iBuyers: What REALTORS® Should Be Doing Now
You could say that iBuyers and their effect on the real estate industry is this year’s hot topic. A panel comprised of industry experts discussed the iBuyer phenomenon at this month’s Fall Forum in Beaver Creek, CO, and offered insight into ways REALTORS® can survive in an ever increasingly competitive industry.
Brandon Wells, President of The Group, Inc., explained that REAL-TORS® need to adjust their way of thinking and use iBuyers to their ad-vantage when it comes to dealing with their clients. iBuyers, he said, have access to large sums of capital and their spending significant portions of it to market themselves to potential home sellers.
“Avoiding the conversation (with clients) is absolutely the worst approach. You need to embrace the conversation because they’re going to be exposed to that marketplace (of iBuyers),” he said.
Wells suggested REALTORS® become familiar with the major players in the iBuyer world operating in Colorado, such as OpenDoor and Zillow, and REALTORS® should understand how their iBuyer programs work.
“Have a nice, educated dialogue with your customer about what (iBuyers) are, what the difference is with an instant offer versus exposure to the open market. That’s the conversation people need to be having,” said Wells. “There are potential risks (with iBuyers) as it pertains to equity and costs associated with closing. For the home seller, it’s more convenient. There’s a guaranteed time-line. But sometimes that comes with costs.”
Wells said a recent Zillow study found that 53 percent of homeowners who sell via an iBuyer have never sold a home before. He said home-owners may initially be attracted to the iBuyer model because selling a home is not something that is done frequently. He feels real estate agents bear some of the blame be-cause relationships end once the homebuying process is completed. REALTORS® should ensure they’re having conversations about wealth creation when dealing with clients, Wells advised.
“One hundred million dollars is being left on the table annually by homeowners due to mismanagement of home equity. They’re trading convenience for a cost,” he said. “One of the tenets of personal wealth creation is home equity. People need to understand what they’re potentially trading for the long term.”
Nobu Hata, Director of Industry Out-reach with NAR, said REALTORS® need to know their value proposition and take action now.
“People who are dreaming of selling their homes next year are already doing the research right now. They already have the mindset of selling and you shouldn’t wait until they’re at your table to begin talking about equity,” said Hata.
Wells conceded that iBuyers fill a niche because some homesellers may need to sell quickly due to a relocation or other extenuating circumstances.
Adam Pollock, Co-Founder and CEO of BoardRE, Inc., said REALTORS® should be straightforward with potential clients when it comes to helping them evaluate an iBuyer of-fer, what the offer is and what the offer isn’t.
“The data shows the offer is rarely in the best interest of the seller. The of-fer is rarely the highest sales price,” said Pollock. “The iBuyer is certainly not someone who’s going to be with the homeseller for a transaction that’s done once every seven years.”
Hata compared iBuyers to Amazon Prime and consumers’ increasing value of having something right now.
“The amount of money that people are willing to pay for certainty and convenience is off the charts. That’s the world we live in,” said Hata.
Pollock added REALTORS® should tell potential clients to “play the field” to get the best offer and “not the first offer,” which is essentially what an iBuyer offer is.
Pollock said just as iBuyers have reshaped the way homes are purchased, the time has come for a shakeup in the mortgage industry.
Pollock refers to his company as an “i-Lender.” iLenders such as BoardRE, Pollock explained, utilize their own cash to purchase homes upfront on behalf of borrowers who have been pre-approved for a mortgage through their company. He says that his company’s services turn the ordinary consumer into an iBuyer. The iLender then transfers the ownership to the new owners at the same price. There are no additional fees for the buyers, sellers, or agents. BoardRE generates its revenue from loan origination fees.
And while some REALTORS® might be hoping to relax during the upcoming holiday season, Hata said that is the opposite of what they should be doing. He explained that Google analytics confirms peak search time for homeselling is heading into the holiday season. As such, REALTORS® should increase their marketing during this time and be proactive in cultivating relationships with new and exist-ing clients who are looking to sell their homes within the next year.