Raleigh, Durham, N.C.-based iBuying remains strong in its exit from Zillow


Nine months after Zillow discontinued its instant purchase operationsother major iBuying firms continue to have a strong presence in the Triangle housing market.

Sales records from county registry offices show that top iBuyers like Opendoor purchased more homes in the area in 2022 compared to the same period last year, and their footprint is even larger in larger counties like Wake and Durham.

Instant Buyers use pricing algorithms to guarantee cash offers to homeowners. The companies then usually make minor repairs to the house and try to flip it for a profit. iBuyers emphasize the convenience of their approach: sellers do not need to find a real estate agent, plan their home, welcome visitors to open houses, negotiate or wait for a bank appraisal.

But many real estate agents don’t like iBuyers and argue that sellers miss out on better deals when they opt out of the open market. This is exactly what hundreds of sellers have done.

As of July 27, iBuying companies owned 5.2% of active or prospective home listings in the Triangle MLS region, which covers eight local counties. The percentage was higher in Wake (7.4%), Durham (11%) and Johnston (9.5%) counties. The figures were provided to The News & Observer by John Wood, a Realtor with Re/Max United in Cary.

Opendoor is by far the largest iBuyer in the region. The San Francisco-based company, with a market capitalization of $3 billion, began buying homes in North Carolina in 2017. Last summer The N&O and Charlotte Observer found real estate technology company was purchased more Wake County homes than any other during the pandemic.

In the fall, online real estate giant Zillow shut down its instant-buy operations after reporting significant financial losses in the sector.

This left Opendoor as the clear industry leader. In Wake County, it remains one of the largest corporate owners of single-family detached homes, with public records showing the company owns about 300 homes in the county.

In 2021, the company was involved in three times as many home deals as the second-largest iBuyer, Arizona-based Offerpad, according to collected data real estate technology strategist Mike DelPrete.

According to DelPrete, iBuyers participated in 1.3% of home transactions last year, but that rate was much higher in Charlotte and Raleigh, which were among the top 20 iBuying markets in the country.

Convenience for the price

Over the past three months, Opendoor said it has purchased the most homes in the Triangle area in the ZIP codes of 27526 (Fuquay-Varina), 27587 (Wake Forest) and 27703 (Durham). In the past year, both Opendoor and Offerpad have pushed further into markets like Burlington, Fayetteville and Asheville.

In late June, Angela and Reed Zupancic sold their five-bedroom, two-and-a-half-bath home in Knightdale to Opendoor. IBuyer has been on the couple’s radar for some time. They saw several neighbors selling Opendoor, and the flood of mailings they received from the company was hard to ignore.

After filling out an online survey, the Zhupanchis received a preliminary offer that was well above the $279,000 they paid for the home in 2018. They gave Opendoor representatives a virtual tour of the property. As a result of the external review, the proposal was announced officially.

“It was very smooth,” said 28-year-old Angela Zupancic. – We never had to leave for the weekend or rearrange our schedule for an open house day.

The house sold for $481,000. Today, Opendoor is now lthe property is valued at $495,000.

Angela Zupancic said she was told by several realtors in her family that $481,000 was a great price for the home. But several Triangle agents said sellers like the Zupancic family typically don’t get top dollar when they work with iBuyers.

“I tell my clients that the only reason someone would choose iBuyer over the traditional way would be convenience,” said Seun Dare, a Realtor with Keller Williams Realty in Cary. “Honestly, with iBuying, you’re leaving money off the table.”

Wood said that “an open market will only give them more money than iBuyer.”

Although iBuying has mushroomed over the past five years, Wood doesn’t believe it will change the home-selling landscape in the long term.

“I think it’s a lot of noise,” he said. “If we’re talking about less than 5% of the market, that’s probably not as big an impact as advertising dollars would have you believe.”

Uncertain future for iBuyers

Opendoor was founded in 2014 and went public last July. Its shares topped $34 in February, but have since fallen below $5 a share.

In March, the North Carolina Real Estate Commission (NCREC) suspended the company’s license in the state for 18 months, citing problems with three properties that Opendoor sold. Issues included non-disclosure of property information, a permit issue and false advertising of a home with an outdoor pool and hardwood floors.

NCREC suspended the suspension shortly after it was issued. John Enberg, general manager of Opendoor, which is based in the Triangle, said his company is working with the state to ‚Äúremediate disciplinary action through continuing education. As a result, Opendoor Brokerage’s license remains active.”

Experts like DelPrete say iBuyers like Opendoor face serious challenges beyond government regulators.

“The questions surrounding their business model remain the same: Can they become profitable in a market that is not driven by record high home prices?” he said.

Amid rising interest rates and broader economic uncertainty, the once-buoyant local housing market in the Triangle has cooled slightly. From April to June, the average volume of home sales increased by only 1.6%, which is a far cry from past price spikes. Realtors like Dare and Wood noted that homes that recently received 10 to 15 offers are now likely to attract several.

But Enberg said that in countries with uncertain economies, home sellers will want the certainty of iBuying. However, traditional real estate agents emphasize that there is nothing certain about this forecast.

This story was produced with funding from a coalition of partners led by Innovate Raleigh’s Independent Journalism Grant Program. N&O maintains full editorial control over the work.

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Brian Gordon is an Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He writes about jobs, startups, and all the big tech things that are transforming the Triangle.

Raleigh, Durham, N.C.-based iBuying remains strong in its exit from Zillow

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