Disrupting the Disrupters: Keller Williams Enters the iBuyer Space
The rapid rise of direct-to-consumer homebuying programs (known as iBuyers) prompted Zillow to adjust its business model in 2018. Earlier this year, Redfin began testing the waters with RedfinNow in Dallas. Now, Keller Williams appears to be pivoting as well.
In May, Keller Williams will launch its iBuyer program, Keller Offers, in the Dallas-Fort Worth market. Currently, iBuyer pioneers Offerpad and Opendoor operate iBuyer programs in that market alongside RedfinNow.
KW spokesman Darryl Frost says that Keller Offers will be in up to eight major markets by the end of 2019.
Industry expert Steve Murray, president of REAL Trends, is not surprised by the development, noting that Keller Williams was a standout in the REAL Trends 500, a ranking of the nation's brokerages; more Keller Williams affiliates qualified for the ranking than any other franchise.
"I have believed for some time that players like Redfin, Compass, Keller Williams and Berkshire Hathaway might enter the iBuyer space because they have the means to do so," said Murray. "Don't study their intentions, study their capabilities. Clearly, Keller Williams has the capabilities."
Founder Gary Keller alluded to this development last year at Inman Connect.
Frost says the franchisor has planned to spend $100 million on the program in the coming year.
"Unlike other iBuying experiences, with Keller Offers, consumers have a fiduciary—a Keller Williams real estate agent—serving them as a trusted advocate and working in their best interests while selling their home," said Frost.
"While we believe the addressable market for iBuyers represents less than 10 percent of the overall market," said Frost, "we do see this as an important additional option for KW agents to be able to offer their sellers."
While the iBuyer model may be new for Keller, it’s a disruptive business model that has had some staying power with prominent players, including Offerpad, which started purchasing homes directly from homeowners in the Phoenix area in June 2015, and Opendoor, which launched in 2013.
Offerpad and Opendoor have purchased nearly 10,000 homes combined over the past five years, according to an ATTOM Data Solutions analysis. ATTOM recently issued an analysis of iBuyers and noted that they tended to cluster in the South.
Murray notes that Dallas' demographics make it an attractive market for the iBuyer service, and is home to one of the largest KW brokerage companies in the country.
According to ATTOM Data Solutions Chief Technology Officer Todd Teta, iBuyers have been expanding at "breakneck speeds."
"What started as a moonshot idea six years ago has now blossomed into a massive, billion-dollar homebuying market in its own right," he said, "and it’s not showing any signs of slowing."