Enter The Direct Buyer Brokerage- A Hassle-Free Real Estate Transaction (2018 Trends)

By Alanna Mejia, Content Director - Posted on
Don’t forget to leave us your comments at the bottom after you’re done reading this article…

We’re covering real estate TRENDS in this week’s article- check out the Swanepoel Trends Report for 2018 (CLICK HERE) for much more in-depth information and statistics. You’re going to want to know the top 10 things driving the real estate business this year! Today- it’s all about the Direct Buyer model. Plus- you can get 10% off the Trends Report, ONLY here at Agent Inner- use the discount code “discount10” when ordering! (CLICK HERE) to order.

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Especially for homeowners or buyers, real estate transactions are slow, uncertain, and tedious. And that’s even though most other aspects of real estate have advanced with the revolutionary changes brought about by technology. Taking advantage of that relative hassle in the industry, there’s a new breed of company that have merged the brokerage and finance models together- and it could change the real estate market forever.

Here come the Direct Buyers! 

 
 

What’s a Direct Buyer?

Also known as iBuyers, Direct Buyers are working to streamline the real estate transaction process to bring it up to the speed and ease which consumers have begun to expect for any type of purchase (cue Amazon if you’re looking for someone to blame).

Direct buyers are: hybrid firms that buy properties from sellers, fix them up, and sell them- but not like the old distressed-buyer/ “I pay cash for any house” model that’s been around forever. This model stays closer to market rate for properties, but allows sellers to

  1. Indicate interest
  2. Receive an offer
  3. And pick a move date! Just like that- sort of like the CarMax of real estate.

How Direct Buyers work

Direct Buyers focus on specific types of homes:

  • Single-family
  • No historic homes – relatively new (usually built after 1960)
  • Smaller lots (under .5 acres for the most part)
  • Estimated value in a specific range (Redfin Now: 150K-550K)
  • Vacant or owner-occupied
  • Clear title, and in good condition

The ease of the Direct Buyer process is generated by how quickly an offer can be made. Since there’s no traditional mortgage, the uncertain and long timeline is absent in these transactions. Direct Buyers can close within days of a seller expressing interest!

How is an offer generated?

Direct Buyers use an algorithm to generate the offer that calculates things like:

  • Estimated cost of repairs needed
  • Appraisal, inspection, closing costs
  • Staging costs
  • Property tax
  • Past sales
  • Comps
  • Cost of holding this particular inventory
  • Estimated time to get home on market
  • Estimated final sale price
  • Growth rate in the area of the home

Direct Buyers also often offer to perform the repairs needed, collect payments, and select title companies and arrange inspections. Controlling all parts of the transaction can remove all delays.

Big players- what’s driving Direct Buyers

Millions in investor funding has made the Direct Buyer a force to be reckoned with in real estate. The four big players in the US are currently (Check out the table below for info on how agents can fit into their models- click to expand):

  1. Zillow Group
  2. Opendoor
  3. OfferPad
  4. Redfin
Direct Buyer Models - 2018

 

 

What does this mean for me as a REALTOR?

Direct Buyers are creating a buzz in the industry. Staying power for this model of brokerage will depend on whether sellers want to opt for convenience and speed over possible better returns with a traditional broker.

Brokerages and agents who focus on quick transactions will likely find themselves in competition with Direct Buyers, not as much brokerages that focus on quality of service and specialized marketing.

Agents are best equipped to talk about Direct Buyers when they understand how the process works and know something about each big player. Leverage Direct Buyerss as all-cash buyers for difficult homes or sellers that need a quick exit/sale. Sometimes, working WITH is better than AGAINST.

What are your thoughts about the advent of the Direct Buyer model? Leave us a comment below and start the discussion!

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Alanna Mejia
Alanna Mejia has been an integral part of Agent Inner Circle for the past several years, supporting agents and managing content as well as maintaining web systems. Alanna's background includes working as a journalist for print and radio; as a copywriter for ad agencies; tech editor and designer for her own business, Red Scribe Consulting; and as marketing coordinator for various companies.
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21 thoughts on “Enter The Direct Buyer Brokerage- A Hassle-Free Real Estate Transaction (2018 Trends)”

  1. I am in this situation right now and the potential seller found a buyer while his neighbor has an open house and he put For Sale By Owner sign in the front the his lawn got contract signed because people came to his neighbor’s open house and stopped by his and that’s how he got offer.
    How agent to be prepared for this kind of situation?

    1. Hey Abby – you said “potential seller” does this mean you had no listing agreement in place?

      Michael

  2. I am in Tuscaloosa, Al. and would like information as to how I can help my sellers take advantage of this concept. I have sellers who need to sell and we have such a slow market, not a lot of buyers that can perform and not a lot of listings that are on the market.

  3. I am a Realtor in Tuscaloosa, Al. and have a couple of sellers who need their property sold and we can not get someone to buy, lots of buyers are not qualified to purchase because of credit issues. Unique properties and will take a special kind of purchaser to purchase. We are in a slow and soft market where we have a low inventory and you would think that there would be interest.

    1. Hey Amelia I would have a look at the four players referenced in the article and reach out to them directly to see if they cover your area.

      All Good Wishes,
      Michael

  4. This is a good option for agents. Question – if I have a FSBO whose house looks like it fits your model home and who will pay me a commission if I bring him a buyer, can I submit that to you for examination?

  5. Hi Michael, Great post! The real estate business is changing, driven by technology and consumer demand. The best way to compete is to be innovative and give the consumer a better value. Not all consumers have the same hot button issues. For some it’s speed and convenience, others need more of a personal hand holding experience, others need a system that will help them through the process, take care of all the details and save them equity. There is a percentage of the market that want the convenience of these instant offers programs, and a large percentage of the market that either can’t afford it or are not in a hurry. Plenty of business for all.

    1. Good points all John!

      The challenge we face as Realtors is to keep innovating and marketing that to our customers.

      All Goood Wishes,
      Michael

  6. Interesting thought, I will follow closely in the future.
    I don’t know how this idea will pan out in California where CAR has a strong Realtor and lobbyist following.
    I see sellers making less profit with this plan and I always see that sellers to to maximize there bottom line.

    1. Hey Don – less profit perhaps but in exchange for a sure closing and no hassles.

      Time and consumers will dictate how this model fares.

      Thanks for the comment!

      All Good Wishes,
      Michael

  7. While I agree that today’s home seller is interested in results, I don’t think you can say that all of them, don’t care about service. I believe that there are still Sellers out there that do want top rated service and know that their agent is interested in more than just a commission but truly has their best interests at heart. But I also agree that, if this is the trend, better to read the writing on the wall, jump on board and use it to your advantage, rather than living in denial beating your head against a wall. As Darwin concluded, it’s not the strongest who survive but those that can best adapt. We’ll have to keep an eye on this and see if it’s here to stay or goes the way of those discount Brokerage companies.

    1. So well put Jeffrey – those that can adapt to change and articulate their value to their customers are the ones that will rule the day.

      Thanks for taking the time to comment!

      All Good Wishes,
      michael

  8. Good information. They have all entered our market and is a trend. It is your mindset on how you deal with it. Proven results is key as Michael said. There will always be competition in the market. Find your USP and show your results.

    1. Amen to that Cathy … it’s no about service … it’s about the RESULTS!

      Thanks for commenting.

      All Good Wishes,
      michael

  9. Great information, another tool to approach sellers and to use it to our advantage, rather than continue complaining and crying. In order to win a battle, we must know our enemy!

    1. Maria how refreshing – You Get It! Hiding your head in the sand , wishing things will stay the same is not an option. To thrive in this business you need to be constantly watching what the competition is doing, be aware of new trends and respond in kind.

      Thank you so much for the comment.

      All Good Wishes,
      michael

    1. Good one Al – we bought the company but didn’t name the product LOL!

      Seriously though as an industry we fixate on service and lose sight of the fact that our clients want results.

      As for Service For Life …. being around almost 20 years and with thousands of happy customers I think we have the RESULTS part dialed in pretty good.

      All Good Wishes,
      Michael

  10. Would love to have some recommended reading links on how iBuyers work. I confess that I still can’t visualize the process adequately enough to say I understand it or could explain it to a potential seller prospect. And many other agents here in our small, local market don’t understand it either. Just lots of fear and speculation about it. Thanks so much!

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