Power Buyers target home buyers, not home sellers, with services such as cash offers, bridge financing and trade-in programs.
2021 Seeing Emergence of Power Buyers
What and who are Power Buyers?
Power Buyers are real estate brokerages and their agents that focus on home buyers. Unlike iBuyers that target home sellers, Power Buyers target home buyers with services such as cash offers, bridge financing and trade-in programs.
Companies such as EasyKnock, Knock, Ribbon, Orchard and Homeward are Power Buyers. All of these companies have experienced growth ranging from three-fold to ten-fold rates. In fact, according to Mike DelPrete, Orchard and Homeward saw +150% growth in 2020 and +300% growth into 2021.
Though iBuyers are focused on sellers and Power Buyers are focused on buyers, both Power Buyers and iBuyers are transaction-driven. And for Power Buyers, agents are at the center of every transaction.
Three Products Offered to Buyers by Power Buyers
In a housing market such as ours with high demand and low supply, Power Buyers have chosen to empower buyers with products and services such as bridge financing, cash offers and trade-in programs.
Power Buyers offer home buyers three product options:
- Trade-in or buy-before-you-sell option
- Cash offers
- Sale lease-back bridge
The Trade-In or Buy-Before-You-Sell Model
The “buy before you sell” model or trade-in model is proving to be very popular with consumers in this 2021 housing market. Buyers move into their “next” house with no financing contingency as Power Buyers buy that “new” house with “their” cash. The Power Buyer lists the buyers’ “old” home on the market and if the “old” house doesn’t sell in 120 days, the Power Buyer buys the “old” home. The home buyers then purchase the “new” home from the Power Buyer.
The Cash Offers Model
Cash offers are backed by the Power Buyers. Power Buyers digitally integrate all aspects of the transaction including mortgage and title so home buyers don’t have to deal with the time, effort and uncertainty of the loan process…the loan, quite simply, process is eliminated.
In terms of attach rates to title and mortgage products associated with Power Buyers, results are industry-leading. There is a 70%+ mortgage attach rate and an 80%+ title attach rate. This is in stark contrast to major iBuyers who have struggled to attach both mortgage and title products with just a 20% attach rate.
Power Buyers believe that it is more effective to target buyers early on in the transaction process when it comes to attaching mortgage and title products.
The Sale Lease-Back Bridge Model
Homeowners unlock their home equity by selling their homes to Power Buyers. Then, these now former homeowners lease back the home from the Power Buyers.
Power Buyer Tech Focuses on Consumer Empowerment & Improving Agent Productivity
On the customer empowerment side of the equation, there is…
- Process visibility
- On-demand communications
- Online offer submissions
- AI-powered price predictors
On the agent productivity side of the equation, there is…
- 1-to-1 customer communications
- Pipeline management
- Salesforce integration
- AI powered lead scoring
Power Buyer tech also includes features that engage/appeal to buyers such as room comparisons and HomeMatch.
Outfits such as Zillow are looking to develop a presence on both the buy- and sell-side of the transaction with Zillow Home Loans for buyers and Zillow Offersfor sellers.
Some industry experts are predicting that brokerages will provide every aspect of the transaction process from search products to buyer-focused products to seller-focused products to mortgage and title attachments in order to thrive within a now fast-paced real estate sector. We’ll see soon enough.
Thanks to ATTOM Data Solutions, Zavvie and Mike DelPrete.