iBuyers — Who and What Are They?
Instant offer companies are commanding a strong presence in real estate, and they seem to be growing more and more popular by the day. What are they offering that some sellers can’t refuse?
These “iBuyer” companies offer to buy your home outright, which can be enticing to sellers who’d like to go straight to the closing table rather than through the process of preparing their home for the market and selling it the traditional way. Opendoor, Zillow, Knock, and Offerpad are just a few of the companies that cater to these types of sellers.
This begs the question: Why would anyone want to sell their home to an iBuyer?
Some sellers need to make a quick move because they’ve had a job change and their company doesn’t offer a relocation package; others would need to spend hundreds, or even thousands, of dollars to fix up their home for the market; still others are underwater on their mortgage and just need a quick sale.
As simple as it all sounds, there is some fine print. Instant offer companies aren’t available in every market or price point—namely, the higher ranges. If your home is worth more than $500,000, for example, chances are that no iBuyer will make an offer on it.
Part of your due diligence is to also contact a smart, skilled real estate agent who has an expert grasp of your market.
In addition to that, these companies are comprised of very savvy real estate investors, and their main objective is to make a profit. As a result, sellers who work with an iBuyer will almost always take a hit: The offer you’ll receive is usually below market value. That could mean you’re losing out on 5%, 10%, and sometimes as much as 20% of your home’s value.
Maybe you’re still convinced it’s worth it because you’re able to skip doing x, y, or z. Unfortunately, you stand to lose even more: iBuyers also charge you a fee in the 8% range, whereas the traditional agent will charge you a 5% to 6% commission. Those two factors combined are taking a big bite out of your equity.
There are two questions you really ought to consider before electing to sell to an iBuyer: Does it make more sense to work with a real estate agent who is there to protect your interest or to work with an investor who has their own interest at heart? Second, does the bottom line number actually work for you?
Now, having the power to choose is great, so if you’re in the right market and the right price range, by all means, contact an instant offer company to see what they have to offer. However, part of your due diligence is to also contact a smart, skilled real estate agent who has an expert grasp of your market.
If you have any questions or you’d like to know your home’s value and how we at Real Estate Experts can help you get the most profit out of your sale, please give us a call. We’d be more than happy to help!