MARKET COMMENTARY

House Sales A Click Away

In Canada’s busy residential real estate market, iBuyers are a story to watch. Their online business model, focusing on speed, convenience and client control is stirring things up.

02.16.2021 - Fiduciary Trust Canada

Whether homebuyers are moving up or over—from urban to rural, from other cities or provinces—it is shaping up to be an active year for Canadian residential real estate. How properties are sold will be one of the stories to watch as iBuyers continue to disrupt the real estate business.

While iBuyers apply different business models, their very existence is another sign of the digital transformation underway in our world. Using their database and algorithms, iBuyers basically estimate your home’s value based on the features and images you provide online. They assess what, if any, repairs are needed. If your home gets the thumbs up, the iBuyer makes a set, guaranteed offer. You choose the closing date and the burden of selling the home now lies with the iBuyer. There is no agent, no people wandering through your home, no negotiating.

The focus is on speed, convenience and control for clients. Over the last few years, companies like Zillow and Opendoor in the United States and, more recently, Canadian firms like Sweetly and THE WAY AHEAD Properly have been gaining attention. For executives needing to relocate quickly, for people in search of a getaway property, for the challenges COVID-19 presents, for everyone used to speedy, convenient online shopping, the model is proving attractive whether you are a buyer or seller.

Understandably, there is another side to the iBuyer theme. For example, if you live in a “hot” market, do you want to eliminate the potential for bidding battles over your property? Does the seller have the ability to earn the latest full market value, based on the pool of purchasers looking for a home at a given time? Others argue that iBuyers are really offering decades-old guaranteed sales programs presented in a digital way. As real estate firms are increasingly adept at both showing homes and working online, is the iBuyer advantage as great? How do iBuyer fees and the commission structure of a traditional real estate deal compare?

Over 2020, we became online shoppers as never before, purchasing everything from diapers to diamonds. Time will tell just how much our increased familiarity with the on-demand digital world affects residential real estate. It is your move.

 

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