iBuyers Taking Bigger Bite of Home Sales
SEATTLE – iBuyers are growing and expanding their market share, though they still don’t make up a significant percentage of the home sales market.
The number of U.S. iBuyer sales almost doubled in one year, but they still only made up 3.1% of all home sales in the third quarter of 2019 in the 18 markets studied – a year-to-year increase from 1.6%, according to new research from Redfin. The study included public data on home purchases and sales made by iBuying firms like Opendoor, Zillow, Offerpad and RedfinNow.
iBuyers work largely in selected markets so far, so the total percentage of iBuyer sales would likely be smaller if it included every U.S. metro area.
The markets that saw the most iBuyer activity in the third quarter were in the South. iBuyers accounted for more than 4% of sales in Raleigh, N.C. (6.8%); Phoenix (5.1%); Atlanta (4.4%); and Charlotte, N.C. (4.3%).
iBuyers are instant buyers that use technology to make instant offers to home sellers in quick transactions. iBuyers usually charge a higher fee than a typical listing agent for the convenience of a quick, off-MLS sale. Interested home sellers often hope for a quick sale and find the iBuyer model a quick way to do that.
“iBuyers are concentrating their efforts in southern markets where both home sales and prices are poised for strong growth,” says Daryl Fairweather, Redfin’s chief economist. “We think that iBuyers are likely to accelerate home sales in these markets. Homeowners who may have been reluctant to sell because they didn’t want to deal with the hassle may be persuaded by the convenience of an iBuyer sale.”
iBuyers are centering the majority of their activity at a national median price point of $313,200.
“Focusing on these more affordable homes allows iBuyers to purchase more homes with the same amount of money,” Redfin notes in its study. “Affordable homes also tend to sell more quickly than expensive homes, which allows iBuyers to move through their housing inventory and buy additional homes more quickly, refining their process with every home they sell.”
Source: “iBuyers Bought More Than 4% of the Homes Sold in 4 Southern Markets Last Quarter,” Redfin (Dec. 11, 2019)
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