In a world where instant gratification is very valuable, it was only a matter of time until someone figured out how to bring that into the real estate industry. The concept of an iBuyer is probably something you’ve heard of, but perhaps haven’t heard the term iBuyer. Companies like Opendoor, Zillow, and iBuyer.com are impacting the industry in a big way, so I thought it was time to talk about them. The good, the bad, and the reality.
First, what exactly is an iBuyer? An iBuyer, or instant buyer, is a company that will buy your house, site unseen, based off of information you give them and a computer algorithm that determines the value of your home. It’s far more complicated than that behind the scenes, but they don’t really want you to know the interior ins and outs. They just want you to see instant and jump right in.
Since the start of these types of companies, variations have arisen, but we won’t go into all of that at this moment. Let’s just focus on this concept of instant buyers. One of the biggest things to remember about iBuying is that they are not interested in buying homes, they are interested in selling homes and convenience comes at a cost. Let’s examine the pros and cons of iBuyers.
- Convenient – A lot of people dread the idea of selling their home. For me, as an agent, I don’t see it as a daunting task, but for many it is. An iBuyer is appealing because it takes all of the tasks of selling your home out of the equation and simply buys the house. tThere is no staging, no showings, etc. Just answer some questions online and get an offer.
- Quick – The current market aside, sometimes selling your home can take some time. And sometimes the sellers don’t have time on their side, so the option of selling your home within weeks or even days is a very appealing one.
- Certain – With traditional home selling there exists the possibility of the sale falling through during the time when the home is under contract. With an iBuyer the likelihood your sale will fall through is very low. It’s basically a guaranteed deal.
It may sound appealing, but now let’s take a look at the Cons.
- Profit Loss – With an iBuyer’s offer you are selling your home at a discount. An iBuyer is in the business of making money and to do that they need to buy homes cheap and charge a fee. Studies have shown that when selling to an iBuyer you are likely paying 13%-15% MORE in fees than you would to an agent in a traditional sale scenario. So not only are you receiving a discounted sale price, but you’re paying higher fees as well.
- Deductions – After an inspection of the home, the iBuyer may identify needed repairs and may deduct those from the already discounted amount they are offering.
- Zero Negotiations – With a traditional home sale, the buyer and seller have the opportunity to negotiate with one another to make a fair deal, but with an iBuyer there is no negotiation. They make the offer and you either accept it or don’t. That’s it.
I can’t say whether iBuying is good or bad, but I do believe it’s here to stay. Sometimes in life convenience and speed is more important than profitability and the ability to negotiate. You never know until you’re in that position.
Is using an iBuyer right for you? Weigh the options. When deciding ask yourself, “Is speed and convenience more important that financials with the sale of my home?” Your situation is your own and no one can decide but you. One thing I will strongly suggest is be informed. Do your research and make educated decisions in all things. Good luck out there!