For some who are not in the industry or in the market to buy or sell a home, the term iBuyer may not be as readily known, but most everyone knows who Zillow is because of their strong self-serving marketing campaigns online and over popular network and cable television channels. But, the term iBuyer is going to be making more news waves today thanks to the real estate inventory showcasing giant – and not necessarily for good reasons for many.
That’s because big brand news from Zillow could affect REALTORS and consumers in the coming months.
Back2Basics team members have been working with REALTORS® to strengthen their stories and messaging of value for years. This became even more important when data collection and distribution tech companies like Zillow took on the real estate industry in 2006 and found a way to infiltrate that market deeper and deeper each year; holding many REALTORS hostage to their marketing tactics to consumers.
Most recently, Zillow joined the ranks of other strong real estate tech-based companies like Opendoor, Offerpad, RedfinNow, We Buy Ugly Houses (HomeVesters), EasyKnock (or just Knock), Homelister, RealSure, and HomeLight in what was coined the iBuyer real estate movement. The first five listed here were most commonly seen in the Twin Cities area over the past couple of years with Zillow leading the pack recently thanks to the combined efforts and partnership with Chris Lindahl and the restrictions during COVID that drove more home sellers and buyers online.
So, what is an iBuyer program and why was it a concern for many of the traditional or old-school REALTORs®?
- What does this have to do with today’s news about Zillow?
- Is it true the news from Zillow could affect REALTORS and consumers?
- And, why is this a branding concern you should pay attention to?
Let’s first define the perceived benefits of an iBuyer program to a prospective home seller or buyer? It’s important to note that the iBuyer programs and tech companies were already in place and established in the western segment of the US a couple of years ahead of moving into the midwest markets; especially the Twin Cities. Because Back2Basics works with professionals across the country, we were in tune with the trend years ahead of local concerns within the Twin Cities market.
Essentially, short of some isolated differences between these companies, such as Knock’s platform who focuses on ‘home trading’ that enables homeowners to sell their existing home and buy a new one simultaneously, most iBuyer companies follow the same process —
- Homeowners go online to one of the iBuyer program’s sites and fill out a form describing their property’s features and benefits
- The iBuyer company receives this information and feeds it to an Automated Valuation Models (AVMs) software that runs an automated algorithm to provide an estimated property value
- The iBuyer uses the estimation to provide an all-cash offer to the homeowner within 48 hours of the inquiry which includes a breakdown of fees and expected net proceeds of the sale
- The homeowner typically has about a week to accept or decline the offer, but because iBuyers assert they only make fair market offers on properties, they won’t negotiate their offers
- If the homeowner accepts this offer, the iBuyer company may set up a home inspection to determine the condition of the home. If their inspector finds the home needs repairs, the iBuyer will provide an estimated assessment of the cost of those repairs and give the homeowner the option of making the repairs or deducting the cost from the sale price – no negotiation.
- Once repairs have been completed or the new price has been accepted, the homeowner chooses a closing date.
- If the buyer chose a reduction on sales price the closing happens and then the iBuyer company has their selected contractors complete repairs deemed necessary to meet minimum community certification standards before relisting the home for sale – not required by all communities – and not as thorough as an individual home buyer inspection.
These homes are typically always sold As-Is, without warranties, and usually with a Seller’s Disclosure Waiver. Both of these things can leave a new homebuyer at a disadvantage – especially when they’re feeling pressured to purchase without their own inspections performed in a heightened seller’s market. And, during the height of the pandemic, we saw more real estate clients selling through the iBuyer process and more buyers purchasing site-unseen or without precautions in place.
It was important for REALTORS® to really OWN and SHARE their story and the benefits of working with local experts like themselves before the popularity of these programs took hold of the Twin Cities real estate market. It became even more important for those REALTORS® whose target market consisted of technology-savvy consumers who saw the iBuyer company as a way to save them time and money – despite documented knowledge they most often left money on the table.
Today, however, brings another twist to this story, and one that some REALTORS®, as well as Title Agency professionals, mortgage lenders, and even property inspectors, should pay close attention to in the coming days and weeks as big brand news from Zillow could affect REALTORS and consumers.
In a big move, Zillow announced on October 18th that they will be phasing out their iBuying program – ceasing to purchase any more homes. This comes after purchasing a record number of homes – thousands of homes – across the U.S. in 2020 and 2021.
This left shareholders concerned about the stability of the company, and it leaves REALTOR members who invested in this partnership wondering where they’ll go in the coming weeks and months with this inventory still sitting out there, or if they still have any leverage with their partnership agreements.
OUR ADVICE TO REALTORS and those in the REAL ESTATE INDUSTRY TODAY —
When it comes to the conversation of iBuyer and iBuying Programs or Zillow, it’s important you stay in tune with the news as it unfolds and takes part in the conversation in a responsible and informative way for your client base. Don’t just recycle headlines. But be ready to answer questions and concerns about whether the news from Zillow could affect REALTORS and homeowner or home buying consumers. Provide information, insight, and your expert opinion based on your experience and from a point of view that best meets your brand image and messaging. And, don’t become clickbait. This could have impactful but short-lived results that could actually damage your reputation in the future.
Talk with your team, your brand manager, or your content writers to make sure your outbound messages and communications regarding this timely industry topic can leverage the current and trending conversations in a manner that best fits your brand voice. Take control of your content management and strategies around important and topical industry discussions whether that’s in real estate or some other industry or vertical.
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