I buyers are down – Hey, it’s 2021, have you heard of I Buyers recently? I don’t know, so we were all worried about in 2019, in 2018, 2019, there was like a trend and there is things, things going on and we’re like, oh, this is going to be the future and this is going to really work and what’s going to happen. And they were like industry disruptors and we were worried.
And then all of a sudden 20, 20 happened and the world changed quite a bit. Yeah, and now here we are in twenty twenty one, but the real estate market, as much as it changed, it actually like shot up and there’s all these additional changes like new factors that are going on right now.
And I buyers, let’s go ahead and chat in a link and split the screen and look over here for us please.
So thank you, Omkar, as we do that and this is an opinion article written from Inman magazine. So we’re going to take a scroll through here and I’m going to direct us, if I could please write to the section in particular that talks about transaction volumes. OK, so we had a trend. 2017, 2018, 2019. And this is that’s a trend on an upward magnitude for sure.
So we see that there was sixty thousand properties that were purchased like this. Now if I’m to give my personal opinion here, they were also losing money. Yes. At a massive rate. And this is something they were trying to do to end up getting to to end up getting market share.
So they were all buying these homes, but also losing money. And I heard on average that they lost ten thousand dollars per property overall for the whole industry, for every single property that they purchased and then resold and their cost and their holding costs once they figured out they were losing about ten thousand dollars per property.
So then you take ten thousand times sixty thousand. And that was kind of like the average loss for the industry. Yeah, so they they lost they they made up for it by losing money in volume. Right. So they just they kept doing the same thing. And now what I’m going to do is go back to where we were. And take a look here and we see that this trend is dramatically down, so we’re kind of thinking, why did this happen? Right. And as I’m looking at this, I believe that the transactions that are happening now are more logical transactions.
Right, and the ones where you might have been loose enough were you may have been losing money. Right, those things disappeared and possibly the reason why is you don’t need to market when the market’s super hot. So if your objective is to gain market share or to do something along those lines, if the market’s super, super, super hot, then why would you be doing that and losing money on it? Right.
So what I think they did is if we looked at this drop between the high of sixty thousand and where they’re at more down, I don’t know, maybe it’s thirty five thousand here. I think this difference are the transactions where they bought and truly lost. Right. I think that this is more of a reasonable number.
And I would argue that some of these thirty five thousand transactions were covered, transactions where people sold directly because they didn’t want to be have people in their home or anything like that. So I think that these total transactions, a bunch of people chose them because it covid and exposure. And this number is actually bolstered or boosted by covid.
And in fact, the actual transactions that should logically happen on an annual basis for eye buyers are probably closer to twenty seventeen numbers. And then the ones added on top of it are kind of covid transactions. And then the disappearance from here to here was because those are transactions where they were losing money and they simply eliminated them as they move forward because the market was hot, you know, personal.
Take the yeah. The buyer program. I for me, I think a couple of things happened. One, I think that it was a great concept. Right. They buy these properties and then, for example, open door and then they did some minor fix ups and then put them on the market. Well, it was very hard to schedule and get into the properties. I mean, it was it was really it’s difficult to get into one of their properties.
Then you go in and I found on multiple occasions that we discovered things that weren’t disclosed. And, you know, they just weren’t not that anybody was intentionally doing it. But there’s so many hands in this in this one particular transaction that, you know, you’re buying something as is. And it’s difficult to get in. And I don’t know. I think that it became kind of a you know, that word spread and it’s more of a reputation. The entire reputation is I say the fact.
Yeah, when you buy a home from them, like, how were they actually repaired? Yeah. What’s disclosed? What’s the age and experience like? Because the person on the other side is most likely an employee’s right, not a relative.
Or, you know, in today’s market, you have to act quickly and you don’t have time to wait. And you may if you finally can get into the property and then you have to wait, you submit an offer and then it’s like two days before you hear back. And it’s just that process is too long in today’s market, in my opinion. That’s my opinion. But I do think that concept is interesting. And I think with everything going on that we’ll see it come back in some capacity.
I do, but probably not in a losing way where people are trying to gain market share. Again, we’ll get a little bit closer those things to work and they’ll they’ll fix up the challenges they can. But it doesn’t appear to be on this huge like, you know, you see numbers grow and grow and grow. And then it appears like you think it’s going to just rocket ship up. But things change. And central to everything that we’re kind of talking about is the agent.
So let’s go ahead and go back over here and take a look specifically at different companies. Nothing. So transaction volume, social interaction and all they want. It’s just you can’t replace that. I totally agree. So open door. I don’t know enough about them and their agent experience.
Say they’re the ones that that’s the one that’s top of mind that we hear about all the time.
And they did have the biggest decrease in the amount of them that they did for the year. So they were down fifty nine percent. Zillow purchased last homes as well. So did offer PAD and Redfin. Their total transactions here were like I mean, they bought some. Right. And there’s some other companies that also do this. But this shows open door and how many they purchased and kind of what happened and where they’re on track for. And then what happened. It also talks about the segment of market share.
So Zillow actually gained market share as all of this has happened. They went from three to eighteen to twenty-six.
They’re really smart, ladies and gentlemen. They’re amazing. You know, I’m always impressed with what they do from a business standpoint. I may not like them, but I do like how they are doing things in business, they just keep doing it, they’re so strategic.
So they actually gained market share. We see that all four had stayed roughly the same from twenty eighteen and open door shrunk the most and they went down. So anyways, that’s a super quick review of what’s going on with the buyers, but I think they’re going to come.