It can no longer be said that iBuying is merely the domain of venture capital-backed startups or buzzy listings platforms. It’s gone relatively mainstream. In just the past few weeks, nonbank mortgage lenders Rocket Companies and Better.com have revealed plans to instantly buy homes from their customers and also pair their services with in-house real estate agents. And then there’s KWx, the parent company of residential brokerage Keller Williams.
The Texas-headquartered franchise behemoth says its “agent-centric” iBuyer model, known as Keller Offers, is genuinely different than its competitors: theirs is the only one that has a fiduciary duty to its agents’ clients.
The company recently hired Raymond “RJ” Jones to lead its iBuying program as well as Keller Manage, a new service for home maintenance, renovations and moving.
Jones, who joins after a stint at real estate coaching company Ferry International and executive positions at eXp World Holdings and Zillow, said Keller Williams’ iBuying service is positioned at agents whose clients who are looking to sell quickly and want the certainty that iBuying brings.
Currently, the program, initially launched in 2019, is in 49 markets. Keller plans to roll the iBuyer program out in 100 markets by the end of 2021.
“Consumers are engaging with competing types of opportunities,” Jones said. “Having this service available, it is a way to make sure our agents are providing more value but providing an option that removes worries or stress in the context of what that homeseller is going through.”
He added that “other models don’t have an agent at the center of it” and the company sees the future of the homeownership experience combining bleeding-edge technology, essential services and “lasting relationships” between homeowners and their KW agents.
He declined to say how many homes have been sold through the Keller Offers program, though he noted that between 6,000 and 7,000 KW agents are “engaged” with clients through the platform.
“Our agents can receive between 2-3% [commission], which is comparable to a market listing, as their client’s homes are sold via Keller Offers,” Jones said.
Unlike say Zillow or Opendoor, Keller Williams doesn’t use lines of credit to fund the home purchases made through Keller Offers. In fact, it doesn’t keep the purchases on its books at all.
According to Jones, a “myriad” of individual investors and institutional investors are in the system and are ready to buy the home in cash from the homeseller. Jones declined to identify the “partner” investors or disclose what proportion of buyers are institutional investors. He noted that they must be active buyers.
These days, most large institutional homebuyers are scooping up owner-occupied single-family homes and converting them into single-family rentals, depleting already-low levels of housing inventory. A Redfin study in May found that investors paid a record $77 billion for homes over a six-month period.
In June, Blackstone paid $6 billion to acquire Home Partners of America, a company that owns more than 17,000 houses and offers renters an option to buy. KKR recently launched a new division that will buy homes and rent them out. And Invesco earlier his year paid $5 billion to buy 20,000 homes that will be rentals.
Ultimately, many of the real estate brokerages, iBuyers, “power buyers,” and mortgage companies are taking similar approaches to fattening up their margins — attaching as many services as possible to the transaction. Most of the big players have either a mortgage-JV or their own company, a title and escrow arm, concierge and cash offers. Keller’s no different in that respect. Jones said he sees a big opportunity with Keller Mortgage and home insurance.
“The intersection of all these services is where we think of the integrated experience,” he said.