Instant buyers, also known as iBuyers, are home buying and selling services that offer off-market homes directly from the seller at market rate, allowing homeowners to quickly list them for sale on the open market after making light repairs and updates. Recently, Zillow released an analysis on the four largest U.S. instant buyers — including Zillow Offers — in 33 markets across the country.
“The growing number of homeowners using an iBuyer service clearly demonstrates that sellers desire an easier way to sell their homes, with more certainty and less stress, even in a hot sellers market,” said Zillow chief operating officer, Jeremy Wacksman. “iBuyers remove some of the traditional home selling pain points, unsticking homeowners previously put off by the hassles of selling a home or worried about timing their next purchase.”
Essentially, iBuyers serve as a connection between sellers and eventual buyers. Unlike other real estate companies that acquire homes to hold or rent out, iBuyers flip their home with light repairs before quickly reselling on the open market.
It is not always necessary for sellers to invest in large-scale renovations in order to increase the value of their home. iBuyers tend to buy and sell homes near the median sale price in a given metro area, which also helps add liquidity for affordable homes that are in high demand. In 23 of the 33 largest iBuyer markets, the median price that iBuyers purchased homes was within 10% of the market's overall median sale price.
Additionally, 83.6% of homes sold to one of the four largest iBuyers in the second quarter — Zillow Offers, Opendoor, RedfinNow and Offerpad — had not been previously listed for sale on the open market, adding liquidity to the market. “This brings net-new inventory to the market, mainly at an affordable price point near the middle of the market,” Wacksman said, “adding liquidity to the market that has traditionally been difficult for consumers to navigate.”
Homeowners that used iBuying services in the second quarter sold 15,000 homes for a total of nearly $5.3 billion. That is a significant increase from the 7,000 homes sold through iBuyer services in the first quarter, totaling $2.1 billion. For the first time, the market share for iBuyers reached 1% of all U.S. homes for sale in the second quarter.
The typical home sold off an iBuyer service lasts 64 days on the market before closing. This record-breaking quarter lasted throughout (and likely resulted from) the strongest seller’s market that the country has seen in years. Some homes were pending within a week of being listed on the market, with over a third selling above list price. The national median price of a home off iBuyer is 3.6% higher than the overall U.S. median sale price, likely because iBuyers tend to operate in larger, more expensive markets.
Although sellers have plenty of advantages in today’s market, Zillow’s analysis shows that iBuyer services offer better convenience, certainty and control than traditional services. This service is potentially more preferable when trying to time the purchase of your next home in a competitive market.
Overall median sale price in top iBuyer markets grew 9.1% from the first quarter. During a period of rapid home price appreciation, iBuyer homes typically sold for 9.6% more than the purchase price.
Metro areas with the most home sales using an iBuying service in the second quarter were Atlanta, Phoenix and Dallas. iBuyers had a market share of 5% or more in Phoenix, Charlotte and Atlanta.
For more information, including research methodology and charts, read the full Zillow report.
