The Pros and Cons of Using iBuyers
iBuyers are becoming more and more popular as consumers transition to online shopping for everyday needs, including home buying and selling.
Traditional real estate firms like Keller Williams and Re/Max are being forced to change the way they operate and get into the iBuying world because of leaders in the industry like Zillow and RedFin taking over.
With all of the change happening in the real estate world, it is hard to decide what is best for you! Let’s talk about the pros and cons of using iBuyers.
What are iBuyers?
iBuyers are companies that do real estate transactions online instead of the traditional in-person way. They are becoming increasingly popular because they are able to have their online agents make transactions without meeting in person, which makes for a much faster sale.
This is great for people who need to quickly sell their home and aren’t interested in – or don’t have time to – make renovations and updates to sell the home.
What Does This Mean for Real Estate?
These iBuyers are able to make the process of selling a home much quicker for the seller, because they buy the home ‘as is’ instead of requiring updates or fixes from the seller before they make an offer.
In addition, the homeowner doesn’t have to meet with anyone, they simply contact the iBuyer agent and exchange information about the home.
These iBuying companies are able to make a profit by purchasing the homes below market price, because they are buying to home as is and the seller needs to sell quickly – so they agree to sell it for a lower price. The company will then list and resell the home within 60-90 days to produce a quick profit.
Is Using an iBuyer a Good Idea?
iBuyers have become more prevalent within the past year and have the potential to make a big impact in the home realty world.
The impact is still to be determined as to whether it will be good or bad.
Here are some pros and cons of iBuying companies so that you can decide whether or not they might be a good option for you.
iBuyers are gaining popularity, and are an option for people who need to sell quickly or don’t care about selling at or above market value.
- People who don’t want to deal with in-person interaction can do everything online.
- Everything can be done from the comfort of the home, no need to go to offices.
- You can get the money for your home right away, no waiting for buyer bank approval and counter offers.
2. Quick Turnaround
- The turnaround time of sale is the biggest advantage that iBuyers have.
- Most iBuyers will make an offer and close within 10-14 days.
- Traditional real estate takes about 40-50 days to close, not including the time it took for the house to be on the market, discovered, toured and to accept an offer.
3. No Inspections or Renovations
- Most people fix their home up and make various updates to their home before they list it to increase the property value and incentivise buyers.
- iBuyers will judge the house based on pictures of it and then make an offer, they don’t need inspections or renovations.
- If there are things that need to be fixed they will reduce the price of the home and then fix it themselves before reselling.
- This is perfect for people who don’t have the patience, time or simply don’t care to fix problems.
For most home sellers, a quick process would be great, but these cons typically hold more weight than the pros.
1. High Transaction Fees
- They charge a lot of money in fees, typically around 7% of the price of the home, but sometimes up to 13%. (realtors typically charge 6%)
- That is much higher than the cost of closing and commission for traditional real estate sale.
2. Below Market Sale
- iBuyers strategy is to offer below the market value of a home
- When they buy it at a lower value than it is worth, they can turn around and sell it quickly for a bigger profit, meaning that they make a lot of money off each home in a quick amount of time.
- Homeowners typically get about $15,000 less from an iBuyer than they would from another buyer.
3. Real Estate Agents Can do the Same Thing
- If you choose the right agent for you, they can sell homes in a quick amount of time too
- They just need to know how to choose a fair yet competitive price, market the home based on its best features and find the right buyer
- Agents also have good advice and can help you negotiate a fair price
- An agent can help you find a new home
- Using an agent allows you to keep the equity of your home when looking for a new one, whereas using iBuyers doesn’t
Using iBuyers Can Cost You, So be Cautious
Ultimately, the decision is based on your needs as a seller.
If you need to sell your house quickly and don’t have time to fix things up or don’t care to, then an iBuyer might be the right choice for you. Just keep in mind that you will likely get an offer for less than your home is worth, and have to pay a large amount of fees as well.
Real estate agents are more reliable and can help you get a better price for your home if you are willing to take a little bit more time to find the right buyer for your home.
Take your time & consider all the pros and cons when deciding which way to sell your home, in most cases you’ll find that using an agent is the more sensible choice.