We’re witnessing a new trend in the residential real estate industry. People are now turning to iBuyer companies like Opendoor, OfferPad, and Zillow to buy and sell houses. It’s a simpler alternative to the traditionally more complex real estate transactions.
Since it’s a recent development, many questions and misconceptions are surrounding the iBuyer industry. Here you’ll learn about iBuyers, the pros and cons, and whether selling your home through this method is right for you.
What Is an iBuyer?
According to an iBuyers guide by ISoldMyHouse.com, an iBuyer acts as a real estate investor interested in flipping your house for a profit. While it may be a similar business model to cash buyers, iBuyers do not prey on fixer-uppers and desperate sellers. Instead, iBuyers conduct everything online and use an automated valuation model (AVM) to evaluate and generate an offer.
How Does it Work?
The process is straightforward. The homeowner can fill out an online form and expect an offer from an iBuyer a few days later. If the seller accepts it, the deal can be closed in seven business days without hassle.
In some cases, the iBuyer will want to have the property inspected for any potential problems that would impact its value. The good news is that fixer-uppers are not necessarily deal-breakers.
What Are the Benefits of an iBuyer?
The benefits of an iBuyer will depend on the house’s conditions and how fast you want it to be sold. Here are some of the perks you can expect with an instant buyer.
Everyone that has had to sell a home knows how time-consuming it is, and how much bureaucracy goes into the process. Unlike other methods, iBuyers don’t wait for inspections, appraisals, or loan underwriting, which could take 30-45 days. Since their closing is also considered an all-cash closing, it occurs faster with lower costs.
If you find yourself in a time-constricted situation such as employment relocation and need an immediate closing date, iBuyers can arrange that for you. This method is preferable if having a house on the market for too long is beyond your means.
If you’re not looking forward to searching and dealing with a realtor, this option is for you. This way, the process cuts down on time and unnecessary steps.
Avoid Home Repairs, Inspections, Staging, or Showing
With iBuyers, sellers are not required to spend money on renovating or improving the property. This is efficient for those who want to skip the showing conditions or schedule that comes with traditionally selling the home.
The most attractive feature of taking the iBuyer route is that once you accept their offer, it becomes their responsibility to sell the home. In other alternatives, there’s no certainty about whether a house will sell or not. It guarantees the peace of mind a homeowner cannot get anywhere else.
What Are the Disadvantages of Selling to an iBuyer?
Like most strategies, there’s also a downside to instant buyers.
One thing to consider before selling your home this way is how much you want to earn. While iBuyers tend to pay closer to fair market value compared to cash buyers, it’s not as much as you would earn through traditional property sales.
The impression many have is that they can skip additional fees such as real estate agent commissions. However, there are specific program’s service charge, commission, or fees that come with every individual home. For instance, if your home needs extensive repairs and you want iBuyers to take over on repairs, the cost will be deducted from their cash offer.
iBuyers are not available in all locations. If you’re considering this route, you have to make sure it’s an option in your area.
There’s no human interaction with iBuyers. Instead of dealing with a person, the process takes place on their website. Not talking to them in person may be a pro or a con for you depending on your preference.
Unlike traditional methods, you cannot negotiate and come to terms with a price agreement. iBuyers generate a price they deem most accurate for your home, so your only options are accepting or denying the offer. This is a deal-breaker for homeowners if their home has sentimental value, or they are set at a higher price.
The Bottom Line
It’s up to you to weigh the pros and cons of the iBuyer method. If the importance of selling fast and efficiently outweighs the need for a larger profit, this type of real estate transaction may be suitable for you.
While iBuying is still new, its speed and convenience attract both sellers and real estate agents. How iBuyers will affect the real estate market is still up for debate. One thing is certain: it’s a shortcut to part with your home quickly and effectively.