The global real estate market in 2021 was one of the most robust sellers’ markets on record. Following on from a dip in property sales during the pandemic, the market is recovering rapidly. Two emerging trends to hit in 2021 were the rise of iBuyers and an increase in power buyers. The short video attachment looks at what the term ‘iBuyer’ means.
Ryan Mahoney of Dubai, UAE, is prolific entrepreneur with a long history within the real estate market. Mr Mahoney has been involved in multiple start-ups across a variety of industry sectors and maintains a close watch on emerging models within real estate.
iBuyer Breakout
Research from brokerage-branded marketplace solution company zavvie shows a fivefold increase in iBuyers throughout 2021 when compared to the previous year. iBuyers accounted for around 1.3% of the total market share, representing over 71,000 home property purchases across the year. In 2020, this figure was just 14,000. While the pandemic accounted for some slowdown across all real estate sales, it seems apparent that this type of instant offer sale is appealing to today’s consumer.
Power Buyers
Power buyers provide more leverage and options for consumers when it comes to purchasing property by facilitating up-front cash purchases. This gives greater flexibility to both buyers and sellers, removing much of the hassle associated with a real estate chain.
For buyers, this opens up multiple new opportunities and increases the chances of securing the property they want. The zavvie study found that consumers utilizing cash offers through power buyers successfully completed a purchase after an average of just 1.1 submitted offers. In comparison, buyers using traditional mortgages with loan contingencies submitted an average of seven offers before being successful.
iBuyers vs. Power Buyers
While both iBuyers and power buyers give consumers more flexibility through cash offers, there are several key differences between performance in each area. Power buyers tend to charge lower fees than iBuyers – typically below 3%, compared to 5%. However, both of these fees are lower than what the average seller can expect to pay on the open market.
The median purchase price of iBuyers increased by 41% year-on-year when comparing Q4 of 2020 and 2021, reaching $395,000. Power buyer transactions reached a median purchase price of $485,000 in the same period.
The embedded infographic explores some top-level statistics for the global real estate market.