BOULDER, Colo., Nov. 30, 2021 /PRNewswire/ -- Homebuyers and
sellers contended with historical challenges in markets across the
U.S. this July through September — and turned toward innovative
solutions as a result. When available homes for purchase were
scarce, average home prices hit record highs, and multiple offers
with escalating bids became the norm, "Power Buyer" companies
became more commonplace than ever. With upward of 70% of sellers
also needing to buy a home, it was a particularly difficult
time.
Power Buyers are companies offering services that give
consumers more options and financial "power" to buy a home through
a cash offer, a buy-before-you-sell bridge solution, or the
sale-leaseback; a new zavvie Seller Preferences
Report details the explosive growth of Power Buyers and
changes in the iBuyer landscape throughout the U.S. between July
and September.
Just released by zavvie, a brokerage-branded marketplace that
connects broker-agents and their clients with new ways to buy and
sell homes while keeping agents at the center of the transaction,
the report also offers deep insight into the iBuyer market.
In the third quarter of this year, iBuyers doubled their
acquisitions from any prior quarter and now command a 1.8% national
market share. Most notable, the report indicates a trend that
iBuyers are making less aggressive offers. For example, iBuyers
paid about market rate — 100.6% of market value — in September
compared to their July offer strength, which peaked at nearly 105%
of market value.
But perhaps the most significant trend emerging from the zavvie
report is the continued expansion of the leading iBuyer and Power
Buyers firms, including Opendoor, Redfin Now, Offerpad, Knock and
Ribbon. During Q3 alone, these firms launched their services in
more than 30 major metro areas and states.
The new zavvie report also acknowledges that in November, Zillow
announced it would discontinue its iBuying operations. However, the
report concludes that "it's clear that Zillow's decision was
completely attributable to internal factors specific to Zillow
rather than to any lack of consumer demand" among iBuyers.
Stefan Peterson, zavvie Chief
Data Officer and co-founder, said, "Paraphrasing Mark Twain, the
reports of the death of iBuying by some has been greatly
exaggerated. The fact is: iBuyer purchases increased by 46% from Q2
to Q3, a breakthrough quarter for iBuyer purchase volume."
Peterson notes that with the withdrawal of a major iBuyer firm,
total volume may be impacted — and compounded by seasonal factors —
but he believes other iBuying firms could increase their activity,
as recent news reports indicate.
Other highlights from the Q3 zavvie Seller Preferences
Report include:
- Power Buyers grow exponentially: Ribbon reported demand
for its cash offers had increased 10x in 2021. EasyKnock's Q3
business doubled from Q1. And Knock expanded from 3 markets at the
end of 2019 to 69 markets in 14 states across the country.
- iBuyer median purchase price jumps: The median
purchase price for iBuyers increased from $280K in Q4 2020 to $413K in Q3 2021, a remarkable 47% gain.
- Power Buyers top iBuyers with higher price
points: The median transaction price for Power Buyers was
$480K in Q3, significantly higher
than iBuyers.
- iBuyer "Buy boxes" widen: zavvie notes that iBuyer
"buy boxes" (the targeted purchase price range, age, and other
conditions) continued to widen in 2021. The percentage of houses
eligible for offers increased 38% in Q3, with eligible inventory in
the markets that iBuyers service growing from 32% to 47% in the
last quarter.
- Cash offers drive Power Buyers growth: Various
Power Buyers reported 2x to 10x growth for cash offers in Q3
compared to Q4 2020.
- iBuyer fees compare favorably to average
commissions: iBuyer service fees remained consistent at
5%, compared with a 5%-6% real estate sales commission typical for
an open-market home sale.
- iBuyers want more for "prep and repairs": The
average seller concession increased from the first half of 2021
from 1.9% to 3.1% of the purchase price in Q3 — still lower than
the 2020 average of 3.6%.
- Power Buyers earn the highest consumer satisfaction
scores: On a 10-point scale, satisfaction among customers
of Power Buyers increased from 9.3 in Q2 to 9.5 in Q3. However, for
iBuyer clients, satisfaction dipped from 8.7 to 8.0, indicating
service levels may have dropped some due to the skyrocketing number
of properties they purchased in Q3.
The zavvie Seller Preferences Report is the first
review of its kind, covering every selling solution, including
iBuyer and Power Buyers, available to homeowners and buyers
throughout the U.S. It examines offer strength, offer acceptance
rates, service fees, market availability, buy boxes, average
concessions and time to close for selling solution providers. The
complete zavvie Seller Preferences Report is
available for free at zavvie.com/seller-preferences.
Media Contact:
Kevin
Hawkins | zavvie
206-866-1220 | 324856@email4pr.com
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