Opendoor and Offerpad pioneered the iBuying model, allowing sellers to receive instant cash offers and synchronize the sale of their homes with the purchase of new ones. However, this model is capital intensive and operates on low margins, making it vulnerable without a steady housing market. After the initial rise of the market and interest from major real estate players, the pandemic disrupted this model, leading to volatility and challenges in pricing as seen when Zillow closed its iBuying program.
This business model is highly capital intensive, operates on low margins, has long transaction times and requires high volume to reach breakeven.
Major players acted accordingly, as Zillow, Redfin, Realogy (now Anywhere) and Keller Williams launched their own versions of iBuying between 2017 and 2019.
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