Friday Flash: iBuyer beware

Just a few thoughts on this dog-day Summer Friday…

Zillow had to spend $3.5 billion to take out Trulia and launch Realtor.com into oblivion. 

I don’t think Zillow will have to do the same with Opendoor. They will just bury them. Their cash and brand power is overwhelming at this point. And I suspect Z has been in the iBuyer game long enough now to eat up much of the operational lead Opendoor had. 

Opendoor (and also Offerpad) have both announced “list it with us” brokerage options recently in an attempt to monetize more of their offer requests. But this is a tough slog. Just look at Redfin’s long walk to scale. 

So, second tier iBuyers may increasingly become merely the acquisition arms of institutional buyers/landlords, which is kind of a bummer. 

I wonder if a time will come when people will actually ask, “what are you going to do with my home once you buy it?”.

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Speaking of Institutional investors, there’s this from National Mortgage News: Invitation Homes eyes its next 80,000 houses as suburbs boom. 

Here’s a taste: 

The company has narrowed its focus to suburbs closer to the city center in a total of 16 markets. It has bought houses from builders, as well as an emerging class of companies called iBuyers. It’s also developing a plan to buy homes and rent them back to sellers.

For the most part, though, it bids on homes as they hit the market, competing with first-time homebuyers and other single-family landlords.

Look, I’m a card-carrying capitalist, but something about massive institutions vacuuming up single-family homes and making it harder for aspiring homeowners and small-time investors to build wealth makes me want to puke. 

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I’ve said it before and I’ll say it again: Title and closing is the sexiest boring thing going right now. While zillions have been spent over the past 20 years harvesting people leads online, the mechanics of the transaction, particularly at the culminating moment of closing, were still a tangled mess of paper and people. 

Serious money and brains are being poured into fixing this. Tech-driven title companies like Jet Closing, States Title and Endpoint (funded by First American) and tech SAAS companies like Qualia, which works with hundreds of title companies and agents, are leading the way. Established companies like WFG National Title are creating new consumer experiences around the closing process. 

The pandemic has accelerated this. Qualia released a Remote Online Notorization (RON) solution that integrates fully with their closing software. There’s some regulatory work left to do here, as some states do not allow RON, and others have only authorized it on an emergency basis, but the cat’s out of the bag. The insane, reckless ritual of a stranger popping by your home to take your fingerprints and sign a stack of paper legal documents is going to be hard to stomach going forward. 

If you’re an agent, sending your clients into a title and closing experience that remains stuck in this old way isn’t a good look. 

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I just used it to write this post, so I’m gonna plug it: our handy little Proptech Guide is a great reference. No BS, just a current, categorized list of new venture or PE-backed startups. Bookmark it. It’s free. 

Enjoy the weekend.