Everyone’s rushing to be an iBuyer — except for Realtor.com

It was February 2019 when Zillow co-founder Rich Barton reclaimed the CEO role in dramatic fashion, betting the future of the $8 billion company on instant home-buying.

In the months since, the Seattle-based listings giant has made good on its promise to go head-to-head with competitors ranging from Opendoor and Offerpad, to Keller Williams and Realogy.

But Zillow’s chief rival Realtor.com has remained conspicuously absent from iBuying, raising eyebrows among analysts and industry observers.

“I’m completely befuddled as to why they’re not in this game at all, not even a little bit,” said Rob Hahn, a real estate analyst at 7DS Associates. “It seems like they’re completely missing the boat.”

Indeed, public comments from News Corp., which acquired Realtor.com parent Move Inc., in 2014, have ranged from uninterested to skeptical.

“It’s not an area we are particularly interested in,” Mike Florin, News Corp.’s head of investor relations, said Dec. 10 at a UBS investor conference at the New York Hilton. “It’s much more capital intensive and not the type of business we are focused on,” he added.

Instead, Florin said the biggest part of Realtor’s revenue comes from the buy side. For that reason, he said the company aims to improve buyer leads through a new performance-based tool that vets buyers before matching them with qualified agents. “It’s early days,” he said, “but so far so good.”

Despite Florin’s stance, iBuyers are gaining ground by almost any measure. According to Redfin, iBuyer sales nearly doubled to 3.1 percent in 18 markets during the third quarter, compared to 1.6 percent a year prior. Industry sources indicated the rise is skewed by Zillow’s entrance into the market over the past 18 months.

Since last year, Zillow has raised $1.1 billion to build up its iBuying game.

During the third quarter, the company bought 2,291 homes and sold 1,211. The company said more than 80,000 homeowners requested an offer from Zillow during the quarter.

Not betting on iBuying would be “an existential threat,” said Barton, a Zillow co-founder. “If it works and we don’t do it,” he told The Information in October, “we get displaced as the marketplace, theoretically.”

Industry observers said the fact that Zillow views iBuying as a do-or-die phenomenon makes Realtor’s indifference that much harder to understand.

“How do you have a situation where it’s an existential threat to one portal, but the other is twiddling their thumbs at the back of the classroom?” asked Mike DelPrete, a scholar in residence on real-estate technology at the University of Colorado who studies iBuyers. “I don’t think [Realtor] needs to be buying and selling houses directly,” he added. “That’s not what this is about, and that’s probably a bad idea for them.”

But he argued that portals like Zillow and Realtor are where almost all buyers and sellers begin their searches. In fact, his research found that up to 40 percent of sellers request an instant offer before listing their homes on the open market. “If I can go to Zillow and do that, and I can go to Realtor.com and I can’t, that’s a huge difference,” said DelPrete.

In an effort to make sure iBuying doesn’t pass them by, several residential brokerage firms have joined forces with iBuyers, including Redfin and Opendoor and Keller Williams and Offerpad. This year, Realogy launched an iBuyer program called RealSure that’s funded by Home Partners of America, which is backed by BlackRock and KKR, meaning the home purchases aren’t on Realogy’s balance sheet.

RealSure gives sellers a cash offer that’s good for 45 days; during that time, the sellers can accept the offer or try to beat it on the open market. “We remain skeptical about using our capital to fund a standalone home buying and selling model,” CEO Ryan Schneider said during a recent earnings call. At the same time, “There is real power to the consumer certainty and flexibility iBuying provides,” he said. “We have found it to be very helpful for our agents to win listings.”

News Corp. doesn’t share that sentiment. During a Nov. 7 earnings call, CEO Robert Thomson said the company has no interest in entering “the house flipping, distressed sale business.”

Observers, however, said Thomson may be missing the point. “It’s not house-flipping, that’s the thing,” Hahn said. If you think it is, he added, “then you don’t understand the business.”

DelPrete added that Realtor could be forgoing valuable seller leads generated by an iBuying program. (Currently, Zillow and Realtor focus on buyer leads with agent advertising programs.) “When somebody requests an offer on their home, but decides not to sell it to an iBuyer, that’s a valuable lead,” he said.

But Jared Kessler, CEO of EasyKnock, which buys homes and rents them back to the seller, said brokerages and aggregators should not get tangled up in iBuying. “I personally believe that aligning yourself with an iBuyer is like Best Buy aligning themselves with Amazon,” he said. “It’s helping put themselves out of business; I don’t understand why Zillow has done it.”

EasyKnock, which raised $215 million in May, said most iBuyer business models carry considerable risk. “iBuyers are serving a market with people who have a high sense of urgency,” he said. “Getting into a recession, as you have more competition going in, the person that wins the bid eventually is going to be the loser. When the housing market drops, it won’t be pretty for iBuyers.”