What is an iBuyer and how can Canadians take advantage? Find out here.
Today we’re going to discuss something you’re going to hear much more about in the coming years: iBuyers. What’s an iBuyer? The “i” stands for institution. iBuyers are institutional buyers that are popping up in the U.S. like Opendoor, Offerpad, and now Zillow Offers. These are publicly traded, Wall Street-backed companies with billions of dollars that are looking to provide a new option to home sellers and hopefully grab market share.
As you can see by the graph at 0:35 in the video above, their growth in the marketplace has been exponential. In 2019, pardon the pun, the numbers have been off the charts! Big companies like Zillow are focusing almost exclusively on this iBuyer platform.
What does an iBuyer offer a seller? First, it is the most convenient way to sell your property. You can go on the website, enter your information, and receive a cash offer on your home within 24 hours. That offer is only pending a visual inspection, and you can have the cash for your home in as quickly as seven days. You’re also allowed to pick the closing date that suits you, so you can take a few weeks more to move out of the house if you need it. This is a convenient way to move instead of trying to do it all in one day.
Second, these large buyers don’t have a financing clause, so you don’t have to worry about them getting a mortgage or their financing falling through. There’s a lot of certainty there. Third, you don’t need to be concerned about picking up a paintbrush or doing deferred maintenance. You can even leave all debris in the house, anything you don’t want to take with you. The iBuyers will get rid of it. From a convenience standpoint, there’s nothing better, that’s why you’re seeing such a massive increase in the market for iBuyers.
"I thought, 'Why not do a trial run here in Canada and see what happens?'"
There’s a cost to all this, of course. When you only expose your home to one buyer, and that buyer is incentivized to try to get it for slightly less so they can take it and fix it up, resell it, and hopefully make a profit on it, you’re missing out on the opportunity to take it to the marketplace. That’s what we do as Realtors. We try to elevate the level of competition for your home so you get the most amount of money in your pockets at the end of the day. You give up the potential to maximize the sale in exchange for the convenience, control, and certainty. Fundamentally, that’s what the iBuyer movement is.
A couple of years ago I was talking to a few brokers and agency owners and they were all afraid and anxious about these iBuyers coming into the market and stealing market share, and that’s exactly what’s happened. Watching this over the years, it’s become a growing concern in the United States. There’s a substantial amount of money pouring into this iBuyer space. We didn’t have this in Canada yet, but if the public wants it, I thought, 'Why not do a trial run here in Canada and see what happens?'
So, I started a company with a group of investors, and we created Cash Offer LP. It’s exactly the same promise: sell fast, stress-free, and convenient. Ultimately what we’re offering is an instant cash offer on your home and you’re in control of the closing dates. So, we ran a small test on this and received 1500 visits to the website. Out of those visits, 150 requested an offer on their home. I sent out an elimination email to everyone, basically saying; I can’t possibly do this many evaluations, but here’s our model, we’re buying homes at 10% back of the market value, if that’s of interest to you, please tell me and I’ll proceed. 30 people emailed back and asked me to proceed. We made offers, and six of those became homes we bought.
Therefore, there’s a market for this here, but it’s not for everyone. If you have time on your hands and you want to maximize the sale of your home, this is not the product for you. We at Vantage West specialize in consulting you on how to fix your house up, then we do targeting marketing campaigns to put your home in front of thousands of buyers, to get you the most amount of money. That is still our core product. In addition to that, we still offer our guaranteed sale where you get all of the marketing and the fallback plan of the guaranteed sale in 29 days. Now, we have a third option, which is the instant cash offer. The whole purpose of this is to give our customers as many options as we possibly can.
If you’re interested in knowing a bit more about our cash offer program, you can go to cashoffer.ca and take a look around the website. All the frequently asked questions are there. As always, Vantage West would love to consult you on how to maximize your home sale or how to buy a property. If you have any further questions for us, please reach out by phone or email. We would love to help you.