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Homebuyer and seller demand for new products that reduce friction in the homebuying process remained high last year — even as just about everything else went south.
That’s according to the software marketplace zavvie, which released a report on Tuesday that it says confirms products affiliated with its services remained in high demand in 2022.
The performance of various companies in the “Modern Marketplace” point to demand from buyers and sellers for innovative products that make real estate transactions easier and more certain, even in a shifting market, the report reads.
“It’s clear that the popularity of these new solutions for homesellers and buyers continues to grow,” zavvie Chief Data Officer Stefan Peterson said in the report. “Real estate brokers and agents know that in today’s market, to win over the customer, they must have these vital tools in their kit — or they will lose out to a competitor who does.”
The marketplace is basically a suite of tools for agents and brokers to share with clients looking to strengthen offers, make listings more attractive and broadly wanting more options to either buy or sell their homes.
The company shared various metrics from firms affiliated with its marketplace in a year that saw home sales fall from 6.5 million in 2021 to just over 4 million in 2022.
The power buyer EasyKnock grew its revenue by 89 percent in 2022 compared to the year before. UpEquity saw its buy-before-you-sell business quadruple in that same time frame, the report said.
Revive, which offers pre-sale renovations and an instant sale product, grew by 75 percent each quarter.
At a time when total home transactions dropped by 38 percent in 2022, power buyer transactions grew by 33 percent, according to the report.
While the middle of last year brought a rapid shift from the need to give homebuyers a stronger offer in a hyper-competitive market, power buyers shifted to give sellers more ability to buy a new home before selling their existing one.
“Instant Sale tended to become an option for sellers not getting offers on the open market, rather than the convenience, certainty, and speed they provided during the stronger seller’s market,” the report notes.
The year wasn’t without its challenges. Several companies on the platform underwent extreme challenges as mortgage rates rose and the market quickly shifted closer to a balance between buyers and sellers.
“The power buyers took their lumps as well, with Flyhomes, Homeward, Knock, and Orchard all announcing layoffs,” the report notes. “Ribbon made the extra step of suspending all operations until the spring of 2023.”
Yet some of that represented a shift from companies building for a buyer’s market to those building for a more balanced market.
Homeward CEO Tim Heyl told Inman in December that his firm still grew 250 percent last year despite undergoing two rounds of layoffs in 2022.
He said at the time there were strong signs that consumers wanted more certainty in any type of real estate market.
“We will still get to a place where offers across the board become non-contingent through things like Homeward’s cash offer. But it’s just going to take a lot longer because the necessity is no longer there,” Heyl said at the time. “Real estate is cyclical. In buyer’s markets, you’re going to have sellers who need certainty. In seller’s markets, you’re going to need buyers who need power and confidence in their offers. In all of those markets, you’re going to have the age-old problem of sellers need to sell.”
The price of homes using a power buyer service peaked at $683,000 in the first quarter, nearly double the national average of $348,000. They settled at around $500,000 by year’s end, the report reads.
Consumers were paying between 0 percent and 3 percent of the home’s list price for those services, which effectively remove contingencies.
Institutional investors bought three times as many homes as iBuyers, which included just Opendoor and Offerpad by the end of the year. Both sets of institutional buyers slowed acquisitions after the second quarter.
Cash offers also remained strong. Forty percent of all requests on the Modern Marketplace were for instant cash offers, which according to the report was an indicator of strong consumer demand even in a slower market.
“With these new buyer and seller solutions, agents can help customers get unstuck, creating new inventory by having conversations about how these innovations work and the benefits they offer,” Peterson said.
