'Instant' Home Buying Gains Favor During COVID
The pandemic is speeding up the movement toward ibuying in residential real estate, in which institutional buyers use technology platforms to buy homes speedily and without seeing them in person.
Started by Opendoor in 2013, with Zillow Instant Offers, Offerpad and others joining within the last three years, the "instant buying" trend is now being adopted by traditional real estate brokers, too.
"Brokers that don't offer choice aren't going to pick up market share," said Craig McClelland, co-owner of a Better Homes & Gardens Real Estate brokerage in Atlanta. His brokerage introduced a service last year called Instant Move, which aggregates cash offers from the three big ibuyers and presents them to sellers.
"What was happening in Atlanta, it was 10 percent of our market that was transacting with the ibuyer. In some counties it was up to 20 percent. Opendoor was buying 500 a month. Zillow was buying 500-600 a month, and Offerpad was buying about 300 a month," he said, and he wanted his share of the action.
The traditional home-selling process is cumbersome, he acknowledged. "The real estate process, there's steps and there's process and there's protocol. People are sitting there going, 'I bought a car by clicking a button. Yet you're telling me I have to physically show up at a closing and sign in blue ink?'"
Just as in-person meetings have lost favor during the pandemic, tech has risen. "There's a lot of technologies being forced upon people that they've never used before," he said. "We're moving forward, or I should say forcing forward."
Andrew Linn is an ERA franchisee in Jacksonville, Florida, one of the first markets the large ibuyers targeted. His brokerage piloted an ibuying program now called RealSure, which guarantees a cash offer for homes if they don't sell in the traditional way within 90 days.
"ERA stands for Electronic Realty Associates, so we're very tech-friendly," he said, noting in 2019 there were nearly 60,000 ibuyer transactions in the United States for a sales volume of $8.7 billion.
He said the trend toward ibuying is welcome, although not without its downsides. "The disruption has been to eliminate the clunkiness of the purchase or sale," he said. "From an agent standpoint, it is moving faster. The agents have a lot more tools to provide to the customer, and the customer has a lot more options on how to sell a home, how to buy a home."