iBuying: Real estate transitions in internet age
New options for homeowners to get homes sold fast
(WKMG) Entrepreneurs are pushing boundaries by taking everyday tasks and using the web to simplify consumers' lives.
Need a ride? Call for an Uber, a Lyft or a Wingz.
Hungry? Try UberEats, Postmates and GrubHub.
Selling a house? As the saying goes, there’s now -- almost -- an app for that.
Anyone who has ever bought or sold a home knows the process is time-consuming, from the listing, to the showings to the offers and counteroffers, followed by months of waiting until the closing.
In real estate, the new buzzword is iBuying. It's as simple as click, sell and move.
iBuyers are a group of startups with deep pockets ready to make an offer to buy your home and close the deal within days. And while the startups don’t all technically have mobile apps yet, the process of selling a home the traditional way, with a real estate agent, is being turned on its ear.
“OfferPad is not a fix and flip service,” director of communications Cortney Read said. “We’re not looking to low ball a client and then turn around and fix their home and flip it for a lot more. We’re looking to be a resource for consumers that want to have control over the real estate process.”
In fact, iBuyer companies seem to have learned from the mistakes of other dot-coms that previously put an emphasis on the tech but forgot about the customer. The emphasis for iBuyers is on service and not just the sale.
“(We act) as a trusted home advisor to walk sellers through every step of the process,” Cristin Culver, an Opendoor communications manager, said. “We’re passionate about building a convenient, certain experience that delights sellers and buyers at every step. “
OfferPad and Opendoor are two big players in the world of iBuying and both operate on a very similar business model. Each company says it will make an offer on a home within 24 hours after the owner takes a short survey, uploads photos and submits information about the property online.
“We’re providing a very easy, seamless transaction process for consumers looking to sell and buy homes,” Read said. “You have the certainty of when your house is going to close, because you are choosing that close date.”
Knock, the third big gun in iBuying, has a totally different business model, said company co-founder and CEO Sean Black.
“It’s time to collapse some of the costs,” Black said. “A lot of liquidity is held up in home ownership.” Rather than selling and then buying, Black thinks owners should be able to trade in their home, in much the same way people trade in their cars.
With Knock, owners start by submitting information to establish how much their current home is worth. Next, the Knock team gets owners prequalified and helps identify a new home. For some people it’s an upgrade to a dream house, while for others it’s downsizing or a move to a new city.
Once the new home is agreed upon, Knock buys that house, makes improvements and moves the owner in. The previous home also undergoes improvements before being put on the market. And when that house is sold, Knock settles up for any repairs the customer authorized, taking into consideration the new home's purchase price, the old home's selling price and improvements made to both homes. The new home is then transferred into the customer’s name and mortgage.
Black, who was a founding team member of Trulia.com, points to the fact that three distinct transactions -- sale, financing, and purchase -- are being rolled into one.
“People would move if it was an easier process,” Black said. “With a move, you almost have to be a project manager and most people have never done that.”
The common value points of all three iBuyers are speed, convenience and certainty. Not everyone, however, is sold on this business model.
“I think sellers are better represented by an agent who has their interests at heart,” said Holly Wilton, a real estate associate with Keller Williams. “I think very few sellers want to put the buyer in the driver’s seat.”
When an agent signs on to sell your home, just about everyone can find it through another agent or on the internet. The home may sell for more than its listed price, or it may sell for less. If it’s a hot commodity. The market can surprise you, Wilton said.
Because of that, Wilton cautions potential sellers.
“If you are selling to just one buyer, rather than exposing your property to the whole market, you may not be getting the best offer out there.” Wilton said. “When you’re doing business with a company that is providing the contract and setting the terms for the negotiations and the repairs, you’re really giving control to the buyer.”
In terms of convenience, iBuyers may be a good fit for millennials, who prefer doing things on the Internet; seniors who don’t want the hassle of a long drawn out-selling process; and homeowners in the military or job who need to make a move quickly.
The convenience of a quick offer, however, come with the caveat of needing to make a quick decision.
Opendoor and OfferPad are both up and running in Orlando. Sean Black said Knock will be launching in the area later this year.
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