What Can You Expect From Selling to iBuyers?
We’ve been receiving a lot of feedback about iBuyers lately. Today I’ll discuss what an iBuyer is and what advantages and disadvantages there are to working with them.
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What is an iBuyer? You’ve likely have heard of at least a few iBuyers, like Offerpad, Zillow Offers, and Opendoor. They’re companies that offer to pay you in cash for your home as-is. While there are some advantages to working with iBuyers, there are also some drawbacks to consider.
The first advantage to working with iBuyers is that they provide both flexibility and convenience. If you’re like a lot of people, the idea of preparing your home to sell can be overwhelming. There are improvements to make, you need to declutter, and there’s a long list of other projects to accomplish before your home is truly market-ready.
If that’s the case for you, you can have one of these iBuyers come to your home to examine it, and based on its condition, they may submit an offer to you. Most of these companies will allow you to move out anywhere between closing day and up to 30, 60, or 90 days after closing. There is a fee associated with that, but the iBuyer method is still flexible since you don’t have to worry about appraisals or many of the competitive aspects of selling in the traditional market.
On the other hand, when you work with an iBuyer, you’re not likely to get the same amount of money for the home as you would if you had done the work to prepare it for the market and then listed it. We’re currently in a really good market, so if you’re looking to get the most money possible, listing on the traditional market is the way to go.
iBuyer companies charge a convenience fee that ranges between 7% and 13%, depending on your specific property. When you compare that to the typical real estate agency fee of 6%, that convenience fee could mean a world of difference in your return.
When you work with an iBuyer, you’re not likely to get the same amount of money for the home as you would if you had done the work to prepare it for the market and then listed it.
Further still, the goal of an iBuyer is to make money when they sell your home. They’ll purchase your home as-is, sure, but they’ll turn around and make all the repairs that you didn’t and then resell the home for a profit. If you have the means and ability to invest a few thousand dollars here and there, that could equate to tens of thousands of dollars on the back end.
The second disadvantage is that you don’t get the full range of communication with iBuyers. When you sell with these companies, you still have to go through some of the same steps as a traditional sale.
For example, they’ll still send an inspector to your home, but you may not necessarily find out what they want from that inspection until possibly even the week of closing. At that point, they’ll tell you that, say, your roof or furnace is bad, but they’d be willing to move forward with the purchase if you take the costs of those repairs off the purchase price.
Some people may not mind doing that, but there have been plenty of people who’ve wound up disappointed, thinking they would net more than they actually did.
Additionally, you’re still expected to pay some of the normal real estate fees such as the closing fees and the title company fees. The catch is that you have to use a company that the iBuyer also owns. It may be an amazing service, but also might not be. As a consumer, when you work with an iBuyer, you’re eliminating the range of choices you have to pick the best option for your situation.
One way or the other, if this is something you’re curious about, know that you have a lot of options out there. Talk to your local real estate professional; they should have connections, so ask around before making a really big decision regarding your home sale.
If you have any questions or would like a few recommendations, don’t hesitate to reach out to me. I hope to hear from you soon!