iBuyers want to capture more business volume. Here’s how they hope to do it.
The move by Opendoor, Offerpad and Zillow to offer listing services alongside their iBuying services caused quite a bit of comment over the summer. Obviously, they hope to capture more business volume by listing homes through their own agent-partners or agent networks. It seems logical that in the areas where they are generating interest in their services, and where a homeowner may not like their offer to purchase, they can pick up more business by referring these sellers for a portion of the listing commission.
The one thing that inhibits great success with this strategy, at least thus far in the maturation of our industry, is the housing consumer’s behavior of choosing agents to represent them. From our Harris Insights studies in 2014 and 2018, there was little movement away from consumers choosing an agent based on some kind of relationship. Approximately two-thirds of all consumers still choose to work with someone they know or have heard of.
That means that one-third of all consumers use other means to choose an agent—this is a huge segment of the market. As Redfin discovered, having a strong website and offering significantly lower commission costs, does not overcome consumers’ desire to know their agent. Some of our own employees raved about Redfin’s website and used it, only to choose their own agent through relationship channels.
When Offerpad, Opendoor, and Zillow extend their relationship with consumers to refer those sellers who don’t want to exercise a sale to these firms, it doesn’t mean that a large percentage will use their preferred agents. Some will, as we know that, again, one-third of housing consumers don’t use a relationship to choose their agent.
Will this change? Just because it hasn’t over the past 30 to 40 years doesn’t mean it won’t change. Our belief is that it will change as more firms, like those mentioned above, continue to offer more consumer-facing services to entice housing consumers to engage with them in the sale or purchase process. The only question we consider is how fast and how far will it change?