iBuyer financial model: Bad for Zillow, good for Redfin

January 5, 2020
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iBuying, the buying and selling of a home for a fee, and what that means for websites like Redfin and Zillow.

Instant, institutional home buying, or "iBuying" has dominated the headlines of real estate media, raised well over $2 billion in equity (and far more including debt), and has become the largest revenue growth driver for two publicly-traded companies, Zillow and Redfin. "iBuying" is the business of buying and selling a home for a fee, providing the home seller with quick liquidity and saving them the hassle of listing and showing the home.

Some of the more notable iBuying institutions include the "pure iBuyers" Opendoor, Offerpad, and Knock, as well as the real estate media tech company Zillow, the tech-powered brokerage Redfin, and, more recently, the traditional brokerages Keller Williams and Realogy. Such rapid growth in this space has led some to speculate that iBuying is the future of residential real estate, despite warnings that the enterprise is a disaster-in-the-making. Others, however, maintain a more agnostic, informational stance.

Anyone invested in the residential real estate space - either through public brokerages, rental services (AMH), home builders (ITB), or even simply home ownership - needs to have an informed opinion of iBuying; it has already altered the dynamics of this industry in numerous markets. However, I've found that the available information on iBuying lacks the detail and flexibility, i.e. an interactive financial model, needed to inform a grounded opinion about how iBuying might affect their investments.

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