SYLVIE DOUGLIS, BYLINE: NPR.
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ADRIAN MA, HOST:
Welcome to THE INDICATOR FROM PLANET MONEY. I’m your host, Adrian Ma.
STACEY VANEK SMITH, HOST:
And I’m Stacey Vanek Smith.
MA: You know, Stacey, selling your home can be a real pain.
VANEK SMITH: Oh, yeah.
MA: Just listen to some of these frustrated home sellers.
UNIDENTIFIED PERSON #1, BYLINE: Tell me about it. I just spent hours cleaning and making repairs to get my house market-ready.
UNIDENTIFIED PERSON #2, BYLINE: I just had a buyer pull out because of financing, and don’t get me started on agent fees.
MA: Oh, no. There’s got to be a better way.
VANEK SMITH: And now there is a better way – sell your home to an iBuyer.
MA: The I is for instant. We use algorithms to calculate your home’s worth and make you an offer so you can sell your home for cash in a matter of days.
UNIDENTIFIED PERSON #1: Wow, that’s amazing. Thanks iBuyer.
UNIDENTIFIED PERSON #2: Wow, that’s amazing. Thanks iBuyer.
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VANEK SMITH: Does it come with ginsu knives? That is the question.
MA: (Laughter).
VANEK SMITH: So iBuyers – these are companies like Opendoor, Redfin and Zillow. And they started doing this a few years ago – buying homes. For the home seller, the idea was that this would be fast and easy. And for iBuyers, I mean, this seemed like a slam dunk. After all, they had all this data on, like, what homes people were searching for, what neighborhoods people were interested in, what homes people were clicking on and liking. And, you know, they also knew, like, regional data and all these trends. They had so much information.
MA: And so they could make these really precise calculations on how much they should pay for a house and still turn a profit.
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MA: So today on the show, the mighty algorithm takes on the housing market. What could possibly go wrong?
iBuyers – basically, they buy homes online, throw on a coat of paint and turn around and sell them. This industry really got started around 2014 and took off with companies like Opendoor, Zillow and Offerpad. But Gregor Matvos of Northwestern University – he says they only concentrated in certain places, like Phoenix, Atlanta and Las Vegas.
GREGOR MATVOS: They are very present in markets in which you have, let’s say, standardized housing in a very, fairly narrow price range. …….