Working with iBuyers can mean easy money for agents
The commissions are lower, but so is the effort. Representing a client in an iBuyer transaction takes less time and can supplement an agent's business.
- Working with iBuyers "makes perfect sense" for agents looking to scale their business.
- On the seller side, there are no marketing costs, and on the buyer side, agents don't have to spend time on tours.
- Both iBuyer companies and clients see the benefits of involving agents in the transaction.
Tim Evans calls it "the easy button" in real estate.
Just as some homeowners are willing to forgo a chance to maximize profits in exchange for the convenience of selling to an iBuyer, agents working with iBuyers say the ease and speed of the transactions make it worth the lower commissions.
"If you're an agent looking to scale a business, it makes perfect sense," said Evans, president of the Carol Royse Team in Tempe, Arizona.
Arizona has been ground zero for iBuying companies. Offerpad, one of the leading iBuyers, was founded in 2015 and is based in the Phoenix area. Opendoor is the other major player, while several companies, including Zillow and Redfin, left the iBuyer arena in the past year.
The companies that remain have managed to make fans of some agents.
"It's shocking how much more volume I can do [working with iBuyers]," said Dan Noma, designated broker at Venture REI in Scottsdale.
"I wasn't a believer at first," he said. But his conversion is complete. Three years ago he founded iReal Estate Pro, designed to help proselytize the iBuyer process to other agents through training and education.
Lower commissions balanced by low effort
In a tight market, a 1% commission on a deal that's almost certain to go through and won't take much of your time isn't too shabby. An iBuyer deal can generate revenue while freeing up an agent to look for more listings, said Misty Michael of The Michael Team in Plano, Texas. "Given the responsibilities, it's fair," she said of Opendoor's commission.
"If your client is selling a home to an iBuyer, you don't have marketing costs and it's minimal work," she said.
And when representing buyers referred by Opendoor, she doesn't have to spend time driving clients around to tour homes — Opendoor touring agents handle that part.
"You don't make as much on commissions, but also you're spending a fraction of the time out with the buyer," Michael said. And clients enjoy the streamlined process. "'I've had people say, 'This is the easiest transaction I've ever done.'"
Presenting sellers with all the options
Besides the ease, Noma believes getting an iBuyer offer for his sellers fulfills an ethical requirement.
"If we know there is a buyer willing to make an offer and we don't tell them, I worry that we are violating our fiduciary responsibility," he said. "If we ignore iBuyers because our commission is lower, then we are operating in our self interest, not the consumer's."
And, Noma said, he often negotiates an additional commission from his sellers.
"A lot of agents, they're afraid to make the ask," he said. "But most sellers understand the market rate is a 3% listing fee. I just tell them, 'Look, the buyer is going to kick in a point. If you pay two points, I'm whole.' Once we explain it that way we typically don't get a lot of pushback."
And sometimes it's worthwhile to accept the iBuyer commission alone, given the effort. "My workload with an iBuyer contract is less than an hour," he said.
Agents remain valuable — to iBuyers and clients
Even in the world of iBuying, people still need the expertise of a real estate agent — and iBuyers need agents. "Opendoor is very transparent that their success rate goes up when an agent is involved," Noma said.
Indeed, Opendoor is openly wooing agents, with its Agent Access program offering bonuses for agents who complete multiple transactions with the company.
And most clients recognize the benefit to having a real estate agent even when working with an iBuyer, said Vikki Middlebrook, also with the Royse Team. "They want that human touch."
Still, an iBuyer doesn't work for every seller. "It's not meant to serve every consumer out there," Michael said. "It's a niche." And that niche is just one pillar of her business, though it now represents about half of her transactions.
Michael is convinced iBuyers are here to stay — and are nothing to fear. "Other agents may look at it as they're taking something from me," she said. "I look at it as they're giving my clients an option they didn't have before. … Everybody has their place in this industry. If you work hard, the business is there."