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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Yesterday, we learned that Opendoor snapped up discount brokerage Open Listings, giving the iBuyer platform company a huge foot up in not just the buying but the selling of real estate.
 
Today, we learn that Knock has expanded to Texas with the start-up’s first-ever Home Trade-In platform: buy and sell at same time, in North Texas.
 
Knock?
 
Know that in order to create an online iBuying or selling platform company, the first requirement is a catchy name clearly associated with a house: Brick, Door, Opendoor (do not confuse: Door is a locally-based flat fee brokerage. Opendoor is an iBuyer now armed with a discount brokerage. Shall we soon see Shingle and Front Porch?)
 
Knock is “a revolutionary new approach to home buying and selling that is certain, convenient and cost-effective.”
 
Launched by some of the founding team members of Trulia, the company says it uses data science to price homes accurately (that’s their AVM), technology to sell them quickly, and a dedicated team of Licensed Local Experts (agents) to guide consumers through every step of the process. Knock employs real estate agents, offering vacations and benefits.

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