By Meghan Hall
For the average homeowner, the traditional listing process is what typically first comes to mind when it comes time to sell their property. However, HomeLight, a San Francisco-based real estate referral company, has launched Simple Sale, a platform designed to connect everyday homeowners with pre-approved cash buyers. The Registry spoke with Simple Sale’s General Manager, JJ McCarthy, to get a glimpse into what role Simple Sale—and iBuyers—play in the residential real estate market.
Tell me a little bit about the nature of the modern-day home selling market and traditional listing process. Why is a platform such as Simple Sale needed, and what pain points in home buying does it seek to solve?
In most cases, when homeowners think about selling their home, the first thing that comes to mind is preparing and beautifying their home to make it more marketable. Typically, they’ll have to go through the cumbersome processes – ideally, with the help of a top local agent – of staging their home, hosting open houses every weekend and hoping the right buyer comes along and makes an attractive offer on the home. With the emergence of new technologies, this tried-and-true method of selling a home is no longer the only option.
Although daunting, the traditional home listing and selling process has proven effective. So long as you list your home with the most qualified local agent, this long-standingmodel is most likely to achieve the highest price for their home. That said, there are no guarantees in terms of the closing timeline – or whether a sale will occur at all.
The emergence of the iBuyer – investors that make instant cash offers for homes en masse – is the entrepreneur’s response to a genuine and longstanding consumer need: providing liquidity and avoiding the traditional home-selling process that takes an average of 47 days to complete. Working with an iBuyer is attractive to many sellers, whether they’re responding to a sudden life change, faced with the possibility of juggling two transactions at once or simply don’t want to worry about the delays that can occur during the traditional listing, selling, and closing process.
What are “instant offers?” How has the concept of instant offers evolved and what impact does Simple Sale have on the prominence of this type of offer?
Instant offers are cash offers made on homes by institutional or individual investors, often before the home is listed on the MLS. These investors have specific buying criteria for home, which we call a “buy box.” These factors include location, type of home, year built, condition and estimated value.
The iBuyer story is still very much evolving. What began as a small contingent of startups and real estate companies launching iBuyer offerings (Opendoor, Redfin, Knock, Zillow) quickly gained traction among venture capitalists. Next, iBuyer hotbeds started to pop up in pockets across the U.S., including Atlanta, Phoenix, Las Vegas, Dallas and Tampa.
Our Simple Sale offering is the next chapter in the iBuyer story. For the first time, home sellers are able to compare the most competitive instant offer estimates from the palm of their hand, request formal written offers in 48 hours or less and close on the sale on their own timeline. Simple Sale is also a tool for agents, offering them the leading industry commission on iBuyer referrals, incentivizing them to present clients with all of their selling options, not just the traditional listing model.
Do you think that the residential real estate market will see a shift to fewer traditional listings and more sales to iBuyers with the introduction of Simple Sale? Why or why not?
For the foreseeable future, we expect the traditional listing to remain a preferred selling method among home sellers for two reasons. One, given the specific purchase parameters for homes from the 150+ iBuyers in our network, these investors cannot purchase more than approximately 10 percent of homes on the market. Two, the traditional listing process was, until recently, the only way that sellers could compare offers and reap the benefits of bidding wars to get the most competitive price.
If more homeowners are choosing to sell to instant buyers and forgo the traditional listing process, how can this impact the residential real estate market long term?
As technology solutions continue to streamline the residential real estate market, agents will need to adapt; however, technology can never replace the human connection and advisory role the agent plays. That said, agents who have distinguished themselves in their local markets and have a proven track record of success are likely going to be able to adapt more quickly and use technology to their advantage.
Simple Sale is complementary to HomeLight’s flagship offering as a platform that matches top local agents with home sellers based not only on transactional data, but also taking into consideration qualitative data, including customer feedback and the specific qualities of the home.
In many markets such as the San Francisco Bay Area or Seattle/Puget Sound, homes are often snapped up quickly and sell for more than the asking price. Simple Sale claims to give home sellers more selling options when it comes to the sale of their home. Where, specifically, does Simple Sale fit into this dynamic?
In competitive markets like the ones you mention, selling to an iBuyer is a less attractive option for the reasons mentioned above. That said, it’s not unheard of – if a seller needs to liquidate their home to put a down payment on another competitive property, it may make sense for them to sell quickly to an iBuyer to avoid losing out on their next purchase. There are plenty of other situations in which people choose to sell to an iBuyer and forgo the traditional listing process, which are just starting to unveil themselves as this market trend starts to gain traction.
Simple Sale claims that homes will receive offers in 48 hours or less, but on average, how long does it take for these sales to close?
This is all up to the seller. The closing timeline could be5 days or as many as 60 days. Those details will be decided during the negotiation process. While there is some variance in the closing timeline among Simple Sale buyers, the process is undoubtedly far shorter than that of a traditional sale.
What types of sellers typically use Simple Sale? How are they similar and different to the traditional home seller?
There’s no “type” of seller for Simple Sale or for iBuyers in general, since the concept is so new. The justifications for selling to an iBuyer are still just beginning to unfurl. We’ve seen situations ranging from the need to liquidate the asset to put a down payment on their dream home to relocating for a new job and not wanting to worry about a lingering home sale as they start their next venture.
What sort of buyers are on Simple Sale? Are they exclusively institutional investors, or do they include individual investors as well? What do these buyers seek to do with the listing once they purchase it?
Simple Sale buyers include leading national iBuyers, buy-and-hold investors who purchase properties to rent for passive income, and “fix-and-flip” investors who renovate properties in poor condition at scale. We have a mix of institutional and individual investors in our pre-vetted network, which to date has amassed over 150 total investors nationwide.
Now that Simple Sale has launched, how has the platform been received? Do you see more adoption in the agent community or among consumers?
Our agent community is especially excited by the agent tool that we’re just beginning to roll out in beta.