Should You Sell Your Home to an iBuyer?
If you’re selling your home, you want to sell it to the highest bidder as quickly as possible. Home iBuyers are becoming a popular way for online real estate companies to purchase property without ever physically looking at it before buying it. Some of the most popular and well-known iBuyer companies include Redfin and Opendoor. There are also smaller companies currently looking at homes in various markets throughout the country. Before you decide whether or not selling your house to iBuyers is right for you, read on to learn more.
What are iBuyers?
The term iBuyer is short for “instant buyer” because the purchasing company does so without any in-person contact and typically buys a property for cash. These online real estate companies only use online agents and won’t physically send anyone to visit the home. This means that they won’t actually look at a property in real life before deciding to buy it. The entire transaction is completed online and provides sellers with a much shorter timeframe than they’d receive with a traditional real estate agent. Waiting for conventional buyers to get financed can take a long time, and some sellers want to offload their homes as quickly as possible. The iBuyer companies make an all-cash offer to sellers, an attractive choice for those who wish to sell their homes fast. The companies make a profit by buying houses below market price. Then, they resell the home within approximately 60 to 90 days, or they may choose to hold it in a rental portfolio. Deciding to sell homes to iBuyers can impact the real estate market as a whole by lowering supply while increasing the demand for more cash buyers. It also limits the number of available properties for individual buyers who use traditional financing methods.
How Have iBuyers Impacted the Real Estate Market?
New technology and comprehensive real estate data allow iBuyers to make automated offers on a home. Once the company buys the house, they make repairs and/or a few cosmetic updates, then sell it within just a few months. Some claim that iBuyer companies pay too little for homes or inflate home prices in otherwise stable markets. Others worry that these home iBuyers funnel owner-occupied homes to investors who pay less than the property is worth, then “flip” the house for a significant profit. On the other hand, many homeowners feel that selling their home for a bit less is worth it in exchange for a fast transaction. People who need to sell their homes quickly may prefer using iBuyers to get the deal done quicker.
One concern is that iBuyer companies are buying large swaths of homes, making it more difficult for the average buyer to find affordable housing. However, according to Zillow, iBuyers made up just one percent of the market share in the second quarter of 2021. Additionally, these iBuyer real estate companies claim that many homes were purchased without ever being listed for sale. In other words, the iBuyer scours the data then makes an offer to a homeowner regardless of whether or not the property is currently for sale. This can be appealing to some homeowners who are contemplating moving but haven’t entirely decided to list their homes yet. Major markets like Dallas, Phoenix, and Atlanta see the highest number of iBuyer transactions. Small, rural areas may not see many, or any iBuyer offers whatsoever.
Advantages of Using an iBuyer
As a seller, there are many pros and cons of Opendoor and other iBuyer companies. Here are some of the advantages of using an iBuyer to sell your home:
- Convenience: Using an iBuyer real estate company allows you to do everything online. You won’t have to worry about hosting open houses or dealing with a home inspection.
- Quick turnaround: A traditional real estate transaction can take between 30 and 45 days to close on average. This is in addition to the time the home sits on the market and the buyer and seller come to an agreement. With an iBuyer, an offer is made on a home and closed within 10 to 14 days.
- No need for inspections or repairs: An iBuyer typically won’t ask for a home inspection. Instead, they will analyze property based on photos and property lines. This means that sellers won’t have to worry about making repairs or performing upgrades, saving them money and time. If something needs to be fixed, the iBuyer may reduce the offer price and complete the repairs themselves.
Disadvantages of Using an iBuyer
While there are many advantages of using an iBuyer, there are also some disadvantages, including
- Higher transaction fees: Most iBuyer real estate companies charge higher fees than a real estate agent will. In fact, these fees are usually around seven percent of the home price but can be as high as 13-15 percent in some cases. A realtor typically charges between five and six percent, which is much lower.
- Lower sales price: The goal of an iBuyer is to offer sellers below the market value of their home. This allows them to flip the house for a higher profit, which means sellers may get less than they would from a traditional real estate sale.
- No help from agents: A professional real estate agent understands the local market, which means they can also sell homes quickly. In certain markets, sellers will have no trouble finding eager buyers who may make a higher offer than the current market value of a home. Real estate agents can also provide their clients with helpful advice and assist sellers with finding a new home, while iBuyer companies cannot.
How to Decide What’s Right For You
If you’re still uncertain as to whether selling your home to an iBuyer is right for you, keep these things in mind:
- iBuyers will purchase your home in cash, but they typically offer a lower price than traditional buyers will.
- Using an iBuyer can be a good option if you need to move quickly.
- Remember that the fees are higher when using an iBuyer, which could affect your bottom line.
- Make sure you have a new home or a new place to live lined up since iBuyer transactions close within just a few days.
Using an iBuyer company helps homeowners sell their homes quickly for cash. While this is an advantage for many, it might not always be the best option. Ultimately, it’s up to the seller whether or not they want to sell their home to an iBuyer or a traditional buyer. As a home inspector, it’s important to emphasize the benefits of your services for both buyers and sellers. Inspection Support Network is here to help, so be sure to sign up for your free software trial today.