In 2008 funding for “Property Tech”, or what’s more commonly referred to as prop-tech, accounted for a mere 20 million dollars. In 2018, 10 years after the financial crisis, that number has grown to $4 billion. The result of this boost in financing? A new wave of companies deploying innovative business models and new technologies to the real estate sector.
A segment of these companies that have come to prominence of late are the iBuyers. In the real estate sector, these iBuyers have become particularly impactful in changing the dynamics of buying and selling homes. Divvy sometimes competes against iBuyers to buy homes from customers and has even purchased homes directly from iBuyers.
Because these iBuyers have become so common, we wanted to take a moment to compare their businesses with ours so that you the customer can clearly understand the current industry landscape.
How iBuyers work
iBuyers have created a new way to buy and sell homes. These companies utilize technology to value a home and immediately generate an all-cash offer. This process can shorten the home buying timeline by weeks and therefore has become a popular way for sellers to get cash quickly.
This model is completely new to the industry and therefore is currently dominated by a handful of companies.
In aggregate, these companies accounted for approximately 0.2% of all real estate transactions last year. However, in established markets such as Phoenix, iBuyers make up as much as 6% of the total transaction volume. This difference shows that there is still significant room and opportunity for further growth. It’s an exciting new time for the market.
But now for the big question…
Is Divvy an iBuyer?
And the answer is…yes and no.
Much like an iBuyer, Divvy uses technology to value homes and ensure that we are putting down the most competitive offers on behalf of our customers. We also have the same ability as an iBuyer to make an all-cash offer on the spot, raising the chances of success that we will win homes for our customers. Most importantly, we move just as quickly as iBuyers, allowing our offers to close with speed and efficiency.
What distinguishes Divvy from the standard iBuyer is our business model. Divvy is a gradual homeownership program that allows you to purchase a percentage of any home (between 2-10%) and purchase more ownership of the entire home over time. Most iBuyers own the home for only a matter of months. The Divvy business model is instead centered around creating a partnership with the buyer to find the perfect home and then working with that customer to transition from renting to owning.
At Divvy, we are proud to offer the same level of sophistication and ingenuity as an iBuyer while staying directly in the customer’s corner. Rather than using technology to buy low and sell high, we are buying low and then translating that benefit directly to the customer.
It’s a very exciting time for the real estate industry. With a great span of technology advances behind us and even more on the horizon to look forward to, Divvy is implements these developments to offer the best home buying experience for our many amazing customers. With Divvy, homeownership is more than a dream: it’s a journey and reality. We look forward to helping you make your way.