Is iBuying Poised for a Comeback?
September 15, 2020
iBuyers last quarter purchased the fewest homes in more than three years, as the pandemic gave the real estate model its biggest test yet.
Many iBuying giants, like Opendoor and Zillow Offers, stopped making instant cash offers to home sellers when the COVID-19 outbreak struck the U.S. this spring.
iBuyers have mostly resumed activity after gradually reopening in select markets in May and fully by late this summer. They’ve reportedly seen a rebound in demand—and even bidding wars—from homeowners who are looking for quick cash and a quick sale during the pandemic, Redfin reports in a new analysis.
But that wasn’t the case in the second quarter. The top iBuyers in the country purchased 880 homes in the second quarter—or just 0.1% of homes sold across major metros. That is down 88% from 7,410 homes—or 0.6% market share—a year earlier, according to the research published by Redfin, which is based on an analysis of MLS and public records data of iBuyers like RedfinNow, Opendoor, Zillow, and Offerpad. iBuyers spent $195 million buying homes compared to $1.6 billion a year earlier. Phoenix, Raleigh, N.C., and Las Vegas saw the largest drops in iBuying activity in the second quarter.
iBuyers provide homeowners an option for a quick sale by offering cash for their off-MLS listing. Homeowners often have to pay higher transaction fees for the convenience of selling instantly.
As iBuyers regain traction, they’re reportedly experiencing a significant uptick in interest. “One trend that has ramped up since the pandemic began is the iBuyer bidding war,” says Jason Aleem, vice president of RedfinNow. “Homeowners are seeking out offers from multiple iBuyers so they can feel confident they are getting the best possible price in this blazing hot market without a bunch of foot traffic coming through. As a result, iBuyers are making more competitive offers.”
During the second quarter, iBuyers purchased homes for a median of $241,000, which is down from $250,000 a year earlier, Redfin’s data shows. iBuyers tended to purchase homes for less than the metro area’s median price, except in Riverside, Calif.
“iBuyer Activity Ground to a Halt in the Second Quarter, With Market Share Plummeting to 0.1%,” Redfin (Sept. 11, 2020)
Updated: April 20, 2021