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We buy, you buy, iBuy: PropTech finds its place in traditional real estate

Can technology bridge the gap between buyers, sellers and funds?

The real estate market landscape is changing. Not only have 30-year mortgage rates hit their highest level in two decades, but the pandemic widespread shift to digital solutions is a change that is likely to stay. Along with these market shifts, much of what has been familiar in the home buying and selling process for generations is under renovation.

One area of ​​the real estate industry that is undergoing a particularly significant overhaul is the home buying and financing space with the emergence of iBuyers (instant buyers) and other related PropTech technologies. . iBuying allows owners to quickly sell their properties online for cash, usually to large investors and corporations with deep pockets.

In 2021, venture capital investments in real estate technology reached a record $32 billion, a 28% increase in funding since 2020, according to the Center for Real Estate Technology & Innovation (CRETI). Much of this financing has landed with companies that provide iBuying and bridge financing solutions – two approaches to the home buying process that prioritize certainty of transaction completion for buyers and sellers while adding additional efficiencies to a process that involves many contingencies and a lot of uncertainty.

“These PropTechs are trying to bring venture capital technology to the consumer to give them choice and flexibility in how they find a home, buy a home or protect the home,” said solutions expert Mark Weaver. real estate technologies from CoreLogic.

Will the housing cooling market affect iBuyers?

Buyers are not a new phenomenon in the real estate space. It is, however, an option that has grown in popularity over the past couple of years, with market dynamics encouraging quick trades.

But as the housing market starts to cool, the long-term success of market-leading companies like OpenDoor and OfferPad relies on the accuracy and reliability of their data. After all, iBuyers typically use a “buy-box” model where they set acceptable parameters, based on market conditions, to buy a home instantly for cash. If an estimated valuation is wrong, an iBuying business risks losing a significant portion of their investment, especially when performing large volume purchases.

“In the PropTech space, we worked with a leading iBuyer to navigate market conditions as they started to change and the risk appetite of the business changed,” Weaver explained. “We’ve helped this leading iBuyer revamp what we call their ‘buy box’ so that they will now only make instant offers on homes under certain parameters and conditions that we’re helping them refine in response to market development.”

The market easing has also raised questions about maximizing a home’s market value. Given the importance of a property’s market value, sellers who work with iBuyers want to be sure that they receive a very competitive offer. As it can be difficult to know if the the data supporting an iBuyer’s offer is of the highest qualityworking with an experienced and reputable real estate agent remains the most popular approach to ensuring that all aspects of a home’s value, from school districts to neighborhood amenities, are considered and marketed to buyers potentials.

Human contact remains important

As pandemic market trends begin to give way to new realities – easing competition and slowing house price increases are trends taking hold – real estate agents remain a very reliable for buyers and sellers.

Working with a real estate agent isn’t what it used to be. A new generation of agents supports buyers in a way that merges old-school community insights with data-powered digital tools. With access to services like Matrixwhich provides instant access to new real estate listings and portals that enable instant communication every step of the way, agents are a valuable resource in the process of buying and selling a home, especially when it comes to is about whether or not to engage with automated technology solutions like iBuyers.

While options like iBuying shouldn’t be overlooked, it can also be worth consulting with a real estate agent, as they can offer advice on current market conditions, as well as insight into how much one can reasonably afford. expect to win on a house sale. If sellers have accurate market information, they will be better able to judge instant offers and decide if this route is feasible or if they should go the traditional route and put the property on the open market. If a seller chooses the latter avenue, it is invaluable to have a knowledgeable and experienced agent who can offer information on how to price a home, the number of reasonably expected offers and how long a sale can take.

Similarly for buyers, many real estate agents have an in-depth knowledge of the most current market trends, including offer levels, the average number of offers on homes, the percentage of cash offers and the quality of local schools. Arming yourself with this knowledge can not only help buyers buy the right home, but it can allow them to optimize and streamline the overall experience through the use of new technology.

To learn more about how advances in technology are changing the real estate market, log on to CoreLogic Podcast or get the latest market data, trends and insights Intelligence.