Where iBuyers Are Your Biggest Competition

February 26, 2020

Raleigh, N.C., led the nation with the highest market share of iBuying activity in 2019, followed by Phoenix, Charlotte, and Atlanta, a new study by Redfin shows. Redfin used MLS and public records data on home purchases and sales to track national iBuyer purchases from firms like Opendoor, Zillow, Offerpad, and RedfinNow.

iBuyers are a growing group of companies that use technology to pitch instant offers to home sellers. They’ll purchase homes in all-cash transactions, allowing sellers to pick the closing date and bypassing selling publicly on the MLS. iBuyers tend to charge sellers a higher fee than a traditional real estate agent for the convenience. A growing group of Wall Street–backed iBuying firms are competing for home sellers, but brokerages—like Keller Williams, Redfin, and Coldwell Banker--are jumping in with their own spin on instant offers as well.

In 2019, iBuyers purchased one of every 100 homes that sold across more than 200 metro areas, according to the Redfin analysis. That is nearly double their market share in 2018. iBuying is growing quickly, although it does still represent a relatively small number of transactions.

In 2019, Raleigh had the highest iBuyer market share in the country, with 7.3% of homes purchased by an instant offer (up from 3.9% in 2018). Phoenix had 5.9% of its housing inventory purchased by an iBuyer, followed by Charlotte. N.C., and Atlanta at 5.2% and Las Vegas at 4.1%.

By numbers alone, Phoenix had the largest number of homes purchased by an iBuyer in 2019 at more than 5,200, followed by Atlanta at more than 4,300 and Houston at 2,100, according to the Redfin analysis.

“It’s no surprise Raleigh and Phoenix led the nation in iBuyer share because those housing markets are iBuyer sweet spots and are poised for price growth in 2020,” says Daryl Fairweather, Redfin’s chief economist. “These markets work well for iBuyers, which tend to purchase homes that are relatively affordable, were built within the last few decades and are easy to price accurately because they are located in tract neighborhoods with largely homogenous housing stock. iBuyers also try to buy homes that will likely retain or increase in value over the short period between purchase and sale. Our forecasts indicate that both Phoenix and Raleigh will have strong price growth in 2020.”

Fairweather predicts that those metros experiencing strong iBuyer activity will alo likely see a growth in home sales. “It’s a seller’s market right now, but this can be a double-edged sword for sellers who also are looking to buy,” Fairweather notes. “iBuyers are a big help for folks who need the equity from their current home to buy the next, and want the flexibility of lining up their sale with the purchase of their new home. Homeowners who may have been reluctant to sell because they were concerned about carrying two mortgages or worried about the stress of choreographing two transactions may be persuaded by the convenience of an iBuyer sale.”

iBuyer vs average home cost. Click on graphic to access interactive table.

© Redfin | Click on image to access interactive table.