Redfin reports that one out of every 100 homes sold during Q4 2019 was done through an iBuyer. Data shows that the market nearly doubled when compared to last year’s 0.6% share.
iBuyers are defined as real estate companies that incorporate technology and AI to make immediate offers on properties in order to buy homes via fast, cash sales. Due to the nature of this transaction, specifically that it is seen as being much more convenient to sellers by eliminating the need for traditional real estate agent services like home prep, showings and open houses, iBuyers commonly charge sellers a higher fee.
Following the sales, these iBuyer companies then conduct any necessary repairs and improvements to the properties they buy before reselling them (usually for a great profit) to homebuyers.
This type of home buying, although still representing a small portion of the market, is clearly on the rise. Metro areas across the nation are especially seeing increases, namely in the south and southwest regions of the country. In fact, a recent study revealed that Raleigh, North Carolina,
led the nation in iBuyer market shares in 2019, followed by the cities of Phoenix; Charlotte, North Carolina; Atlanta; and Houston.
Redfin Chief Economist Daryl Fairweather commented on the recent rise in iBuyer activity: “It’s no surprise Raleigh and Phoenix led the nation in iBuyer share because those housing markets are iBuyer sweet spots and are poised for price growth in 2020. These markets work well for iBuyers which tend to purchase homes that are relatively affordable, were built within the last few decades and are easy to price accurately because they are located in tract neighborhoods with largely homogenous housing stock. iBuyers also try to buy homes that will likely retain or increase in value over the short period between purchase and sale. Our forecasts indicate that both Phoenix and Raleigh will have strong price growth in 2020.”
Fairweather also said that these metros that are seeing strong iBuyer activity now can also expect to encounter a spike in home sales overall.
“It’s a sellers market right now,” she said.