This document summarizes information about iBuyers and the real estate industry. It provides an overview of several major iBuyer companies like Opendoor, Offerpad, RedfinNow, and Zillow Offers. It discusses their business models, fees, funding amounts, and target markets. It also covers new entrants from large companies like Keller Williams and Realogy who are launching their own iBuyer programs. The document analyzes the size of the iBuyer market currently and potential future growth estimates.
2. I AM MARK CHOEY
● Cofounder: Climb Real Estate + Climb Labs
● Investor and Advisor to RE Tech companies
● 2019 SP 200 Most Powerful RE Leaders
● 2017, 18 Top Trendsetters (Swanepoel)
4. • The Goal: remove pain points
• Initiated and handled almost entirely online
• Leverage technology
○ Utilize AVMs - automated valuation models
○ Automate workflows
○ Text and Email Communication
• A company purchases the home & resells
• Give the consumer the Best Experience
○ Make it as Instant as Possible (e.g.,
instantBuyer)
○ Rough Costs: 4-10%
5. • Finding and Managing the Right Agent
• Property prep and staging headaches / costs
• Multiple Showings and Open Houses
• Simultaneously selling and buying
• Long and Uncertain transaction time
• Uncertainty of Closing
○ buyer financing issues
○ inspection issues
6. ● iBuyers looking for “livable” properties
instead of “distressed properties”...
● “We’re not coming in and knocking out
walls… We’re essentially coming in and
doing the deferred maintenance. Minor
renovations, interior paint, carpet,
landscaping.”
-Tyler Hixson, Opendoor’s Real Estate Industry
Strategy Lead via Inman
● “A home flipper will give somebody 70
percent of a home’s value, but iBuyers will
give somebody 98 percent of the value”
-Mike DelPrete
8. ● Purchase homes in volume and at
high-velocity, allowing them to make offers
closer to fair market value - operate on
much lower margins.
● Target newer homes (e.g., after 1960) in
good condition, with few issues.
● Mass Market Play...
Initial iBuyer model is different from flippers
10. ● Founded in 2014
● Started in Phoenix. Today operates in
19-20 Different Cities
● As of April 2019, raised over $1.3
billion in funding. $3 billion in debt.
● No Showings. No Repairs Required.
1 Week Close
● Move on your own Timeline
● Eric Wu, CEO claims they convert 1 in 2
offers to sellers.
● Fee: 6.5% - “Unit and City profitable in a
bunch of markets at 6.5%”
● “How do we get the costs to near free”
11. ● Founded in 2015
● Also started in Phoenix
● Raised almost $1B ($975M
Equity+Debt)
● Currently operates in 9 major metro
areas
● Plans to be in 30 cities by end of next
year (Opendoor‘s goal is 50)
● Help you Buy as well
● Fees: Offerpad charges a service fee
between 6%–10%
12. ● Founded in 2015
● Raised $435M in equity funding
● Atlanta, Charlotte, Raleigh, Durham,
Dallas, Fort Worth and Phoenix.
● plans to be in at least 10 markets by
the end of 2020
● Hybrid Model: Brokerage/Flipper
● FEES: You pay Knock the same 6%
commission to sell your old house.
Reported 8% interest for at least 60
days on the buying of your future
home.
13. “Knock co-founder and CEO Sean
Black argues that, whatever the
iBuyers say, they have to offer a
‘lowball’ offer to make their model
work.
In contrast, Knock’s approach gives it a
different incentive. Rather than being
stuck with a home it buys from a
customer, the company advances
homeowners cash to purchase a new
one, then sells the existing property on
their behalf once the homeowners are
settled in the new home.”
Andrea Riquier, Morningstar, 4/22/19
14. ● Founded in 2017
● San Antonio, Dallas-Fort Worth, and
Austin, Texas
● As of April 2019, raised $220 Million.
$20 Million in equity, $200 Million in
debt.
● Hybrid Brokerage/iBuyer Model.
Basically guarantee you a price for your
home.
● Perch will give you an offer - valid for 6
months. Their agents will help you find a
new home. Simultaneous close.
● Fees: Buy / Sell Fee: 6%, Sell Only: 8.5%
15. ● Trialing Zillow Offers since 2017
● Zillow is a public company with a
market cap of $7.37 billion
● Has $1 billion in max borrowing
capacity as of 2/21/19 (SEC Filing)
● 7 Markets now, 14 by end of 2019
● Fee: 7% Average
● Purchased 686 homes and sold 177
homes since April 2018.
● Going “All In” - targeting to buy 5000
homes / month (roughly 1% of RE
market)
16. ● Founded in 2004
● Public Company with a market cap of
approx $2.0 billion
● “RedfinNow” is a separate company
owned by Redfin
● Dallas, Orange County, LA, Inland
Empire (Riverside), and San Diego
● 5 New Markets in 2019
● Fee: Charge 7% of offer price
● As of Early January, closed on 150
homes, 7 in the Dallas area.
● “Most customers who get a Redfin
Now offer don’t take it”, but sell with
Redfin anyway -Glenn Kelman CEO
17. ● Homes eligible for sale to RedfinNow:
○ A single-family home
○ Townhomes or condos pending HOA
review
○ Built after 1960
○ Total lot size under half an acre
● $150,000 to $400,000 in Dallas,
● $200,000 to $550, 000 in the Inland
Empire,
● $350,000 to $900,000 in LA
● $400,000 to $1,100,000 in OC and
● $200,000 to $900,000 in San Diego
18. ● Launching “Keller Offers” in Dallas in May
(next month), 6-8 markets by end of 2019
● Had been testing a Fast-Cash iBuyer
program which closed about 100 deals.
● $100M earmarked for Keller Offers ops
● Phoenix KW franchise operates it’s own
iBuyer-adjacent business called Offerdepot
● KW franchise working with Zillow in NC
● “On the whole, Keller Williams believes the
addressable market for iBuyers represents
less than 10 percent of the overall housing
market,”
20. Subsidiary of Amherst Holdings ($1B in
capital, 20,000 SFRs). Targeting homes
needing extensive repairs.
Trialing and expanding “cataList” as well
as OfferBOOST (cash offers) to debut
this summer.
The “OG” iBuyer
“Agent Finder” referral platform
Launched “Simple Sale” Platform early
2019. Simulates iBuyer by matching with
buyers looking to buy off-MLS
24. in 5 years - Rob Hahn
< 10%
60%
1%Zillow’s target in the next 3-5 years
Keller Williams thinks it’s a niche market
iBuyer Transactions in Phoenix
2018 Mike Delprete
25. • “New iBuyer gets $1B to flip heavily renovated homes at no-haggle prices”, Teke Wiggin, Inman, Sep 2018.
• “The iBuyer Report, Zillow's New Strategy: Insights, Implications, and Analysis”, Michael DePrete, 2019, www.mikedp.com
• “Offerpad scores new funding as iBuyer competition heats up” - Veronica Bondarenko, Inman, Mar 2014
• ”The Essential Guide to iBuyers”, Jim Dalrymple II, Inman, Dec 2018
• “Agent, Meet iBuyer. We Think You’ll Get Along Just Fine”, Caroline Feeney, March 7, 2019
• “Sell your home with a Realtor or an algorithm? Maybe both.”, Andrea Riquier, Market Watch, April 22, 2019
• “Zillow Group Reports Fourth Quarter and Full Year 2018 Results”, February 21, 2019
• Redfin 10-K Annual Filing SEC report, Feb 14 2019
• “How Keller Williams plans to take down Zillow, Opendoor”, The Real Deal, April 23, 2019
• “What is Knock, Offerpad, and Opendoor? And Why You Could Potentially Lose a Lot of Money”, April 9, 2018, KW Total
Atlanta
• “Redfin Now's all-cash homebuying offers are usually rejected”, Jim Dalrymple, Inman, Feb 14, 2019
• “Realogy expands iBuyer program, reveals cash backing for buyers”, Jim Dalrymple, Inman, Mar 20, 2019
• “Disruptor Roundup: HomeLight Launches iBuyer Platform”, RIS Media
• ““I feel like I have no choice now”: Keller Williams CEO discusses plans for Q2 launch of iBuyer program”, The Real Deal
• “Keller Williams gets into the house-flipping business”, Amy Scott, Marketplace, April 23, 2019.
