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Zavvie report shows how tech firms are changing real estate

Report from zavvie looks at how iBuyers, Power Buyers, Listing Concierge services and Homeownership Acceleration programs are changing how homebuyers and sellers do business

Real estate software and technology company zavvie has replaced the traditional Seller Preference Report with its Modern Marketplace report, the company announced Tuesday, to reflect the changing landscape of proptech and fintech options now available to homebuyers and sellers.

The report, also released Tuesday, examines the changing U.S. real estate landscape during the first quarter of 2022 by reviewing four major categories of technological services: power buyers, iBuyers, listing concierge programs and homeownership accelerator programs.

According to zavvie, from Q1 to Q3 2021, power buyer transactions grew threefold, before stabilizing in Q4 into Q1 2022. But the average sales price for power buyers increased between Q4 2021 and Q1 2022 as more high-priced “buy before you sell” transactions occurred, with the average purchase price coming in at roughly $750,000 during the first quarter of 2022. Meanwhile, the offer acceptance rate for power buyers held steady in the 35-40% range, as it has for the past year, with consumer fees ranging between 0 and 3%.

Overall, power buyers were responsible for some of the largest growth recorded in the report. Knock reported a 307% year-over-year increase in transaction volume; UpEquity recorded annual revenue growth of 500%; EasyKnock saw a 200% yearly increase in its 2021 customer base; and Homeward reported 375% year-over-year growth in homes under contract.

iBuyers also showed strong growth in 2021 and the first quarter of 2022, according to the zavvie report. In 2021, Opendoor and Offered accounted for 120,000 transactions, or approximately 1.3% of the U.S. market, and during the first quarter of 2022, purchases by all iBuyers were nearly two times that of the first quarter of 2021. However, the report notes institutional buyers, such as Amherst, Invitation Homes, Tricon and First Key collectively purchased roughly one out of every 20 homes sold in the country in 2021, or roughly 5% of the market.

But as more listings have dropped in price, the average iBuyer purchase price and average offer amounts also dropped during the first quarter of 2022, going from a peak sale-to-list price ratio of 104.1% in Q2 2021 to 98.7% in Q1 2022. The report attributes some of the change to Zillow winding down its iBuying program.

The report shows iBuyer offer acceptance rates fell during the first quarter of 2022 from the first half of 2021, dropping from 5.4% to 3.2%.

As for listing concierge services, activity rapidly ramped up during the first quarter of 2022. According to the report, the average renovation project cost $43,000, with some concierge services completing renovations of $200,000 or more.

Finally, homeownership accelerators, more commonly known as rent-to-own firms, saw record levels of sales and capital investment during the first quarter of 2022, with Divvy, HALO and Landis, raising over $1.8 billion. In addition, Home Partners of America was acquired by Blackstone Group in June 2021 for $6 billion.

“Not too long ago, options for home sellers and buyers were scarce,” said Stefan Peterson, zavvie chief data officer and co-founder. “Sellers had one option: List on the open market. Buyers had two: Pay cash or get a traditional mortgage loan. Today, the landscape has been modernized and is radically different.”

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