Tech disruption is all around us, and there is none more current than iBuyers. To catch you up, iBuyers are transforming how digital capabilities impact the world of real estate by purchasing a home entirely online, in all cash, without utilizing a local real estate agent or brokerage.
It sounds simple and quick for sellers (it is), but it also sounds like it could displace real estate professionals. As these companies pop up more frequently, it’s important to analyze their relevance and impact — let’s dive into the good and the bad ways that iBuyers are impacting real estate.
Homeowners seem to like iBuyers
A seller who hears the words “instant, cash offer” feels like they just hit the lottery. It sounds like a solid comparison to us! It’s no wonder that a recent survey found that 77% of homeowners would probably or maybe take 5-to-10% less on the sale of their home for a more convenient, instant cash offer. The convenient aspect of the sale is attractive to home sellers — it seems that money isn’t the only factor at play when it comes to selling a home. This same survey found that more than 70% of respondents found that previously selling a home was stressful or very stressful. The iBuyer format hits a homerun for these sellers that were stressed out by the process. Characteristics like cash offers, a fast process, certainty, and no realtor fees are incredibly attractive to a seller.
There are expansion opportunities for brokerages
One notable positive to point out is that iBuyers have created opportunities for real estate brokerages to evolve. For example, Rocket Homes, a brokerage in all 50 states, announced that it is launching an iBuyer program just this month. Although Rocket Homes is a massive (and not all brokerages can afford a program like this), it still provides a great model for brokerages to expand their services. In addition to its traditional services, the new model provides additional options for its clients. Sellers can choose to work with Rocket Homes’ agents directly online without ever seeing them face-to-face. However, it also provides sellers the opportunity to be assisted by a real estate agent within their market. They’ve expanded into the traditional realm as well as the iBuyer realm in order to adapt to technological change and remain successful. *Want to know what they didn’t do? Ignore the impact of iBuyers and refuse to adapt.
They threaten the role of the real estate agent
It’s easy to look into the iBuyer trend and feel concerned for the place of the real estate agent. iBuyers completely cut out the use of a real estate agent, and sellers might be interested to not pay a commission fee. Unless you let that initial concern completely take over, keep in mind that realtors are of great value. In fact, realtors, just make that your new morning mantra.
- Real estate agents list the home on the market, ensuring more marketplace exposure.
- There is more competition for a higher sale price. In fact, Marketwatch found that iBuyers earned sellers 11% less than a seller who opted to list their home through a real estate agent on the open market. When translated into dollar figures, it’s significant. We’re talking $41,000 when we look at the average sale price in America, which is $374,900.
- Realtors offer advice, have expertise in your market area, have connections to industry professionals (and new homes to look at!), and negotiate on your behalf.
- They create the potential for a bidding war and an offer that is above listing price.
Just because you know your value as a realtor, doesn’t mean potential clients do. It’s important that agents continue to reinvent themselves, find new ways to market their services digitally, add new skills, continually find new clients, and join a growing team that believes in adapting to new technologies. By joining a brokerage who incorporates technology, you ensure the brokerage will make it by adapting and you will only grow in your career.
Brokerages who don’t adapt will soon die
Harsh, but it’s the reality. Brokerages who fail to adapt will simply phase out of the equation especially because technology is so accessible to the client base. That same 1000wat survey mentioned earlier also found that 82% of homeowners trust information on Zillow at least as much as a real estate agent. So, even if tech like Zillow isn’t exactly your cup of tea, your client base is adapting around you. Sellers are intrigued by fast closing times and all cash offers, so what can you do to be competitive? Feely Group, a digital real estate agency, began offering all cash offers to their clients if the listing didn’t sell. And when the market became red hot, they improved that all cash offer to 101% of market value. Not only does this attract home sellers to hire Feely Group, but it keeps their clients from leaving and moving to an outside iBuyer company. They can do the same thing in-house.
So, how does a brokerage go about adapting? Step one, incorporate technology the right way for your brokerage. The more you hold on to traditional methods and old habits, the more difficult it will be to adopt new technologies as they emerge. Step two, invest in your staff. Provide them the training they need to compete in a digital world. Clearly, brokerages and realtors need to evolve as the technology does in order to remain of value. If you, as the brokerage, don’t offer value, your agents will start looking elsewhere. Be the progresive, advancing brokerage that will attract the best available. At some point, you will be standing at the crossroads of Blockbuster and Netflix. Do you know which path you’re taking?
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