Remember Zillow Offers? OpenDoor's promise to buy any house? The iBuyer revolution that was supposed to transform real estate?
It failed. Spectacularly. Zillow lost $881 million and shut down the program entirely.
But something interesting is emerging from the wreckage—and it's not what the industry expected.
What Killed iBuyers
The iBuyer model had a fatal flaw: they were trying to make money on appreciation in a market that could go either direction.
Their model:
1. Buy house at 90-95% of market value
2. Hold for 30-60 days
3. Sell at 100%+ of market value
4. Profit on the 5-10% spread
When the market was rising 15% annually, this worked. When it flattened, they were holding depreciating inventory with carrying costs eating their margins.
Zillow's algorithm famously overpaid for thousands of homes in 2021, leaving them holding bags worth hundreds of millions less than they paid.
What's Killing Traditional Wholesalers
Traditional wholesaling has a different problem: trust.
The typical wholesaler playbook:
1. Market "We Buy Houses" to distressed sellers
2. Get property under contract at 60-70% of value
3. Tell seller it's a "fair cash offer"
4. Flip contract to investor for 10-15% markup
5. Never disclose the true market value
Sellers are wising up. Google "is [company name] legit" and you'll find horror stories of sellers who discovered they left $50,000+ on the table.
The information asymmetry that wholesalers relied on is disappearing. Sellers can check Zillow. They can get multiple offers. They can see what houses in their neighborhood sold for.
The New Model: Transparent Partnerships
What if instead of hiding the math, you showed it?
That's what we're building at Local Home Buyers USA:
The Old Way:The partnership model typically nets sellers 15-30% more than a traditional wholesale offer. Yes, they wait 45-60 days instead of 14. But for most sellers, that extra $30-50K is worth it.
Why Transparency Works
Counter-intuitive: showing sellers how we make money actually increases conversion.
When you hide the math, sellers assume the worst. "If they won't tell me, they must be screwing me."
When you show everything—the ARV estimate, the repair costs, your profit margin, the alternatives—sellers think "Finally, someone honest."
- In our first 6 months:
- Zero sellers backed out after seeing our methodology
- 34% of leads who initially wanted cash offers switched to partnership after seeing the numbers
- NPS of 89 from closed sellers
What This Means for 2026
The winners in 2026 real estate investing will be:
Technology-enabled operators who can process deals faster and cheaper than traditional players. When your overhead is $2K/month instead of $20K/month, you can pay sellers more and still make money. Transparent players who build trust through information sharing rather than information hoarding. The arbitrage isn't hidden knowledge anymore—it's speed, convenience, and certainty. Flexible models who can meet sellers where they are. Some need cash in 7 days. Some want maximum value. The best operators offer both.The traditional "we buy houses" sign-spinner who makes money by tricking distressed homeowners? That business model has maybe 2-3 years left.
The Consolidation Coming
Right now, real estate investing is fragmented. Thousands of small operators, each doing 1-10 deals per year, using manual processes and generic tools.
That's about to change.
The operators who build scalable technology will start acquiring the ones who didn't. We'll see the emergence of regional and national players who combine:
If you're a small operator reading this: the time to build your technology moat is now, not when the consolidation starts.
We're building the tools we wished existed. Check out our open-source valuation engine or see what we're working on.