zavvie Releases 2022 Seller Preference Report — RISMedia
iBuyers had a banner year in 2021, growing their revenue fivefold year over year according to a new report from zavvie.
October-December market conditions, along with record inventory, presented a challenge for iBuyers, whose value proposition is speed, certainty and convenience for door-to-door sellers.
“iBuyer skeptics would say, ‘who needs an instant deal from a tech company if you can sell your home on the open market faster than you ever thought possible for more money than expected?'” said Stefan Peterson, chief data officer of zavvie. and co-founder and author of the Zavvie Seller Preferences Report. “Still, iBuyers has had an outstanding year,” he added.
The report shows that iBuyers purchased over 71,000 homes in 2021, around 1.3% of the national market share, compared to around 14,000 in 2020 when the pandemic temporarily halted iBuying, a 5x increase.
For Power Buyers, companies offering innovative solutions that dramatically increase a consumer’s purchasing power, market conditions were “perfect,” the report noted. Buy-before-sell, leaseback and especially cash offer options for homebuyers have catapulted the growth of power buyers and their accessibility to consumers.
According to the report, consumers gained an advantage when working with a Power Buyer compared to using a traditional mortgage with a loan contingency. Buyers using a mortgage had to bid on seven homes before winning an offer. Using a cash offers program, homebuyers received an average of only 1.1 offers submitted before successfully purchasing a home.
The zavvie report states, “Throughout 2021, Power Buyers experienced explosive growth and expansion. Ribbon reported that demand for its cash offerings increased 10-fold in 2021. EasyKnock, which already operates nationwide, more than doubled its business during the year. Knock continued its expansion from three markets at the end of 2019 to 71 markets in 2021. Homeward launched an expansion plan in 20 states. Flyhomes launched a nationwide expansion under the name “Flyhomes for Agents”, rolling out to multiple states. »
- iBuyers rebound, grow and establish long-term viability: Despite the exit of a major iBuyer from the market (Zillow), Opendoor, Offerpad and RedfinNow have all significantly increased their buying activity.
- Power Buyers reach a wider range of properties than iBuyers: In Q4 2021, the median Power Buyer transaction price was $485,000 compared to $395,000 for iBuyers.
- A giant leap in iBuyer’s median purchase price: Yet the median purchase price for iBuyers increased from $280,000 in Q4 2020 to $395,000 in Q4 2021, a gain of 41%.
- Power Buyers charge lower fees than iBuyers: iBuyer service fees have increased slightly to 5.0%, less than what sellers often pay in the open market, while Power Buyer fees range from 0% to 3%.
- iBuyer “buy boxes” stabilize, but a threshold of $2.5 million hits the market: iBuyer’s “buy boxes” (the targeted buy price range, age and other conditions) were consistent with previous quarters, but the launch of Opendoor in the San Francisco Bay Area carries the $2.5 million home purchases. Based on Q4 buy boxes, iBuyers could collectively buy 47% of properties, up from 32% at the end of 2020.
- Cash offers continue to drive growth for Power Buyer: Many Power Buyers continue to report a 2-10x increase in cash bids in the fourth quarter compared to the fourth quarter of 2020.
- Lower iBuyer “prepare and repair” fees: Called the seller’s concession, they declined in 2021 to an average of 3.1% from 3.6% in 2020.
- Both Power Buyers and iBuyers had higher consumer satisfaction scores: On a 10-point scale, Power Buyers and iBuyers customer satisfaction averaged 9 for 2021.
Read the full report at zavvie.com/seller-preferences.