Valley home buyers and sellers are increasingly using online “iBuyer” services, much to the chagrin of local real estate agents.
Some of those agents say customers are missing out on a knowledge base not easily replicated by internet- based services that look to swallow up market share in the Phoenix market.
According to a new report, Phoenix was among the prime targets for iBuyers such as Zillow and Opendoor from data collected for the second quarter of this year. The report, from Zillow, said iBuyers took up “a market share of 5% or more” in places like Phoenix, Atlanta and Dallas.
Sometimes, an online iBuyer is a better option for some sellers. Arizona Realtors President Jan Leighton said she referred one of her clients to an iBuyer after conflicting schedules didn’t allow the specific house to be shown during working hours. The man of the household slept during the day after working graveyard shifts.
“We couldn’t show the house. Every buyer has a different need and want. It just comes down to assisting buyers and sellers,” Leighton said.
The iBuyers are attractive to some sellers because of the convenience of not having to make any needed repairs before they put their home on the market.
Typically, iBuyers make light repairs on the homes they purchase and then quickly resell homes on the open market, the report said.
Realtor Sarah Prenzno, who sells homes in the Anthem and northwest Valley areas for Delex Realty, said while iBuyers promote a quick, cheap sale, sellers should watch for fees of up to 10% that may not be clear to the seller up front.
She said to some, not making repairs might help make the process of selling a home easier. But often times equity could get left on the table should someone decide to go the iBuyer route.
“I think that’s a lot of the appeal (with) them,” Prenzno said. “Obviously those people (iBuyers) are not doing it to be nice. They are doing it to make a profit.”
The increase in iBuyers comes as home prices around the country continue to rise. The median U.S. home price climbed 17.8% in June from a year ago to $359,900, an alltime high, as sales of higher- end homes helped skew prices higher, according to the National Association of Realtors.
At the end of July, the inventory of unsold homes stood at 1.32 million homes for sale, up 7.3% from the prior month, but down 12% from July last year. At the current sales pace, that amounts to a 2.6-month supply.
New-build communities have seen very low inventory of houses. Olive Grove’s Canyon Series, a Peoria housing community, recently announced it had sold out of homes less than 18 months after opening.
The community offered up 170 homes with seven different floor plans that ranged from 1,986 to 3,018 square feet, and prices starting in the mid-$300,000s.
Peoria has been a hotbed of home sales, outpacing demand and leaving the city with extremely low inventory. Thousands of new homes are in the pipeline, many entitled right now, but experts say it will take time to catch up with the demand.
According to Tina Tamboer of the Cromford Report, the median sales price from December 2020 to May 2021 rose an average of 3.4% per month while the median only rose an average of 1.6% per month from May 2021 to July 2021, indicating a cooling of the market and slower appreciation rate.
With more homes hitting the market, more first-time sellers were availing themselves to selling using online buyers.
The Zillow report said 83.6% of homes sold during the second quarter to one of the four largest iBuyers — Zillow Offers, Opendoor, RedfinNow and Offerpad — had not been previously listed for sale on the open market, adding liquidity to the market.
Leighton, who sells homes in the northwest Valley, said she does her best to help her clients. She said she said the “top” of the Valley housing market was at the end of March or the beginning of April.
Now, she said inventory is “up a skosh” after there weren’t much Phoenix homes for buyers to choose from.
She said homes for sale are on the market longer — giving buyers more time to look at a variety of choices.
While an increasing number of sellers are going online to move their homes, Leighton said some Valley residents might prefer a local professional over an online company.
“I think knowledge is the key to real estate, myself,” Leighton said. “By being a local Realtor, I know my niche. I know my neighborhoods.”
Prenzno said in some cases, she brings her clients an analysis of what a particular house could bring on the open market. She said at times she will partner with the iBuyer to see what their offer would be on a particular property.
She said its up to the seller to determine what’s best for them.
“Real estate isn’t really a one-size fits all.”