Mike DelPrete, a real estate technical advisor and strategist known for his focus on iBuyers, offered Inman News a preview of his forthcoming report on the status of iBuyers in the US.
Here are some DelPrete’s key data points:
- Nationally in 2018, iBuyers accounted for 25,000 transactions, 15,000 purchases and 10,000 sales, throughout the country at all price points. These 25,000 transactions translate into 0.2% of the total 5.5M transaction totals in the national housing market during 2018.
- The iBuyer movement, a movement that enables iBuyers to buy homes directly from consumers and enables consumers to get a free offer on their homes with just a click of a website button, is currently led by OpenDoor. Focused on speed, certainty and simplicity, OpenDoor has raised +$1.3B in equity, is $3B in debt and is valued at close to $4B as of April 2019.
- In Phoenix, the center of the universe for iBuyers with a sales volume as big as the next three iBuyers markets combined, iBuyers have a 6% market share of all homebuyers and OpenDoor has a 3% market share.
- Since Zillow’s iBuying launch in May 2018, total iBuyer market share has risen 2% while OpenDoor’s market share has risen .7%.
Funding and revenue figures look something like this:
Gross revenue includes total home sale value as revenue. Net revenue includes only service fees and price appreciation as revenue.
OpenDoor OfferPad Zillow Zillow 3-5 Yrs Out 7,200 3,500 177 60,000 total sales
$1.7B $840M $52M $20B gross revenue
$200M $118M $4.5M $1.9B net revenue
$27,000 $33,600 $25,000 $32,300 net/home
0-5% 0-5% 0-1% 0-3% net margin
Funding Comparatives look something like this:
OpenDoor – $1.3B equity raised
Zillow – $7.1B market cap
OfferPad – $150M equity raised
Knock – $60.5M equity raised
Redfin Now – $1.8B market cap
You’ll note that OpenDoor has raised nearly 10 times the amount of equity funding as its competitors. It has also purchased three times the number of homes as its competitors. OpenDoor’s average home price is $240,000; its service fee is approximately 7%; its price appreciation per home averages $11,000.
You’ll also note that iBuyers as high gross revenue businesses with very small profit margins.
The definition of “total market” for iBuyers includes…
- Single family detached, townhouses, condominiums
- Short sales and pre-foreclosures
- MLS and non MLS homes
- Investor purchases and sales
- All price ranges
The definition of “total market” for iBuyers does NOT include
- New homes
- Mobile/manufactured homes
- Bank owned homes
- GSE owned homes
- HUD owned homes
- Trustee sales
- Sheriff sales
- IRS sales
- Sales under eminent domain
- Bulk (investor-to-investor) sales
We’ll follow up with DelPrete’s report once all of it is published.