By Matthew Templeton
Managing Principal
KW Urban Dallas

Why is there so much movement in the iBuyer world?

First: What is an iBuyer?

An iBuyer is an institutional or business-based investor that uses automated valuation models (using data and algorithms to estimate value and trends over time) to make offers on properties in the market without actually having to have a huge workforce on the ground.

Who are these guys? Opendoor may be the one you’ve heard about the most. But also, Knock (a version of iBuying that gives you cash to buy the home you want before helping you sell yours), Offerpad, Coldwell Banker, Zillow Instant Offers (opened in Dallas on April 15), and coming in May to Texas, Keller Williams, according to Inman News this week.

How is this different than a traditional investor? In some ways, it’s not — individuals with bandit signs that say things like “we buy houses for cash” and companies like HomeVestors (“We Buy Ugly Houses”) with billboards have been models for decades.  

What’s different is that these institutional investors can buy properties at scale and their hope is to make money on the volume acquisition.  They claim to be purchasing at higher prices than a traditional investor (seemingly providing convenience for a slightly lesser price than retail).  The marketing pitch is slick. The idea behind it seems amazing — except that homes are not just data points. The fallout is yet to be determined.

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North Texas-based JP&Associates is entering the iBuyer market on behalf of its agents, launching an instant offer platform across the exploding firm’s brokerage and franchise network this week. 

This makes JPAR, a full-service brokerage with a capped transaction fee, the first independent brokerage in North Texas to launch an exclusive iBuyer program for its agents. It’s called JPAR Instant Offers.

“Entering the iBuyer market gives our agents a competitive advantage over Opendoor, Knock, OfferPad, and the other unilateral “sell now” offers,” says Giuseppe J.P. Piccinini, President and Chairman of the Board of JP & Associates Realtors. “This will greatly benefit our clients and agents.”

J.P. says he has partnered with a Seattle-based company, OfferAI. which relocated to Dallas in January.

“OfferAI is a white-label iBuyer that uses a bot to make instant offers on off-market properties. It empowers agents to present themselves as an iBuyer from their brokerage site, or their own affiliate page of OfferAI,” says Jack Burns, Founder and CEO of OfferAI. 

Unlike most of the current iBuyers on the landscape, JPAR associates become the “chaperones” of the webpage so they can guide sellers through the process and they retain a 3 percent commission on accepted instant offers.

“And that’s a game-changer,” says JP.

Burns relocated to Dallas from Seattle earlier this year with his firm. He says Texas is a preferable market for the rapidly growing iBuyer market, more so than Seattle, because of our relatively affordable home prices.

“The iBuyer space has not made a strong presence in the Seattle market because the median sales price is $669,500, way too high for iBuyers,” says Burns.
 
Seattle is home to Zillow, Amazon, Microsoft, and other high tech companies, but not likely to be an iBuyer hub.
 
“Texas is a sweet spot as far as home prices that work well for iBuyers,” says Burns, “That’s a home usually in the $200,000- to $250,000-ish range.”

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home buyingWho is most likely to have home buying as a goal this year? Will remodeling and home improvement spending continue to grow?  We look at this and more in this week’s roundup of real estate news.

Four Percent List Home Buying a 2019 Goal

Four percent (about 10 million Americans) said buying a new home was their main financial goal for the year — and millennials were the most likely generation to claim that as a goal, a new Bankrate survey revealed.

Seven percent of millennials said they wanted to buy a home this year.

But that doesn’t mean financial goals aren’t being set. Bankrate’s survey revealed that about 89 percent of Americans have at least one goal for the year, with paying down debt being at the top of the list, with three in 10 saying that was their goal, followed by better budgeting (13 percent), saving more towards retirement (12 percent), saving more for emergencies (10 percent), getting a higher-paying job (6 percent), and investing more (5 percent). (more…)