It sounds like an offer too good to be true, just like those little signs tacked to utility poles with anonymous telephone numbers, promising cash for your home. But the truth is, there is ample financial heft behind the emerging crop of so-called “iBuyers” (instant buyers), online companies that will scoop up your home in record time.
Opendoor, OfferPad, Knock — all emerged a decade after the 2004 launch of Zillow, Trulia and Redfin, taking the final logical step in the inexorable influence of the internet on real estate by not just posting listings online, but offering to buy those homes on the spot and find buyers after the fact.
Speaking last November at the annual PropTech CEO Summit in San Francisco, the founder of New York-based real estate research firm Zelman & Associates suggested that those iBuyers wield significant power today. “The ‘velocity’ of what gets listed and sold is at record levels,” Ivy Zelman said. “At a certain price point — and the iBuyers have actually capitalized on this — there is a definite ‘sellers market,’ below what we call a first-time buyer’s market. If you are in a … $150,000 to $400,000 box, you would see multiple bids in many cities because there’s not enough inventory on the market.”
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Over a half-century, starting in 1953 when an Oregon realtor invented the key lockbox (with an indirect assist from Connecticut’s Yale Lock), the real estate industry was locked in a time capsule when it came to introducing innovation, with multiple listing services and local associations holding the keys to the market. That changed with the advent of Zillow, Trulia and Redfin, which created one-stop shops to compare listings and find how-tos, prodding established multiple listing services and brokerages to refresh their own relevance with online information and tools.
In the past few years, however, venture investors have plowed billions of dollars into fresh “proptech” ideas, including companies like Opendoor, Offerpad and Knock, which tempt homeowners, in Opendoor’s words, to “get an offer with the press of a button” from the startups, then attempting to flip those properties at a profit. Zillow and Redfin now offer similar services, with the latter company noting last December that iBuyers constituted more than 5 percent of transactions last fall in a few markets nationally.
There are others as well. Flyhomes fronts people cash to move up to better homes, while agreeing to buy their old houses at set prices if they are unable to sell them within three months. And EasyKnock borrows a page from the commercial real estate industry in offering to buy homes and lease them back to their owners.
With the model working best in markets where properties offer the promise of appreciating in value, Connecticut’s cities and towns have yet to make an appearance in iBuyer listings. But with new markets coming online at regular intervals, it seems likely that our state will start popping into these sites’ inventories. Opendoor notes, in a cheerful tone, that it’s expanding quickly.
Will the iBuyers be around for the long haul? If the longevity of one decades-old Connecticut company is any indication, the answer would be yes. Cartus was founded only a few years after the creation of the key lockbox and employing more than 1,000 people in Danbury. The firm would pioneer an all-in-one service helping corporations relocate executives into new homes, whether cross-country or overseas — and finding buyers for their old properties, or failing to do so at a base price, buying those houses itself for later resale.
Long a sibling firm to Coldwell Banker, Century 21 and Sotheby’s International Realty under the New Jersey-based holding company Realogy, Cartus’ relocation division is now being acquired by Sirva, the parent company of Allied Van Lines.