Which Real Estate Stock Will Win the iBuying Wars?

iBuying, or the practice of a company buying houses directly from sellers and then selling them to buyers themselves, is widely viewed as a massive market opportunity. But which real estate company will be the biggest winner? Will it be an established player like Red woman (NASDAQ: RDFN) or Zillow group (NASDAQ: Z)(NASDAQ: ZG)? Will it be a company that focuses on iBuying like Open-door technologies (NASDAQ: OPEN) or Offerpad?

In this Fool Live video clip recorded on June 29th, Millionacres real estate analyst Matt Frankel, CFP, and Millionacres editor Deidre Woollard discuss which iBuying player is the most promising.

Matt Frankel: Who do you think has the big advantages? Opendoor is the greatest. I’ll just give you a few numbers. Of the three big ones I know, Opendoor, Zillow, and Redfin. Opendoor sold 2,500 apartments in the last quarter. That’s a pretty good size number. Zillow was 1,422, Redfin was 171. Big difference, big gap between number two and number three.

Deidre Woollard: Yes.

Frankel: Do you think any of them get any closer to the secret sauce there?

Wool hair: I hate to say this, but I still have a feeling Zillow will be next, in part because of what real estate agents hate the most: the Zestimate. I mean, when you think about it, they spent years preparing for it, not on purpose I think because the Zestimate came out so long ago, but they had to figure that out long before anyone else.

Frankel: For a while the zestimate was pretty inaccurate.

Wool hair: Yes.

Frankel: That is also put in a friendly way. For example, my home’s zestimate fluctuated by $ 50,000 over the course of a week.

Wool hair: Oh my God.

Frankel: I think it’s a newer technology too.

Wool hair: Yes.

Frankel: But they have so much data that they can use to perfect this. Zillow has 225 million unique monthly visitors. Their website has been visited 2.5 billion times, they have over 150 million homes in their database, that’s a lot of price data they get. I think Zillow’s competitive advantage is that in certain markets they are starting to test the Zestimate as an offering to really automate the process. You go to Zillow’s side, look up the value of your house, boom, there is your estimate, there is your offer, there you can get all the money immediately. That could put traditional home sales out of business if they perfect that. When it gets that easy to sell your house because right now my zestimate is pretty good. I mean, it’s up about 25% in the last year. If I could sell my house for that in one click, if I wanted to sell my house, that would be a pretty tempting offer. People visit Zillow’s website anyway, and I see they really get a competitive advantage there as they grow. Nobody visits Opendoor’s website unless they want to sell their home.

Wool hair: True.

Frankel: I mean, nobody goes to Redfin Now right now unless they want to sell their house or have been recommended by a Redfin agent. Zillow only has this traffic on his website anyway. I mean there is room for more than one winner in the room. Let’s be very clear. This is a huge market opportunity. But I could see Zillow run away from everyone else if they got it right.

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