The Washington PostDemocracy Dies in Darkness

D.C.-area home sellers have more options as new iBuyer firms open

Opendoor and McEnearney Advantage join a growing field of businesses buying homes at market rate from sellers in a hurry

An iBuyer purchases homes directly from the sellers at market rate, makes any minor needed updates or repairs and then quickly lists the house for sale to recoup their investment. (Joe Raedle/Getty Images)

When attorney Xiao Wang received a job offer in Chicago in June, he knew he needed to sell his rowhouse near Eastern Market on Capitol Hill quickly.

“This would be my first time selling a house and I had heard it was a hassle to prep the house, show it, negotiate with buyers and pay a lot of fees,” Wang says. “I didn’t want to do all that stuff because I was focused on finding a new home and starting my new job.”

Wang opted to sell his home to RedfinNow, an instant buyer — called “iBuyer” — program that started in the D.C. area in the spring. An iBuyer purchases homes directly from the sellers at market rate, makes any minor needed updates or repairs and then quickly lists the house for sale to recoup their investment.

“RedfinNow initially gave me an estimated price range with a $100,000 difference between the top and bottom price,” Wang says. “I was happily surprised that their actual offer was in the middle of the range, and it was what I expected to sell for if I used a traditional agent. Maybe I would have sold for a little more, but they closed exactly when I wanted so I could move directly from one home to the next. There was no hassle at all.”

For sellers in a hurry, iBuyers online service offers a new option

Wang paid 4.5 percent of the sales price to RedfinNow, which is comparable or less than typical real-estate-agent commissions paid by the buyer.

While multiple iBuyer companies such as Opendoor, Zillow Offers, Offerpad and RedfinNow have been operating in many housing markets for several years, Opendoor recently announced a new iBuyer program in the D.C. region. For now, Opendoor is only available in Northern Virginia.

“Opendoor evaluates markets by looking at an area’s growth, fundamentals, demographics and local housing stock,” wrote Patrick Halligan, general manager of the D.C. region for Opendoor, in an email. “The Washington, D.C. area is known for having a robust, stable economy and a strong housing market fueled, in large part, by government employees. The area can also be somewhat transient with forces such as administration changes that accelerate people’s needs to buy and sell homes quickly. Traditional real estate transactions are not quick in the least bit and that’s where Opendoor comes in. We streamline the process to make buying and selling a home simple, certain and fast.”

RedfinNow is available in D.C. as well as the Maryland and Northern Virginia suburbs.

McEnearney Associates is launching the McEnearney Advantage powered by zavvie, which provides technology to help agents showcase all possible selling options. McEnearney and zavvie’s program allows sellers to compare and choose between an instant cash offer from an iBuyer or to list their home on the open market. In addition, McEnearney will offer a “power buyer” option that helps them buy their next home before selling their current home. A McEnearney agent will work with homeowners to evaluate their options.

Consolidation and competition in real estate could mean consumers win, Redfin chief says

“D.C.-area consumers are savvy and want to understand and compare all their options, so it’s no surprise to see real estate companies responding to that desire and giving people new ways to buy and sell,” wrote John Monen, regional manager for RedfinNow, in an email. “We’re still in the early innings of this transformation in real estate. Many customers request an offer because they are curious, fully expecting a lowball offer, but then they tell us they are pleasantly surprised to see we’ll pay fair market value. Our fees are often the same or less than what the seller would pay to list with a real estate agent.”

iBuyers have been slow to enter the D.C. region because of the higher home prices in this area and the existence of older homes that require more than minor cosmetic work to resell, wrote Nick Ron, CEO of House Buyers of America, in an email. House Buyers of America, which has been in the D.C. market for more than 20 years, purchases homes directly from homeowners with a “hybrid high-tech and high-touch approach to real estate,” Ron wrote. The company has a design and construction operation to handle large and small renovations to add value before reselling properties.

“iBuyers have only been around the last few years and have never operated in a down market,” Ron wrote in an email. “Many are losing hundreds of millions of dollars in a hot market. How much will they lose in a down market? They will get stuck with a lot of houses on the market and they won’t know what to do with them. These iBuyers are not adding enough value to D.C. properties. If all you want to do is flip with limited repairs, you cannot sustain operations in a down market with picky buyers who want the nicer house with substantial renovations.”

Monen wrote that RedfinNow sellers are a mix of homeowners moving up who need the equity from a home sale to buy their next property, busy families with people working at home who prefer the convenience of a quick sale, relocating sellers and out-of-state investors.

Still, sellers who choose an iBuyer are a small part of the market, representing just 1 percent of all U.S. home purchases in the second quarter of 2021, according to a recent report by Zillow.

In the D.C. region, iBuyers represented just 0.1 percent of all purchases during the second quarter of 2021. The median sales price to an iBuyer in the region was $552,500 compared with an overall median sales price of $495,135, according to Zillow.

Read more in Real Estate:

Bank programs seek to widen the path to Black homeownership

One home, a lifetime of impact

The ‘heartbreaking’ decrease in Black homeownership