This time last year, the word ibuyer was permeating the real estate lexicon while many “traditional” real estate agents and investors wondered if Zillow, Redfin, Knock, or OpenDoor might run them right out of business. Today, you can remove at least one of those ibuyers from the list of potential threats because Redfin is bowing out – at least for now.
“From the beginning – repeatedly, insistently, and despite growth pressure from all sides, Redfin has said we aspire to be the most disciplined iBuyer,” company CEO Glenn Kelman said of the decision. “With whole cities shutting down nearly all commerce, no one can say what a fair price is right now, so we’re not making any instant offers.”
Earlier this week, Redfin said it would no longer allow its agents to host open houses in an attempt to limit the effects of coronavirus nationwide. At the same time, the company enacted policies to limit how many people could tour a home at a time and how those potential buyers would behave.
“Redfin won’t ask customers to shake hands [and will] stay six feet away from you throughout the tour. We won’t enter bathrooms or crawl spaces,” Kelman said at the time. He added, “Our listing customers shouldn’t worry…since we publish interactive, three-dimensional scans of all homes listed by Redfin agents [and]…run a digital marketing campaign for every listing to bring plenty of folks through your home online.”
OpenDoor, a U.S.-based iBuyer, also suspended operations this week. Unlike Redfin, however, OpenDoor has no other revenue-generating operations. The company has, essentially, placed its entire business on hold until the housing market stabilizes.
A company spokesman said, “Our priority is the safety and well-being of our customers, employees, and the general public.”
Remaining iBuyers Well-Positioned for Peak of Viral Spread
For the iBuyers that remain in the market, the peak of the coronavirus spread and peak home-buying season could position the companies perfectly for a major real estate grab. In an environment where many homeowners will be leery of bringing strangers into their homes, the iBuying model is an ideal option.
Assuming operations like Zillow still respond to requests for offers and closings at top speed, the iBuyer model could enable homeowners to get ahead of what some (albeit certainly not all) analysts say could be a very sharp decline in home values during the summer months, particularly in areas of the country that are hardest hit by the coronavirus or that impose strict or controversial local sanctions in an attempt to contain the spread.
Do you think this is the end of the iBuyers?
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