iBuyer purchase volumes were significantly lower during the third quarter this year than they were pre-pandemic, according to zavvie‘s inaugural Seller Preference Report. In Q3, iBuyer purchases dropped 82% year over year.
Zillow, Redfin, Offerpad and Opendoor all paused respective iBuying practices in March, citing COVID-19 concerns. The report said that collectively, iBuyers have been purchasing homes at an average 95.5% of market value across all markets since then. That figure is lower than 2019’s average of 98.6%, but that could reflect a perceived higher risk in the marketplace immediately following shutdowns.
“As more homeowners think about selling their homes within the next year, many won’t — because they are nervous about how to do it because of COVID, scarce inventory and general uncertainty,” Lane Hornung, zavvie co-founder and CEO, said in a statement.
Offer acceptance was at 4.7% in Q3, a slight uptick from 4.2% the year prior. “This suggests that for some sellers, the iBuyer benefits of speed, certainty, convenience – and perhaps above all safety – are compelling enough to justify a lower offer amount and higher service fees – even in a strong seller’s market,” the report said.
The report from zavvie, which has its own buy-before-you-sell bridge solution, said that the demand for bridge services has increased. The acceptance of bridge offers – from EasyKnock, Homeward, Knock and Ribbon – are about four times that of instant offers. Zavvie also said that bridge offers are converting at a rate of 22% on average.
In Q3, service fees averaged 8% compared to 7.6% the year prior. Which “probably reflects iBuyer’s perception of higher risk in the marketplace since the start of the pandemic,” the report said. For example, in August, Opendoor reduced its fees to no more than 5%, and bridge solutions service fees averaged 2.03%.
Buy boxes – or an iBuyer’s targeted purchase price range, age, and other conditions – have been expanding, the report said. Buy boxes now include more condos, higher-priced homes, older homes and more eclectic housing stock.