Rapid digitization and remote management are changing the way big data buys, sells, and converts single-family homes into rentals, according to a new blog post by David Luberoff of the Center for Shared Housing Research at Harvard University.
Luberoff said the impact of these changes, particularly whether they’re expanding opportunities for renters and homebuyers, or whether they’re actually crowding out first-time buyers and driving up prices for renters, is an understatement. Future JCHS Symposium.
This surge, almost predictably, is led by a surge in venture capital funding, which grew from $2 billion in 2016 to $19 billion in 2021.
“Real Estate Portal ( Jiro, Truria, redfinWhen realtor.com) first appeared almost 20 years ago and changed the way people look for homes, but ultimately it’s still common to rely on traditional brokers to handle those sales. This model has been used by iBuyers (e.g., open the door, offer pad, and for a while, Zillow) aimed to replace brokers by providing homeowners with fast, reliable, and simple offers based on automated valuations. “
“Following these, ‘power buyers’ (Homeward, Knock, Flyhomes, Ribbon, Orchard, etc.) also tried to kick out the brokers, but they gave cash-strapped homeowners wanting to move out with loans and guarantees. I did so by providing a purchase contract, but I don’t have the cash needed to buy a new home. Both iBuyer and Power Buyer have raised significant VC funding, but are still skeptical because buying and selling a home is a “unique and highly personal process,” unlike other transactions that take place online today. It has not secured a large share of the market. “
Seeing this problem, some entrepreneurs and investors have shifted their focus to building a “technology-enabled brokerage firm” ( compass needle When eXp Realty). Although their strategies vary, portals, iBuyers, power buyers, and technology-enabled intermediaries all generate transaction-related revenue (such as billing prospects, sales commissions, and profits from resale of homes) as well as mortgages and Connecting sellers and buyers to monetize all aspects of the home buying process, including providing title insurance.
click here To see what else JCHS has included in the blog post.
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