You know what they say… “If it sounds too good to be true, it probably is”. Have you seen all the ads for real estate iBuyers and wondered what exactly they are and how they work? And is there a catch?
Spoiler alert... there is a catch.
iBuyers are companies that use technology to make an offer on your home—and they are everywhere these days! The four largest iBuyer companies are Redfin Now, Zillow Offers, Offerpad and OpenDoor. These companies market themselves as a seller’s dream-come-true. They tout instant cash offers, fast closings and no need to fix up your house to get it ready for the market.
So how can something that sounds so great, end up being such a bad idea? Let’s take a closer look…
These companies are in it for the profit. Unlike a traditional agent, these companies are not looking out for your best interests-- they are looking to make money. So, while that instant cash offer might sound like a wonderfully convenient deal, it is going to cost you a lot more than you might realize.
iBuyers employ several different strategies to make sure they are able to pay you as little as possible. The first place you will probably take a financial hit is in the offer itself. iBuyer offers are often below market value.
Next up... the inspection process. iBuyers are notorious for having really long inspection repair lists (usually much longer and much pickier than a traditional home buyer’s inspection repair list would be). And for every item on the list, they dock money from their original offer. The factored in “repair credits” can add up quickly and make quite a dent in the original offer amount.
Then there are the service fees that most of these companies charge. Most of the iBuyers have service fees between 6% and 12% (whereas a traditional realtor commission is 5% and 6%).
The math doesn’t lie. When you crunch all the numbers, rarely will the convenience be worth the cost of using an iBuyer.
As a homeowner, I know you have worked hard to build up equity in your home. As an agent, I not only walk clients step-by-step through the process of selling their home, I am an advocate for them. I am there to answer any questions they may have. I ensure they get fair offers and are educated on the closing costs. The process of selling a home is much less intimidating and confusing when you have an ally in your corner to guide you through the process!