iBuyer All-Star Panel Takes a Look at the Good, the Bad and the Ugly of iBuyers

by Joe Sesso on July 28, 2020

When iBuyers first appeared, they took the real estate market by storm as they spread to
markets throughout the United States. However, the spread of iBuyers slowed to a virtual stop
as COVID-19 began wreaking havoc on the industry. Now, iBuyers are beginning to make their
resurgence.

Recently, I hosted a panel during one of our Secrets of Top Selling Agents webinars to
discuss what real estate agents should know as iBuyers make their way back into the world.
The panel featured CEO and Broker/Owner of the Boston-based Lamacchia Companies,
Anthony Lamacchia, real estate super-producer Kenny Klaus, and WAV Group founding partner, Victor
Lund.

The Return Begins
iBuyers are not available in all markets, but they are present in more than 25 markets across the
country. The Phoenix, AZ market, which is known as the “Ground Zero for iBuyers,” has seen
an especially strong return of iBuyers.

While iBuyers are making their way back into the market, they are coming with some new fees.
Before the COVID-19 outbreak, fees for iBuyers were as low as 5% – 6% in some markets, but now iBuyers have since increased their fees in almost all markets. In addition to higher fees, iBuyers are also making more conservative offers due to the COVID-19 outbreak. With the market being incredibly unpredictable right now, it makes sense that companies are
making more conservative offers.

What’s Changed After the Hiatus?
As iBuyers make their way back into their respective markets, Lamacchia noted that they are
taking the same approach, but in a more cautious way. When iBuyers began their resurgence,
they seemed to take a more cautious approach, but now it looks like they’re prepared to go full
force once a few choice events have passed.

There are two events that will play a part in how the return of iBuyers will play out: the hopeful
eradication of COVID-19 and the upcoming presidential election. Contingent upon how these
events go, the housing market will react in a positive or negative manner according to
Lamacchia. As for where the market stands right now, there are fewer sellers and much less
inventory.

Is There More or Less Opportunity Out There?
For iBuyers to go back to normal, there has to be an opportunity in the real estate market for
them to continue. Lund said that the opportunity depends on the housing market and its continued appreciation. To be frank, he said that the iBuyer model will be a failed business model due to the overhead of costs of the iBuyer program.

Klaus countered that the opportunity rests in the hands of the agent or the company that is making
the digital offer. Whoever can build the better relationship and support the best interests of the
client will be the one to win the deal. Overall, Klaus feels that iBuyers will continue, and while they might not be profitable now, they could be profitable in the future. He also predicted that iBuyer programs will become more competitive as time goes on.

The Long-Term Strategy
iBuyers aren’t going away anytime soon, so what’s the long-term strategy for the companies
that are investing their capital into iBuying?

Lund suggested that iBuyers are planning to have real estate agents removed from the
transaction and bring consumers to a point where iBuyers offer additional benefits to them such
as a home warranty.

Lamacchia argued that the companies backing iBuyers are here to stay because of the amount
of technology and capital behind them. Those that actually work for these companies study consumer
behavior and because of this, they are able to be successful and position themselves in the
iBuyer world. Lamacchia added that not all iBuyer companies will survive long enough to have a long-term strategy and that the consolidation of iBuying companies is inevitable.

Klaus said that he didn’t believe that there is a way to know for sure what the long-term strategy is. He agreed that large iBuyer companies will buy out smaller iBuyers to eliminate some of the
competition.

iBuyers and Lead Generation
Not everyone is willing to accept an iBuyer offer. The percentage accepted offers is rather low, but there is still much value gained from these rejected offers in the form of seller leads. Lamacchia mentioned that there have been times when he has made an iBuyer an offer on a home, which has created an opportunity for him to sell the home as a normal sale. Klaus added that you have to have full transparency with your clients when giving them their options. He also suggested becoming the expert on iBuying so that you can be the one to guide buyers and sellers in the direction that will best fit their needs.

Overall, it’s safe to assume that iBuyers are here to stay (for now) and as they make their resurgence in the market, they certainly have plans in place to ensure their businesses last. To watch the actual panel, go to SecretsOfTopSellingAgents.com or join the Secrets of Top Selling Agents Facebook Group.

Image of Joe Sesso Joe Sesso is the Executive Director of Sales Marketing for Homes.com and Best Selling Author

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