Selling to an iBuyer; is it for me?
Let’s take a closer look at this “new” way of selling property. Is it new? No, the concept, in my opinion, is not new.
Definitions
iBuyer: Generally, companies that come in and are going to buy a home sight unseen. Sometimes you will receive a flyer in the mail, phone call, or text about buying a property.
Burden Property: A property that seller doesn’t want to deal with and wants to sell quickly with the least amount of hassle.
It is an age-old tale:
An inherited or burden property.
Someone is physically not able to leave the house for showings.
Cash is needed quickly.
There are no funds to fix it up.
This is a new way of rebranding what these businesses are doing: Buying property for cash. In my experience, seeing some iBuyer listed property means nothing has been updated or touched since the cash purchase. This may have changed in the past months since the market is shifting. However, these companies tend to list the property at a higher price than what they paid a few minutes ago.
It is up to the consumer to understand the ins and outs of the iBuyer world to see if it is a fit for their needs. This is not going to be a fit for everyone.
Pros
Speed: It can take about 2 weeks or less for a home to sell if bought with cash. Depends upon the title company and the speed of which they get the documents together. The average as of the writing of this blog is 12 days until a contract for the Central Ohio region - June 2022 report from Columbus Realtors. It takes about 30 days for a sale to go through after a contract if there is financing involved, which totals to about 42 days in total before you receive the money or 24 days if cash purchase.
Convenience: Sellers are not required to make repairs, keep the home clean, or show the home. They can sell the home with minimal fuss.
*adopted from The Ins and Outs of iBuyers by Residential Real Estate Council
Cons
Lower Profit: Sellers end up paying extra fees for the convenience of a quick sale. Plus, they generally don’t get top dollar for their home. There maybe some hidden fees also in the contract. Be aware and get a lawyer to review.
Inaccurate value assessments: Home values are determined by a valuation algorithms, so they may not for unique attributes of a property, such as over looking a river or park, original hardwood flooring, etcetera.
Home Inspections: I have seen some marketing in very fine print require home inspections and sellers fund and make repairs prior to closing.
Summation
It all depends on what you, the consumer, want. I advocate that you find out for yourself how the market is doing before considering any course of action. f you want the most money and the best benefits, I recommend traditional listing and selling. You may have some hassle with it, and you may need to make some cosmetic updates to get the most profit; but… you will get the most money. I’m not going to guarantee it; but these iBuying companies are not in the business to line the consumer’s pockets. Realtors®, those who believe in the Code of Ethics, are in the business to serve the consumer and provide the best experience and most benefits that they can for the seller of the property. Period.
Real Estate Tech: A crumbling house of cards
Prior to posting this, I ran across this YouTube Video by ModernMBA: Real Estate Tech: A Crumbling House of Cards. They do a really good job explaining the issues with iBuyers.