© Provided by The Motley Fool Can iBuyers Win in a Hot Real Estate Market?
The real estate market in the United States is very hot right now, and it might seem like that would be a bad thing for iBuyers like Offerpad and its peers. After all, one of the biggest advantages of selling your home directly to a company is that you can control the timeline and get an all-cash offer — things you can likely do right now on the open market.
Despite the less-than-ideal conditions for its business, Offerpad, which is set to go public through a SPAC merger with Supernova Partners Acquisition (NYSE: SPNV), recently reported excellent growth in its second quarter. In this Fool Live video clip, recorded on Aug. 23, Offerpad CEO Brian Bair sits down with Fool.com contributor Matt Frankel, CFP, to discuss how iBuying can thrive in any real estate market — including this one.
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Matt Frankel: I want to ask you one concern that I have. As a real estate investor myself, I’ve bought and sold probably a dozen homes in the past five or six years. This is the hottest real estate market I’ve ever seen.
Brian Bair: Me, too. By the way, it’s hot, yes.
Frankel: It’s a very uniquely hot market, it’s not the typical hot market you’re seeing. This would seem to me like this might not be an ideal environment for iBuying. In other words, one of the biggest advantages is that you can control the time frame as an iBuying customer. If I listed my house tomorrow, it would sell tomorrow. It seems like the market has taken away that advantage, so how is the business done so well?
Bair: I can tell you know real estate because, most of the time with investors, what I hear is, they think that the reason why Offerpad is successful as we are, is because of the current market conditions, right. You get a lot of home price appreciation, a lot of those things, anything you buy. But to your point, this has been the most difficult and challenging market we have been in. Because really the reason why Offerpad was built, was the traditional process, normally 91 days to get an offer on your home going through the entire process. A lot of those pain points that have been there, when someone can put their house in the market for a weekend and get multiple bids, you don’t have that servicing that can pay Offerpad, not nearly is there. There’s been a lot of love given that from how we had a profitable quarter, a lot of really cool things that we did. But the stuff that I’m probably the proudest of, is how we ramped up our acquisition volume during this time, right? Because anything we acquire is going to your point, it’s going to perform well. But what I was really excited about is, how through the most difficult challenging environment for Offerpad to exist in, how relevant our product still is. Because what consumers understood was, yes, they can get an offer on their home and they can get multiple bids on their homes, but there’s still that certainly and control that they don’t have and for example, what doesn’t get talked about enough is people get to pick their closing date when they choose and they can move that closing date, I want to move it up, I want to move it back. Even when they sell their house the traditional way, they don’t have that luxury. They still happen on somebody else’s schedule. Our acquisitions quarter after quarter were up phenomenally and even year over year. That was the biggest highlight of the quarter for us. But you’re right, each, the real estate market is always doing something, it’s either up, down, it’s always doing something. This right now there’s a lack of supply and way too many buyers. But the way that we’ve navigated this, and as the market starts to normalize or adjusting the other way, we’re going to be really well positioned to handle that.