The Most Active Cities for iBuyers
December 20, 2019
In some cities, iBuyers have purchased more than one of every 10 homes sold this year. North Carolina and Arizona cities are proving to be the biggest hot spots for iBuying activity, a new analysis from Redfin shows.
iBuying companies, backed by Wall Street and real estate brokerages, are rapidly growing their footprints. They offer homeowners instant cash offers and flexible closing dates to bypass the traditional sales approach of listing a home publicly on the MLS. In exchange for the convenience, sellers may pay a higher service fee. This year, more real estate brokerages, such as Keller Williams with its Keller Offers and Redfin with its RedfinNow, teamed with iBuying companies like Offerpad or Opendoor to expand their instant offer platforms. Also, some brokerages launched their own, such as eXp Realty with its Express Offers and Realogy’s RealSure.
iBuyers purchased 10% or more of the homes sold in October in eight neighborhoods in Phoenix; Charlotte, N.C., Fort Worth, Texas, and Raleigh, N.C., Redfin’s analysis notes. In the Phoenix neighborhood of Pecan Creek, for example, iBuyers purchased 13.7% of homes sold so far in 2019. It was the most active neighborhood for iBuyer activity this year. Redfin’s analysis accounted for iBuying activity from companies like Offerpad, Opendoor, Zillow, and its own RedfinNow.
“The fact that iBuyers have reached over 10% market share in some places could be an indication of how big iBuying could get nationwide once the business model is perfected,” said Daryl Fairweather, Redfin’s chief economist. “However, it’s possible that iBuyers are only doing so well in certain neighborhoods because the homes there are largely homogenous—modest entry-level homes all built around the same time, typically with two or three bedrooms. These factors make it easier to use automated tools to value homes well and resell them quickly.
“As iBuyers begin to expand in more expensive markets beyond the small foothold they currently have, we’ll get a clearer picture of whether they are capable of reaching a high level of market share nationwide,” Fairweather said.
Updated: August 11, 2020