“iBuyers” take over the U.S. housing market
Future. Digital home-buying platforms like Opendoor and Zillow Offers are ramping up home-buying across the country, giving sellers a “one-click” option to list and sell a home. If the iBuying market grows as these platforms expect, you may be able to sell your home and buy your next one all on one platform.
Own the map
You may buy your next house from an app.
- iBuyers like Opendoor, Zillow Offers, and Rocket Homes offer platforms that make it easier to list, sell, and make a return on their property.
- iBuyers usually look for “mid-level homes in decent condition,” pay cash upfront, make an average of $10K in repairs, and put it back on the market for more.
- They then charge the owners a fee for its services — typically 5-8%.
To date, iBuyers have raised hundreds of millions of dollars to step up home purchases, even though it’s losing them money in the short-term. iBuyers are banking on that to change soon, though — Zillow expects to make around $1.5 billion from its Offers division next quarter.
The residential real estate market is worth $36 trillion, averaging 5-6 million homes sold a year. iBuyers only expect to capture only a fraction of it… but that’s more than enough. Former Zillow exec Greg Schwartz, who now runs homebuying fintech startup Tomo, said, “If only 500,000 of them sell through iBuying, it’s a massive, massive opportunity.”
Zillow and other iBuyers want to make it more convenient for people to sell their home and move on their schedule — not the buyer’s — so customers can “let Zillow handle things while I go live my life.” That’s why iBuyers collect convenience fees, rather than position themselves as home flippers (though they do that too).
For a rising generation of digitally fluent homeowners, that convenience may be well worth the price.