What Are iBuyers (Zillow/Opendoor) Really About? Lead Gen, Revenue Growth & Friction

    Inman has a great video about iBuyers (companies that buy homes directly from consumers) called “Battle of the Behemoths” and it conveys a really interesting perspective.

    Zillow hopped into the iBuyer market for reasons many don’t understand.

    iBuying for Revenue Growth

    First of all, Zillow’s revenue growth from their “Premier Agent” program (selling Zillow leads) all but ground to a halt.

    So, they were literally forced to look for alternative sources of growth in agent commissions, mortgages and even escrow fees.

    Generating Seller Leads

    But, more important than that is the lead gen factor. Zillow was the first place most sellers went to check on the value of their homes.

    BUT, when Opendoor popped up, consumers started to go there first and Zillow was losing all of those potential leads.

    So even though the iBuyer market may never exceed 5% of total market share, iBuyers are likely here to stay b/c of the lead gen aspect.

    Phoenix is the Prototype

    iBuyers are most prevalent in Phoenix, AZ where they have about 5% to 6% of the total seller market.

    But, what is most interesting is that a full 40% of all potential sellers go to an iBuyer first to get a free “offer” before going to any other real estate-related site.

    Only about 2.5% of those sellers accept the iBuyer-offers, but the leads the iBuyers get from those inquiries are invaluable.

    B/c iBuyers are learning to capture so much of the seller-lead market, traditional brokerages are now teaming up with them.


    1. iBuyers are here to stay. Even if iBuyers don’t capture a lot of market share, they will control seller leads which may be more valuable than iBuying itself.
    2. Friction Avoidance Again. I mentioned “friction avoidance” in this recent blog. I pointed out how sellers clearly lose out by accepting an iBuyer offer, but they still do so anyway simply to avoid friction. It was interesting to me that the Inman video did not address friction.
    3. How Agents Can Fight Back. I am no real estate expert (not even close), but I do have a few thoughts.
      • Stay in front of your database and referral network. I hit this often, but agents should frequently and regularly share valuable info with their database either digitally or traditionally.
      • Friends don’t let friends use iBuyers. Agents should educate their database and referral network about the actual cost of using an iBuyer. Again, sellers are clearly better off financially when they use a traditional agent.
      • Eliminate friction. Agents should show sellers how easy they will make selling their home, as consumers are often willing to pay more simply to eliminate friction.
      • Predictive analytics. I blogged about this recently too, but agents should also share their entire database with a predictive analytics firm like First, as these firms are now better than ever at using mass data to spot potential sellers before they even decide to sell.

    Jay Voorhees
    Founder/Broker | JVM Lending
    (855) 855-4491 | DRE# 01524255, NMLS# 310167

      Get your instant rate quote.
      • No commitment
      • No impact on your credit score
      • No documents required
      You are less than 60 seconds away from your quote.

      Resume from where you left off. No obligations.