Hello and welcome to episode number 2 of the iBuyer podcast brought to you by myself, Shamus SamerDyke and Bella Carballo.
Yes, my lovely assistant Bella.
So today I just want to remind everybody that here at iBuyer.com, we are the go-to source for all things iBuyer, right! So information on ratings, reviews what’s going on in the marketplace, who are the players, where can you find your nearest iBuyer or what are they going to give you for your house, you can get valuations before ever even contacting these people.
It’s a wealth of knowledge, so definitely go check it out anytime you get.
Now today, Bella what are we talking about today?
Today we are talking about the biggest names in the biz.
The biggest names in the iBuyer biz, that’s right. And we would be remiss if the absolute first name we didn’t talk about was
So Opendoor is by far, currently the biggest iBuyer in the game. They were also first, right! So as far as true, you know true and true iBuyers only doing the iBuyer model, buying houses, selling houses, Opendoor is the biggest. Started in 2014, done tens of thousands of transactions since then, I think we’re a little over 25,000 last year alone.
I mean that’s a huge number of transactions, right?
Now keep that in mind. Though the 25,000, that’s of like 6 million home sales that happened last year. So it’s still a tiny percentage of the total home sales but that’s growing bigger and bigger and bigger every year.
But the, part of the reason these guys have been able to do these kinds of transactions and these kinds of numbers is they’ve been very aggressive with funding.
So I mean just an equity alone, they’ve raised over 1.3 billion dollars since founding in 2014 and they take it on another like 1.6 or I’m sorry, another 3 billion in debt right but they also now currently have a valuation over Four billion dollars.
So the reason they’re able to do these transactions is because they are aggressive.
Yeah! So part of the reason they’re able to do these types of numbers is that they’ve been crazy aggressive in their funding from day one. So they’ve raised total over four billion dollars between debt and equity and they also now have a valuation well over four billion dollars so from zero to four billion dollars in five years, it’s pretty damn good.
All right, and part of that has to do with they’ve got an amazing founding team, they’ve got people from Yelp and square and Trulia, all big hitters that are backing up their founding team as well.
Offerpad, very close second in terms of almost market share, you could say, right! So Offerpad not quite the size that Opendoor is at this point, they haven’t raised nearly as much money I think they’re still sub 500 million which is still a heck of a lot of money but they’ve had a totally different approach, right!
So whereas Opendoor sort of comes into a market and really takes its time, you know building out its base in each market sort of like you could almost call like a rifle approach, right! They zero in on one area and they just dominate it.
Offerpad has had more of almost a shotgun approach, right! So they’re going into I think they’re in something like 700 markets, 700 plus markets, almost 800 markets right now nationwide. So they have, their growth strategy is definitely more widespread.
So it’s allowed them though, you know, I think part of the reason is that they’re able to take in a heck of a lot more data, right!
At once versus focusing on one area to see how that goes, they can sort of spread out their resources into a bunch of different markets and that’ll give them an idea it’s like AB testing with ads, right!
You know, you put two very similar ads out whichever ones doing considerably better, you can put all your focus into that and I think that’s sort of the method that they’re using for their growth and expansion. But they are no slack, even though slouch either I mean they’ve done well over 10,000 transactions as well since their founding in 2015.
So again someone to definitely keep an eye on and then we also can’t forget about Zillow
I can’t believe they’re not number one, Oh Zillow.
I feel you!
It’s shocking. I don’t think it’ll be that way for very long.
I mean at the end of the day, Zillow one, it’s got the name recognition. I mean it’s a 3,000 pound gorilla that’s sitting in the room that you can’t help but to look over and wonder what it’s about to do, right?
But they’ve taken a very strategic approach to their new iBuyer arm of their business. It’s called Zillow Offers. The concept is the same, we’ll buy you a house immediately, all-cash offer, close quickly and you know they’ll send you through their realtor network in order to get you in the new house. But they’re only in roughly 12 markets right now.
So definitely less than, maybe more than 12 today but it’s definitely less than 20 and they’ve taken sort of the Opendoor approach where they are really taking their time and forming an individual market before they decide to pour a bunch of eggs into that basket and which it’s a little surprising to me because with seven billion dollar market cap as a publicly traded company and they could afford to, I would think of nationwide.
Right! So I think they’re just trying to be cautious to a certain degree and feel out this whole iBuyer space but at the end of the day, no matter what iBuyer you talk to, unless you went to a iBuyer.com first to find out what your home valuation is, if you get an offer from let’s say Opendoor, you’re probably, the first step is going to be to go to Zillow and check what your estimate is…
Right, exactly. That’s the first place I would go.
It’s the absolute first place, right! So again we’re going to keep it very close eye on Zillow and we’ll keep up-to-date on what’s going on with them as well.
But now we’re going to move on to segment two and we’re going to talk about alternative iBuyer.
So again the traditional iBuyer model is basically house flipping on steroids, right?
So they come in, they buy a house, they fix it up and they turn around and sell it. Well as far as alternative iBuyers go, the biggest one in the game right now is knock..
So they have taken a totally different well I guess not totally different but a very different approach and sort of flipped the model, instead of buying your home now, right, they’re targeting people who are looking to sell their homes so that they can buy a new home and move.
So they’re really looking for people moving. So the deal is instead of buying your existing home, they buy your new home. So the home that you’re wanting to move into and they, so they’ll fund the purchase of the new home, they’ll let you move in on sort of like a leaseback agreement and then they take sort of take control of your old house minor repairs and things like this and they get it up on the market and sell it and they collect a fee for doing both and manage both sides of the transaction that way. So basically they let you move in at a new house and once they’ve sold your old house, you guys settle up at the end.
It’s a really interesting take and what it makes me think of most is trading in your car.
Yeah, that’s what I was thinking.
Right! So I mean if you’re going to trade in your car, you’re not going to, you decide you know hey I’m done with my car, I’m ready for something new, you’re not going to go on Craigslist and post it for sale, right! Are you?
I wouldn’t think so. Bella is not really a Craigslist type of person.
I’m not a Craigslist girl.
Yeah, what you do is you, what do you do? You go to dealership, right?
You go to dealership and they say hey, you know what, your car is worth 16,000, we’re going to give you 14,000 but you’re going to get to drive away in a new car today at or very close to your existing payments, right?
And so for the ease, you give up a little bit of equity and that’s whole name of the game. Giving up a little bit of equity for easy smooth transitions without having to worry about anything.
Nice, love that.
And then, what’s the one thing we cannot forget to talk about here today Bella? I told you to remind me.
It is the local iBuyers.
Local iBuyers, that’s right. So the one thing that nobody seems to be talking about and everyone seems to have forgotten is that iBuyers are not a new thing, though the first iBuyer was founded in 2015, Opendoor.
The whole concept has been around for decades. I mean people have been buying houses, fixing them up and selling them for a very long time, right! All over the country, all over the world. I mean look at HGTV, right?
Flip this house, flip or flop, that’s all they’re doing, people love this stuff. Well in essence, they’re basically an iBuyer too and they’re in every single local market around the country.
So just because Opendoor or Zillow or OfferPad isn’t in your hometown, I guarantee you there is at least one small mom-and-pop company that puts those little, “we buy houses” signs in the ground or the webuyuglyhouses.com and all of that.
Those guys are your local iBuyer and they’re the ones who are going to have all the local knowledge, the local know-how and really you will be willing to work with you very easily.
So we wanted to make sure as iBuyer.com that we incorporate them into the conversation as much as possible so people don’t forget that there is another alternative outside of Zillow, Opendoor, Offerpad, especially if they’re not in your current market yet.
So let’s see, so just a couple of quick things before we go today, today it’s going to be a bit of a shorter episode. One really key thing I want to mention is that, the more iBuyer you have in a market, you would think hey maybe it’s going to get flooded and what not.
If you think about it, the more iBuyer you have in a market between the bigger guys and your local iBuyer is that there’s more people to compete for your house. So remember more iBuyers, higher price. And then two, tip of the week, come check out iBuyer.com for all of your iBuyer needs.
If you’re looking for ratings, reviews, if you want to find out what the heck this whole iBuying thing is all about, you can find it, blogs, articles, tips and tricks on moving and the biggest thing is before you go to Opendoor or Offerpad or accept an offer from these guys, if you’re curious to know what they might offer you, come and check out our valuation tool, right!
To find out what Offerpad or Opendoor or Zillow or even the local guy down the street might offer you for your house without ever having to give anybody your contact information. So that’s it for us, for this week. You can find us at iBuyer.com.
Don’t forget that part.
Yes SoundCloud. It’s still there, it’s still there.
Hit that follow button.
Hit that follow button, subscribe, tell your friends and if you could, go on oh how did I forget iTunes.
Yeah, on iTunes and make sure you leave a rating, hit subscribe. The ratings really do help us tremendously guys, it helps to get the name out, the word out.
And ask questions. If you have questions that you want us to answer, ask them. We love to get questions.
Yes, absolutely please. Any social media or if you want to leave it in a rating review, we’ll see it. Shoot us questions, hit us at Twitter @iBuyer, we will answer as many as we can and we’ll give you guys a shout out on the next episode if you do. So with that in mind.
This is Bella.