In recent years, a new trend in real estate has emerged – that of “iBuyers,” online companies that allow home sellers to go online and get a cash offer for their house. This may sound convenient – but is this right for you?
In this article, we’ll discuss the pros and cons of using iBuyers to sell your home – and show you why using one of these services may not always be the best option for you. Let’s get started now.
What Are iBuyers? Understanding This Trend In Real Estate
iBuyers are a new type of home buying company which buy homes directly from sellers in cash. A few of the most well-known iBuyers include companies like Opendoor, Zillow Offers and Offerpad, but there are many other smaller companies using this business model, too.
The way it works is simple. You log onto one of these websites, fill out an application and some information about your home, and do some paperwork. Then, you get an almost immediate offer for your home’s value – in cash. Then, if you like the offer, you accept it. After a few formalities and some more paperwork, the home will be sold.
The goal of iBuyers is to purchase your home at below market value, and resell it quickly – often within 60-90 days. That’s how they make a profit. In return, they offer great convenience and flexibility.
In a world where you can do almost all of your shopping and business online, it makes sense that there would be companies who do the same thing for the real estate industry, and iBuyers certainly have their benefits. But they have their drawbacks, too – so let’s take a look at both the pros and cons of iBuyers now.
The Pros Of Using An iBuyer
iBuyers like Opendoor are extremely successful, and there’s a good reason that they are so popular with some homeowners. Here are a few of the benefits of choosing an iBuyer.
Extremely convenient – It’s hard to beat the convenience of selling a home online for cash. All you need to do is fill out an online application and some paperwork. You can do the entire transaction on your computer from the comfort of your own home – so if convenience is a priority for you, iBuyers certainly have an edge.
Quick turnaround times – On the traditional real estate market, closing on a home can take 40-50 days – not including the time it takes to show and sell the home. Most iBuyers, on the other hand, will make an offer and close within 10-14 days. If you really need to sell a property fast for some reason, due to an unexpected change in your job or personal life, an iBuyer will be a great option for selling your home quickly.
No need for inspections or rehabbing – If you do not have the patience to deal with the process of rehabbing your home, painting, hiring inspectors, and the other tasks associated with putting your home on the market, an iBuyer could be a good choice. Unlike most home buyers, they’re happy to purchase homes in “as-is” condition, even with cosmetic issues. This may vary based on the company you work with, though – some iBuyers will only accept homes in perfect condition.
Due to these benefits, there are certainly some people who will benefit from using an iBuyer, particularly if convenience and a fast sale time are a priority.
Source: “Selling your home to an ‘iBuyer’ could cost you thousands” Marketwatch.com
The Cons Of Using An iBuyer
Using an iBuyer has its advantages, but it has its drawbacks too – and for most home sellers, these negatives may outweigh the positives. Let’s take a look at these now.
Higher transaction fees – The cost of doing business with an iBuyer can be quite high. Opendoor, for example, has transaction fees that are usually around 7% of the price of your home – but can be as high as 13%. That’s much higher than the transaction fees, including closing costs and commissions, included in a traditional real estate sale.
Homes sell for less, compared market value – The numbers tell the facts. You don’t just lose out on money thanks to transaction fees. Convenience also has its price. iBuyers will usually make you a lower offer on your home, compared to the value of your home on the real estate market. According to some sources, the average offer from an iBuyer company like Opendoor is usually about $15,000 below market value – and in some cases, it can be even lower.
Real estate agents can sell your home quickly, too– If you choose the right real estate agent who can work with you, price your home properly, and emphasize its beauty and positive traits, you can easily appeal to buyers and close on your home quickly – for a much better price, compared to using an iBuyer. Not only that, but you’ll benefit from a personal touch, and you’ll be able to have someone to turn to for help throughout the selling process – and for advice when you’re buying a new home.
But remember, you have to research the right real estate agent who is willing to put in the work for you, which takes intentionality, time and effort; and then you often have to be involved and take their direction. This negates the convenience factor, in most cases.
When you use an iBuyer, you’re trading equity in your home for convenience – which may not always be the best idea. We recommend that you think carefully about your situation before deciding if using an iBuyer is right for you.
The Bottom Line? Using an iBuyer Could Cost You, but be a Great Convenience – So Consider Your Unique Circumstances Before Doing So!
We won’t say that it never makes sense to use an iBuyer. If you really need to get rid of a property fast – due to moving out of the country, quick job relocation, a sudden change in your personal life, or another such reason like inheriting a property you don’t have much time to deal with – an iBuyer could be a great option.
But if you can take a little bit longer to sell your home, you can usually get a much better price with a real estate agent. Selling your home to an iBuyer means you’ll probably get less than it’s really worth – and that’s probably not a good thing for you.
So take your time and consider your own personal circumstances – in most cases, if you are not in an urgent situation, you’ll find it makes more sense to turn to a real estate agent.