How To Maintain Market Share In The iBuying Age
Cathie Ericson4 minute-read
August 31, 2019
The only constant is change, and of all professions, real estate agents know this adage to be true. One of the most recent disruptions has been the rise of iBuying, where an online platform will make an offer for a buyer’s current house, thus giving them quick cash in hand for a down payment on another home.
While iBuyers currently only represent about 5% of sales in the markets where they operate, that can still add up to a sizable chunk of inventory. As the big iBuyer players tout this strategy as more efficient and affordable for sellers, the challenge is for real estate agents to maintain their market share by underscoring the valuable role they play in the home-buying process. Here are some ways that real estate agents are doing just that.
Address The Drawbacks Of The Model
The main way to do this? Talk price, says REALTOR® Jamie Klingman, broker at Boutique Realty Florida in Tampa. She recommends that agents visually present the average difference in prices from iBuyers compared with the potentially higher sales price sellers could achieve by using an agent, which stands at nearly 15% in her market. “Net proceeds are what drives a lot of sellers, so showing sellers what they are leaving on the table is very effective,” she says, adding that offering free home valuations can also underscore the potential difference in price.
David Meek, real estate broker/associate at Keller Williams Arizona Realty, will even suggest that a potential client contact the largest iBuyer in town for an offer, so he can sit with them to conducta side-by-side comparison. In one case, he says, “The iBuyer market value estimate was within 1/2% of my price opinion, but they had greater repair and closing costs, and therefore my net cash to the seller was higher than the iBuyer.” The seller subsequently hired him, and the property was sold in 48 hours to an investor who waived inspections.
He calls his market of Phoenix “ground zero” for iBuying firms, noting that transactions have doubled in just two years. Moving forward, he believes that market conditions will play a huge role in their success – or lack thereof. “In a rising market, iBuyers can be competitive with traditional agents, but if the market softens, iBuyers will have larger monthly carrying costs which will increase their fees and decrease their competitiveness.”
He believes the model will endure for sellers who need to cash out quickly for minimal disruption, but it will be a niche tool for some home sellers and won't consume the traditional agent. “The consumer still needs high-touch advocacy in real estate,” he says.
Double-Down On Your Value Proposition
Indeed, there’s no substitute for continuing to focus on what you do best – providing personalized service, notesChristopher Linsell, real estate analystat TheClose.com. “The best thing agents can do to stay top-of-mind is to highlight the premium service that a full-time agent can provide, such as detailed analysis, local market expertise and of course, your ability to sit across a table in a cafe and actually have a real conversation about what the client is looking for.” He believes that most consumers value this personal expertise enough to sacrifice speed and convenience – the two key attributes that iBuyers trumpet –to have it.
And, with iBuying firms aggressively touting their services, traditional real estate providers must do the same, particularly in today’s technology-focused world. Start with an SEO-optimized website and augment it with active social media, email and any other marketing tactics that have proven fruitful over time, as they will continue to do so.
Become A Broker
If you can’t beat ‘em, consider joining ‘em, says Michael Kelczewski, REALTOR® with Brandywine Fine Properties Sotheby's International Realty, who suggests agents become a broker. “Technically, a broker of record represents a client or principal, but imagine a world where only the real estate transaction occurs. In this case, a broker or attorney would be required to conduct a sale,” he says, adding that providing the service to iBuyers potentially solidifies a role through technological innovation. “While sub-agents may eventually become obsolete, a broker's role will continue.”
Embrace What’s New
Finally, remember that it’s easy to fear what you don’t know. Patrick Frank, a former real estate agent who is now head of sales of commercial real estate startup Biproxi, suggests real estate agents dedicate some of their attention to understanding and figuring out how to work with iBuyer programs. “Think of iBuying as an extension of your professional role, as many programs offer the option to use an agent,” he says. Moreover, he recommends potentially viewing iBuyers as a partner, as some platforms give real estate agents a commission for sending over unrepresented sellers.
“Embrace technology, rather than running from it or scorning it,” urges REALTOR® Benjamin Ross with Mission Real Estate Group in Corpus Christi, Texas. “Technology, including iBuying, will bring opportunities that agents have never had before to show their value. Expertise will always make the difference.”
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