Where they were once a novelty, instant cash offers are becoming a growing customer expectation in the home-buying process. In this post, we look at developing models of iBuying, including trade-in, full-service iBuyers, and incumbent partnerships.
When Opendoor first popularized the concept of iBuying in 2014, there was intense skepticism around using algorithms to buy homes. Since then, Opendoor has entered 21 markets across 12 states, inspiring an influx of activity from investors, startups, and incumbents alike.
In 2018, iBuyers accounted for upwards of 25,000 transactions, or 0.2% of US market share, according to an analysis by industry analyst Mike Delprete. While this number may seem small, traditional brokerages are taking note of this disruptive way of home buying.
While it’s still early to assess the long-term sustainability of iBuying, it’s clear that the future doesn’t end with instant cash offers, but rather will look to integrate other pieces of the home-buying value chain — like mortgages, title and closing, and renovations — to reduce friction in a traditionally cumbersome process.