There is Enought Business for Everyone!
Agents in my company are continuing to poke their head in my office or call me on the telephone anxious to discuss the increased presence of iBuyers in our market here in Nashville and Middle Tennessee. Many of the agents who speak with me are still somewhat confused or uninformed about the iBuyer home buying business model. After I explain to them how iBuyers operate, they then become somewhat fearful these direct online buyers will be taking potential property listings away from them. I encourage them to take a deep breath and calm down. I reassure them that it is going to be ok because the iBuyer route is not for every homeowner who is considering selling their home.
iBuyers, such as Opendoor, Zillow Offers, Offerpad, Homego, and others received a tremendous amount of publicity over the past year or so due to their “step out of the box” concept in home buying. I tell my agents these companies are connecting a relatively small group of large, qualified investors to prospective home sellers for a “service” fee that is usually higher than what a traditional broker would charge a seller to sell the home. And, the price an iBuyer will offer a seller for their property is generally less than market price.
The iBuyer “hook” is a simplified and expedited offer and “contract to close” transaction process, unlike the standard thirty to forty-day escrow period. An iBuyer transaction allows a seller to move on to their next home or the next chapter in their life. Again, it is a good fit for some sellers, but not all sellers.
I explain to agents a seller must decide whether speed and convenience trump potential increase net returns on the sale of the home. In our current good economic times, I feel most homeowners want to realize as much money as possible at the closing table and are patient to wait for a ready, willing, and qualified buyer. Most homeowners are “up sizing” and need as much equity as possible to transfer to their home purchase.
To alleviate any anxiety, fear, and concern agents might have about iBuyers competing with them in the marketplace, I have five very important points for an agent to remember if ever faced going up against an iBuyer company:
1. Educate yourself thoroughly on the iBuyer model. It will be very challenging to defend your value proposition to a seller if you do not know how the iBuyer operates in today’s real estate market. Their marketing is exceptionally good by conveying a very simple message to their prospective clients. I guess you could equate how they market to “Madison Avenue meets Main Street.” Know the iBuyer competition in your market as well as being well versed in the advantages and disadvantages of a homeowner working with these direct buyer,
2. Understand the offer from an iBuyer will most likely not be similar to an offer from a traditional buyer. Though the “quick close” benefit can be attractive to some sellers, most sellers will not like the higher listing fees and lower proceeds at closing. (Note: more times than not, they are lower no matter what the iBuyers say.) Stress the importance of how you, as a real estate professional, can sell a seller’s home in a timely manner at the highest price – resulting in higher proceeds at the closing table. It might take you a little longer to sell the house, but in the end, the result will be a positive one for your client.
3. The iBuyer process is impersonal. One of the most significant advantages of utilizing an agent to market a home and procure a buyer is that the seller will always know who they are working with and will have access to a real person for counsel and advice during the entire home selling process. As professionals, the personal attention we give our clients has been a foundation of who we are and how we have operated for over a century. Most clients want the personal touch and iBuyers cannot offer this to them.
4. An iBuyer may be an option your seller should consider. As much as you don’t want a seller to use an iBuyer, you must remember that today’s consumer wants options. This holds true for home sellers as well. A quick sell might be something your client needs so he or she can relocate to another city to begin a new job. Or, your clients may be beneficiaries of an estate with a home, and they want to sell the property quickly. In either case, an iBuyer might be a solution. As a licensed real estate professional, most iBuyer companies will offer you some compensation if you refer a client or prospect to them. It may not be what you are used to making on a home sale, but something is better than nothing.
5. Don’t let iBuyers be a distraction to you and your business. If Opendoor, Zillow Offers, Knock or other iBuyer companies are showing up in your market, do not let them distract you from your prospecting efforts and the goals you have set for your real estate business. I learned long ago disruptors who enter any industry can cause angst and uproar for those who are already in the business. However, you will survive any disruption if you stay focused each day, work your business plan, prospect consistently, maintain personal contact with your prospects and clients and continue a level of customer service that goes beyond your client's expectations. If you have been successful in the past, you will continue to be successful in the future – with or without iBuyers competing for your listings. You may lose a few opportunities to these companies, but you will gain more if you build on your past accomplishments.
There is no question our profession will continue to evolve. The iBuyer concept is indicative of one of many changes happening in our industry. I don’t believe they are going anywhere anytime soon. However, remember, as the industry evolution takes place, embrace the change coming your way. I guarantee you your role as a real estate professional will be different in the years ahead, but I am confident you will still have an important role to play.
Most sellers and buyers will continue to always need someone they can turn to who can shepherd them through the complexity of a real estate transaction. Always remember the fundamentals of the profession and hone your selling and relationship skills like you never have before! These basics principles of what we do will still be around even when our industry morphs into something different than what we see today. All of us will need to be prepared to take our expertise and adapt them to the new way of selling real estate that lies ahead.
Now, get out there and sell something and don’t let those iBuyers frighten you because there is enough business for everyone!
John Giffen is Director of Broker Operations for Benchmark Realty, LLC in Tennessee. He is the author of “Do You Have a Minute? An Award-Winning Real Estate Managing Broker Reveals Keys for Industry Success.”