Author: Kerrie Kennedy

Pandemic-era sellers to iBuyers: ‘No thanks’

Kerrie Kennedy Leave a comment

The booming COVID-19 housing market may have been a windfall for many homeowners and Realtors, but for iBuyers, not so much.

According to a recent analysis conducted by Redfin, in the third quarter of 2020, the nation’s top iBuyers purchased just 0.2% of homes that sold across the 418 U.S. metros tracked in the analysis. That’s down nearly 80% from a year earlier, as homeowners decided there was no need to sell at a discount with both demand and home prices at all-time highs.

“The hotter the market, the less attractive it is for home sellers to let an iBuying company take a cut of the sale,” said Redfin Lead Economist Taylor Marr in the report. “With home prices and demand surging, many sellers figure they can sell their home quickly without having to give away any of their profits.”

The Redfin analysis of MLS and public records data identified home purchases and sales made by well-known national iBuyers, including RedfinNow, Opendoor, Zillow and Offerpad, all of which instituted a temporary shutdown early on in the pandemic in an effort to minimize unsold inventory on their balance sheets. Ironically, it was at a time when consumers could have used the instant cash and certainty of an iBuyer.

While iBuyer purchases did increase from the second quarter, when iBuyers only bought about 800 homes, the decision to shut down during the pandemic has left iBuyers scrambling to attract homeowners who want to sell at a discount during a red-hot market.

“We’re still playing catch up from the spring, when we stopped buying homes for a few months,” said RedfinNow Asset Manager Sabrina Archolecas in the report. “We’re working on building up the inventory of homes that we can sell.”

This is not the first, or the only, way that the pandemic has affected buying preferences. For now, iBuyers like RedfinNow are focused on purchasing homes owned by families who don’t have time to do renovations themselves and need to sell quickly so they can buy their next home, Archolecas said.

Nationally, iBuyer-owned homes sold more quickly than non-iBuyer homes in the third quarter, with a median market time of 13 days, compared to 33 days for non-iBuyer homes.

But a quick sale at a discounted price only addresses the needs of a small segment of the market. Ironically, while iBuyers are well-positioned to serve customers seeking contactless transactions, the pandemic has revealed an inherent weakness in the iBuyer model.

How Realtors are giving back during the pandemic

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As the coronavirus pandemic continues to batter communities across the country, real estate agents and their brokerages have responded with unprecedented volunteerism and donations, according to a new report from the National Association of Realtors.

The Community Aid and Real Estate Report – the CARE Report – shows that the median annual value of Realtor associations’ donations to communities doubled from $5,000 in 2018 to $10,000 in 2020.

A whopping 92% of broker-owners made pandemic-related donations in 2020, up from 81% in 2018. The median amount broker-owners donated annually was $2,000.

Food banks were one of the top recipients of Realtor generosity — 36% of brokers and their firms donated nonperishables or cash to food banks during the pandemic, 27% donated masks and protective gear, 16% donated school meals to children and 9% were able to provide stable and secure housing to those in need.

In addition to monetary donations, Realtors responded to the pandemic by making food deliveries to the elderly and frontline workers, conducting wellness checks and visits to senior neighbors and offering virtual companionship to those isolated or quarantined alone.

Some 67% survey respondents polled by NAR said they volunteered in their communities on a monthly basis as compared to 66% in 2018, the last time the study was conducted, and 85% said that community involvement was an important part of their business plan.  Among broker-owners, 79% volunteered their time on a monthly basis, versus 77% in 2018.

“Realtors are in the business of helping people and serving their communities, and we’ve seen countless examples of this play out nationwide during this pandemic,” said NAR President Charlie Oppler in a press release. “To hear that my colleagues in the real estate industry have pitched in to an even greater degree than usual is indeed heartwarming, but it is also not surprising. Historically, Realtors have a proven track record of donating time, money and energy toward various charities and volunteer efforts.”

Nearly 70% of association executives or multiple listing service staff also said they volunteered monthly, 93% of them made personal donations and 91% conducted a fundraiser for their community in 2020, an increase from 89% in 2018.

Philanthropic efforts among brokerages were also up this year: 68% percent of members reported that their firm urged employees to volunteer, up from 64% in 2018.

“Since I entered this industry, I always valued giving back to the community and the ideal of paying it forward,” said Oppler, whose 2021 plan includes volunteerism and community services initiatives. “I have no doubt that America’s 1.4 million Realtors will continue to help our neighbors and lend assistance wherever possible as we collectively work to move beyond COVID-19 in the coming months.”