More iBuyers Are Reemerging With Instant Offers
May 8, 2020
Following on the heels of Opendoor’s announcement that it would resume buying activity earlier this week, more iBuying firms are coming back after a month-long hiatus. Their reemergence is countering some housing analysts predictions that called the model a likely casualty of the COVID-19 pandemic.
Many of the iBuying companies that halted their instant all-cash offers to homeowners as the COVID-19 outbreak began are preparing to gradually return to the markets they were in before.
RedfinNow and Offerpad are among those announcing they will resume making all-cash offers to homeowners this week. RedfinNow relaunched its service on Thursday in Austin, Denver, and the “Inland Empire” east of Los Angeles.
On March 18, Redfin had announced it would temporarily pause making offers on homes due to the pandemic. Redfin CEO Glenn Kelman told investors on an earning call Thursday that the “issue for Redfin hasn’t been customer interest. We have never put anything on our website that homeowners responded to more eagerly than a cash offer. The issue has been just how we respond to that interest.”
Kelman said that when Redfin halted its iBuying business in March, the company owned or was under contract on $119 million worth of property. That figure has since dropped to $56 million that he says has mostly been secured through a line of credit. Two-thirds of that amount is under contract to sell in the next two weeks, Kelman told investors.
Kelman said as the program reemerges it has been tweaked, such as by lowering its instant offers and reducing hold times.
Redfin also announced this week that it was bringing back 14% of its work staff that it furloughed following the start of the virus outbreak in the U.S. The brokerage had furloughed 41% of its agents due to economic concerns from the pandemic.
Offerpad resumed cash offers on properties Friday in more than 800 cities. The iBuyer has teamed with HealthyVerify on a safety plan to assure home sellers and buyers of a contactless experience intended to deter the spread of the virus, including virtual home tours, 3D walkthroughs, and digital transactions.
“Through the last 30 to 45 days, we’ve received thousands of requests from sellers,” Cortney Read, Offerpad’s senior director of communications, told Forbes.com. “So we know that the need is still there. People are still looking to buy and sell.”
The iBuying model started a wave in the real estate industry over the last few years under the backdrop of a booming housing market. Even brokerages stepped in with their own instant offers to compete. But the iBuying model has yet to be tested in a slower housing market.
Opendoor, a giant in the iBuying space, restarted its operations in Phoenix this week; it plans to resume activity in Raleigh-Durham, N.C., next week, and then reopen in more than 20 additional markets in the months ahead. The firm is touting its contact-free services, which includes virtual interior home assessments of properties, viewing homes through a live video tour, and all-digital transactions.
“Real Estate iBuyers Are Back in the Game After Coronavirus Hiatus,” Forbes.com (May 8, 2020)
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Updated: July 01, 2022