iBuyer Statistics: Companies & Market Share (2022)

iBuyer Statistics and Market Data

iBuyer Stats

What is an iBuyer?

An iBuyer, or "instant buyer," is a real estate company that uses algorithms and technology to buy and resell homes quickly. The model was first introduced by Opendoor, the current market leader, in 2014.

Wtih iBuyers, homeowners get cash offers for their homes in as little as 24 hours on properties that qualify (more below). Getting paid quickly is the main benefit to sellers. There is no need to list the home with an agent, pay for property photos, open the home to private tours and open houses, negotiate with buyers, or wait for a 30-day escrow period.

After acquiring properties, iBuyers then sell them as quickly as possible. Buying from an iBuyer may result in closing faster because the homes are not owner-occupied. Therefore, there will be no seller requests like extra time in the house, lease-backs, etc.

Based on the terms of service for multiple iBuyer companies, the properties they are likely to acquire share similar attributes:

  • Types of Properties: Single-family residences, condos, and townhouses
  • Lot Size: 0.5 - 1.5 acres
  • Valuation: $100K - $600K

iBuyers are often confused with house “flippers,” but the iBuying model is different. iBuyers are only interested in homes in a good-to-great shape -- with minimal or no improvement needed -- because their goal is to resell the property quickly.

What an iBuyer WantsWhat an iBuyer Doesn’t Want
Ready-to-market with no repairs or renovations Fixer-uppers or homes that require extensive work.
Median value homes that are close to the average fair market price. Luxury homes or homes are priced higher than the area's median value.
Basic or standard blueprints with no customizations. Unique or custom features or fixtures.
Modern construction though not necessarily new. Old with construction dating back 50 years or more.

iBuyers operate on tight margins, and keeping homes in their inventory adds to their selling costs (think holding costs and interest). Their margins also leave no room for error; a slightly negative fluctuation in home prices may force an iBuyer to sell below the purchase price.

iBuyer Market Share

In 2021, iBuyers accounted for 1.3% of the total U.S. single-family home market, with 70,000 purchases and 45,000 sales. Omitting the COVID-related market dip in 2020, iBuyer volume has more than doubled since 2019, the previous regular business year.

iBuyer Market Share - Total

Here is a table showing the data for iBuyer market share over the past three years.

Homes Sold201920202021
U.S. Market Total 4,765,000 5,066,000 5,413,000
Sold to iBuyers 32,726 17,355 70,402
iBuyers Market Share 0.69% 0.34% 1.30%

How we calculated: We counted iBuyer purchases (to avoid double counting) and compared them to single-family homes sold (resale, not new construction) in the United States. In 2021, 5,413,000 single-family homes were sold. Out of these, iBuyers purchased 70,402 units or 1.3% of the market total.

Sources: NAR, Opendoor, Zillow, Offerpad, Redfin

The top four companies below contributed the most to iBuyer sales volume in the United States. Contribution from the smaller players was insignificant. The market leader, Opendoor, was responsible for roughly half of the total iBuyer market segment volume.

Here is the market share, by company, in 2021:

iBuyer Market Share by Company

Here is a table of iBuyer market share, by company and by year.

Company201920202021
Opendoor 64% 48% 51%
Zillow Offers 18% 26% 35%
Offerpad 16% 24% 13%
Redfin 2% 2% 1%

Sources: Opendoor, Zillow, Offerpad, Redfin

Top iBuyer Companies

The largest current iBuyers are Opendoor, followed by Offerpad and then RedfinNow program offered by Redfin. Opendoor’s leadership was challenged by Zillow Offers until Zillow shut down its iBuyer division in November 2021, citing the company's inability to forecast market prices accurately.

Because iBuyers purchase homes with cash rather than financing, this real estate segment is capital intense and driven by well-funded, multi-billion-dollar public companies (no scrappy start-ups here).

With large market capitalizations, the top iBuying companies have access to significant cash resources and benefit from the economy of scale related to their sizes.

Top iBuyers by market cap:

  • Zillow: $9.6 billion
  • Opendoor: $4.6 billion
  • Redfin: $1.2 billion
  • Offerpad: $1.1 billion

Other real estate companies like FlashHouse, Keller Offers (by Keller Williams), and RealSure also make instant offers, but they don’t buy nearly as many houses. Keller Williams is mostly focused on their traditional full-service brokerage business through their real estate agents.

Hottest iBuyer Markets

Where is iBuying taking place?

The iBuyer business model is relatively new and not yet available in all states.

Here is the current count for states where transacting with one of the top iBuyers is available.

iBuyerStatesMarkets
Opendoor 22 45
Offerpad 15 24
Redfin Now 15 31

The table above also show the number of markets where iBuyers operate as of today, and we can expect to see more markets added soon.

With low profit margins, iBuyers see scaling their business as key to their success. Thus, they continue to pursue aggressive market expansion. Opendoor added 5 new markets in Q1 2021, while RedfinNow and Offerpad plan to enter 5 and 4 new markets respectively, by the end of this year.

Hottest iBuyer Metro Areas

Zooming in further, we can see that iBuyers primarily concentrate on the most lucrative markets: the south and west coast metropolitan areas.

Here are the top metros for iBuyer market share in 2021:

Hottest iBuyer Markets - Metros

Here is a table of the hottest markets for iBuying, ranked by transaction volume:

MetroTransactions
Phoenix, AZ 8,710
Charlotte, NC 8,103
Atlanta, GA 5,807
Jacksonville, FL 4,027
Raleigh, NC 3,989
San Antonio, TX 3,175
Las Vegas, NV 2,761
Dallas–Fort Worth, TX 2,639
Orlando, FL 2,638
Sacramento, CA 2,310
Riverside, CA 1,991
Houston, TX 1,921
Tampa, FL 1,817
Denver, CO 1,713
Nashville, TN 1,689
Los Angeles 1,535

All three of the top current iBuyers -- Opendoor, Offerpad and Redfin -- are active in Phoenix, AZ, the hottest metro market in 2021.

We looked at Q4 2021 and found that a few markets got even hotter: roughly 1 in 10 homes in Raleigh, NC, and Tucson, AZ, was sold to an iBuyer.

Do iBuyers Make Money?

iBuyers have three primary sources of revenue.

  • iBuyer service fee: charged to the seller, typically 5%
  • Closing costs: title insurance, loan fees, and other ancillary services that iBuyers bundle, typically 2.5%
  • Resale margin: the different between what the iBuyer pays for a property and how much they sell it for, ranging from 4% to 12%

Here is iBuyer revenue, expressed as a formula:

iBuyer Revenue = Service Fee + Closing Service Fee + Resale Margin

For sellers, the resale margin is their opportunity cost. With only one offer from an iBuyer -- a single opinion of value -- sellers miss the chance to attract as many interested buyers as possible.

Essentially, sellers trade convenience for price discovery on open market.

iBuyer Revenue Growth

In recent years, the revenue growth for the iBuyer segment of the real estate market has skyrocketed.

Total iBuyer Revenue Growth

Here is a table with the iBuyer revenue growth, broken down by company, since 2019.

Company201920202021
Opendoor $4.7 billion $2.6 billion $8.0 billion
Offerpad $1.1 billion $1.1 billion $2.0 billion
Zillow Offers $1.6 billion $1.8 billion $6.0 billion
Redfin Now $0.24 billion $2.1 billion $0.89 billion
Total $7.6 billion $5.7 billion $16.9 billion

Sources: Opendoor, Zillow, Offerpad, Redfin

iBuyer Profits

Despite the high growth in revenue, the top iBuyers' profitability has been slim-to-negative. In 2021, Offerpad was the only iBuyer that turned a profit of $6.5M, while Zillow Offers, Opendoor, and RedfinNow had net losses of ($881.5M), ($662M), and ($51.1M) respectively.

2021 Net ProfitOpendoorZillow OffersOfferpadRedfinNow
2021 Net Profit Opendoor Zillow Offers Offerpad RedfinNOW
Net Profit (Loss) (662,000,000) (881,500,000) 6,500,000 (51,098,000)

Sources: Opendoor, Zillow, Offerpad, Redfin

Opendoor Unit Economics

The iBuyer unit economics (per home purchased and resold) vary by company, but they all face similar challenges.

Let’s take a look at Opendoor’s unit economics, which are quite interesting:

Margin PerformancePercentage
Gross Margin 9.1%
Selling Costs -2.4%
Holding Costs -0.6%
Interest Expenses -0.5%
Contribution Margin 5.6%
Indirect Expenses -13.8%
Net Loss -8.3%

Source: Opendoor

Opendoor’s direct unit economics are positive, but considerable indirect costs (such as employee salaries, marketing, office space, and more) lead to a net loss per unit, making the iBuyer business unprofitable (so far).

Conclusion

That's our round up of iBuyer stats. We’d love to hear from you.

Do you think iBuyers are the future of real estate?

Zillow Offers’ share of the iBuyer market was 35% in 2021. How do you think Zillow quitting its iBuying business will transform the iBuyer market segment?

iBuyer companies have been losing billions of dollars. Do you think this is the cost of market disruption or just a lousy business?

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