Now will real estate agents be next? Will iBuyers take over their business?
The advent of online companies paying cash to buy homes directly from sellers has sent shock waves through real estate brokerages across the nation–in some areas.
Are they cutting out the Realtor?
The chief executive of California Association of Realtors told agents Wednesday, Sept. 25, they have little to fear from iBuyers — provided they embrace change, technology and adapt.
The iBuyer “changes the way you do business as technology has done … to everything in the last 30 years,” said Joel Singer, CEO of the state Realtor association for the past three decades. “But it doesn’t change it in a way that should generate fear. It should generate a sense of opportunity.
The traditional method of selling homes in America has survived decades of innovations many thought would eliminate brokers, even as internet users increased to 81% of the population. Citing figures showing 91 percent of home sellers used an agent this year.
The reasons are twofold, Singer said: First the industry itself has adapted and evolved. Seventy-seven percent of agents say they now are completely or almost completely mobile. Eighty-six percent use social media in their business. The average agent spends $2,000 a year on technology.
The other reason is the nature of home sales, which Singer said is more personal and complex than other transactions that have gone online — such as buying an airline ticket or buying a book.
You cannot automate that (home buying) experience!
However, there is room for improvement.
Buying and selling a home can be a painful process. Twenty-six percent of homebuyers complain the process is too costly, while about a fifth say it takes too long, it’s inefficient, a “rough ride,” according to a recent Google consumer poll.
“What should be an incredibly joyous thing, buying a new house, buying your first house, … is often quite nerve-wracking, quite difficult, (with) a lot of uncertainty and stress,” Singer said. “Until we can figure out how to deal with that, we make ourselves as an industry ripe for certain amounts of change.”
There’s no shortage of potential disruptors. Among them, discount brokers, flat-fee brokers, brokerages that let agents keep their commissions and brokerages with their own exclusive listing services.
iBuyers are perhaps the latest disruptor to appear, surfacing in Phoenix in 2014 then spreading across the nation. Companies like Opendoor, Redfin Now, Offerpad and Zillow started buying homes in Southern California in 2017. Opendoor has a close relationship with Lennar and have focused on purchasing resale homes built by Lennar, but has all the noise been successful?
They provide easy-to-use websites that allow home sellers to submit information about their house, then get a guaranteed cash offer within a week or less. The iBuyers deduct the cost of repairs and charge a “convenience fee.” There is always fine print and most of the complaints have been the repairs have been excessive and offers have changed throughout the process, according to complaints on the Better Business Bureau site.
There is a place for iBuyers, catering mainly to sellers willing to take less for their home for the added convenience or certainty of a cash sale, Singer said. He estimated iBuyers will handle 10-15% of all home sales by the end of the next decade.
But they won’t take over!
For now, the biggest challenge for Real Estate Agents is one another. There will always be some type of company/business trying to gain market share, however the share seems to always be below 10% if they gain any traction at all. A good agent will explain the process to the client and set them up for success.
Referenced from Jeff Collins at Lake County Record-Bee