You may have heard the term "iBuying" used when describing companies like Zillow Group (NASDAQ:ZG)(NASDAQ:Z) and Opendoor Technologies (NASDAQ:OPEN), but do you know what it really means? If not, we've got you covered. In this Fool Live video clip, recorded on Nov. 9, real estate analyst Matt Argersinger breaks down the basics of iBuying investors need to know.
Matt Argersinger: Some quick bullets there, what is iBuying? Well, you've got iBuyers which are essentially quick instant buyers that come in, they'll make you a quick offer on your home, they'll close the deal pretty fast, they'll come and make some light repairs, and quickly resell it. Usually, a really quick turnaround, say less than two months. With the idea of making a profit based on the data they're employing, the algorithms they're using for their buying.
The four largest iBuyers at least as of a few weeks ago, Zillow Offers, Opendoor, Redfin (NASDAQ:RDFN) Now, Offerpad (NYSE:OPAD). I'm sure everyone watching today has heard at least two of those companies. In the second quarter, we don't have Q3 data yet, we will probably have it later this week. But in the second quarter alone, iBuying accounted for 15,000 home sales across the country. Now, that seems like a big number, but that's actually only 1% of all U.S. home purchases totaling about $5 billion.
That does however break the record by quite a margin that was set back in the third quarter 2019 of 10,400 homes. Of course, that was pre-COVID. iBuying was really taking off at that point, it slowed down in 2020, it's certainly bouncing back here in 2021. I thought this was interesting, 84% of homes sold to the largest iBuyers in Q2 were off-market. In other words, these were homes that the seller was able to interact with the iBuyer, whether that's Zillow or Opendoor, arrange a transaction without actually directly listing the property on MLS or in the market.
That's pretty fast, and the way you could look at that and say, well, the number of homes that enters to the market might not have been as big we're not for iBuying. They increased the pie of the overall home market. Then looking at the biggest markets for iBuying, by the way, this data is ironically all coming from Zillow about a month ago. Anyway, the biggest markets for iBuying, you've got Atlanta, Phoenix, Dallas, Charlotte.
What I think is interesting about those markets is that, you guys know this, they tend to be pretty homogeneous markets. You got a lot of homes that are built around the same time, big subdivisions. It's an easier way for iBuyers to go and transact homes in that market versus some of your older markets in the Northeast or even in the Midwest where homes were built at different times, algorithms are harder to deploy effectively, etc. Mentioned two months earlier, but 64-day average hold period for iBuyers. That's pretty quick if you think about selling your home, you sell it quickly, and then iBuyers take only 64 days to actually hold the property, do whatever repairs they think are necessary, and resell it.
Really quick turnaround for them and it's been good for them lately with the rising home prices. iBuyer homes sold in second quarter went for almost 10% more than their purchase price. That's good. That helps the margins obviously in this, of course, it does come during a period with rapidly rising home prices in most markets across the country.