory. Due to stay-at-home mandates, the company said it could not continue purchasing homes because of “elements that require real-world interaction from our teammates, including home assessments and home repairs.”
The company faced financial roadblocks in April and laid off over 600 employees, about 35 percent of staff, to reduce expenses.
“We are doing everything we can to support our teammates who will be leaving us, including eight weeks of pay and reimbursement of 16 weeks of health insurance coverage,” Wu said in a statement at the time. “Also, I’ll be donating my 2020 salary to our Opendoor Employee Relief Fund to help those who may be in more challenging financial or health circumstances due to COVID-19.”
The company will be resuming services in Phoenix this week, largely leaning on virtual tours to do so. In a statement released by Opendoor, the company announced three ways they will be helping consumers “buy and sell safely with fully-digital, contact-free experiences”:
– Sell Direct: “A contact-free way to sell instantly to Opendoor.”
– Home Reserve: “A new way to reserve and move into your new home while we list your current home.”
– Safer Touring: “The ability to virtually tour or self-tour homes to buy.”
“We believe this is the future of how people will buy and sell a home. We are energized this is happening sooner than we expected. So as of today, I am thankful for that feeling that we are going to change an industry and deliver on our mission,” Wu said in a statement.
Along with several other iBuyers, RealSure also pressed pause on instant offers in March due to coronavirus concerns. The company has not yet announced when they will be resuming services.
Keller Williams’ iBuyer arm continued to offer its services over the past several months, with modifications that “prioritize safety and manage delays caused by the changing conditions related to the coronavirus,” according to a previous statement from the Keller Offers Team.
Gayln Ziegler, COO of Keller Offers, told RISMedia that the iBuyer segment “remained operational throughout the pandemic as we felt it was imperative that we didn’t disappear when the consumer needed us most.”
Instead of pausing, the company “pivoted operations” regarding inspections and closing dates, allowing extensions as needed.
“We have not had to lay off a single team member within Keller Offers. From the beginning, we created Keller Offers to sustain drastic market shifts, like the one we’re experiencing,” says Ziegler. “We remain operational in 14 markets and have plans to expand our cash offer program into more mid-tier U.S. markets in May. And, we’ll have more exciting news to share in the coming weeks.”
In March, RJ Jones, EVP of growth and finance at eXp World Holdings, said the company’s iBuying segment, Express Offers, was staying open but would be focusing on managing expectations amidst the coronavirus crisis.
Due to the virtual nature of the brokerage, Jones said the iBuyer brand already had an advantage over other iBuyers who had to halt business operations.
“We continue to add investors to the platform and are expanding into new states. Homeowners continue to value different options that increase their flexibility when selling their homes,” Jones tells RISMedia. “Having access to an agent in the Express Offers service continues to set it apart from other offerings available.”
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Liz Dominguez is RISMedia’s online senior editor. Email her your real estate news ideas at email@example.com.