MReport October 2021

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M R EP O RT | 43 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION iBuying Transactions Reach Record Numbers Accounting for 1% of U.S. home sales for the first time in history, the increase in instant buying indicates sellers' desire for "more certainty and less stress," experts say. A new analysis of home- closing data compiled by Zillow found that iBuyers are poised to sell a record number of homes in Q 3 after setting an all-time high in Q2. This analysis by the Seattle- based real estate and financial services company found that the market share for iBuyers reached 1% of all U.S. home purchases last quarter for the first time as home- owners increasingly used these services to sell more than 15,000 homes nationwide. Instant buying, or iBuying, hap- pens when real estate companies use algorithms to evaluate a prop- erty's worth based on comparable market data and purchase houses, directly from the seller, in quick cash transactions. Those compa- nies then quickly list them for sale on the open market after making light repairs and updates. Benefits to the seller include cash offers, flexible move dates, and the conve- nience of preparing and showing the home. For those same reasons, iBuyers tend to charge sellers a higher fee than traditional agents. The analysis examined how many homes were bought and sold in 33 different markets by the top four major instant buyers: Zillow, Offerpad, Opendoor, and RedfinNow. In Q2, about 15,000 homes, valued at $5.3 billion, were sold through an iBuyer, up from 7,000 homes worth $2.1 billion in Q1. The report found that the trend of using an iBuyer to purchase a home is expected to continue for the foreseeable future. "The growing number of home- owners 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," Zillow COO Jeremy Wacksman said. "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. This brings net-new inventory to the market, mainly at an affordable price point near the middle of the market, adding liquid- ity to the market that has tradition- ally been difficult for consumers to navigate." The news of a record-breaking quarter comes during one of the best sellers' markets in recent memory which benefited iBuy- ers as well—most homes listed by instant buyers sold within a week of being put on the market, a third sold above their list price. Home sellers in three metro areas were found to be the most liberal users of instant buy- ers, selling 1,987 homes in the Atlanta metropolitan area in Q2, 1,744 homes in the Phoenix area, and 1,321 homes in the Dallas-Ft. Worth area. "iBuyers tend to buy and sell homes near the median sale price in a given metro area, adding liquidity for relatively afford- able homes that are often in high demand," the report said. "In 23 of the 33 largest iBuyer markets, the median price for homes iBuy- ers purchased was within 10% of the market's overall median sale price. The national median price of a home sold to an iBuyer was 3.6% higher than the overall U.S. median sale price, likely because iBuyers tend to operate in larger, more expensive markets."

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