As we move forward during the current challenging times, many clients have asked if there are easier or quicker alternatives to selling their home. I always mention that there are many alternatives to selling a home. One that has received a lot of attention recently is the iBuyer.
There have been many ads on TV, social media, and direct mailers to homes, regarding these buyers wanting to buy your home. Below, I will break down the difference between this type of buyer vs. using a Realtor to sell your home.
What are iBuyers?
iBuyers and other institutional buyers, like OfferPad, We Buy Ugly Homes, etc., currently just buy homes from sellers. A few, like OpenDoor, do turn around and sell them.
The iBuyer will:
• typically pay cash and can set up a quick closing if needed
• look to make a quick profit on these homes and have a quick turnaround to sell the home
• come in and make some cosmetic improvements, then sell it again a few weeks later
• sometimes hold and lease the property and will sell at another time
iBuyers have different goals vs someone looking to buy a home to live in and more likely to pay more to be in a particular location or a certain floorplan of an individual home.
iBuyer companies suggest that with the COVID-19 virus, using an iBuyer will have less interaction with people in person.
Pros and cons to using an iBuyer
Institutional buyers sometimes will offer to purchase the home close to the market price, but many times they are offering 5 percent to 25 percent below what a seller can obtain in a traditional selling with a Realtor who will expose the home to thousands of buyers.
Realtors in Texas have access to the latest sales data and can show you the sales price. At times, OpenDoor, iBuyer, etc., do not show exact data, as opposed to Realtors who can show you the accurate data.
Realtors use electronic lockboxes that can be customized for times to show the home and the lockbox, as well as the appointment service records who comes in, and showings can be scheduled not to disrupt a family living in the home.
With the COVID-19 outbreak, Realtors are utilizing more virtual technology, like 3-D videos, virtual showings and, if they must visit, requiring masks/gloves, and they are coaching sellers on how to prepare their home for showings, such as opening all doors, leaving lights on, requesting shoes to be removed, etc.
Cleaning, staging, and suggesting contractors assist with basics like painting and carpet cleaning a home all are things that a Realtor can suggest. Many times, these simple tasks, once completed, can enhance the home’s appearance.
Many times with iBuyers, sellers will be asked to pay additional fees; it has been reported they can be as much as 10 percent of the sales price offered.
This could be more than traditional Realtor commissions and other fees combined!
Advantages of relying on a traditional real estate agent to buy/sell a home
• Price: Exposing the home to many buyers vs. one institutional buyer will likely increase the odds of a higher sales price.
• Cost: Realtors do a lot of things to get a home sold, including research, preparation for a home sale, marketing, negotiations, reviewing contracts, disclosures, and more. Licensed professionals represent you, instead of selling to an institutional buyer with no one to guide you. A Realtor will explain the costs involved so there are no surprises at the closing.
• Buyer financing vs cash: Some traditional buyers will pay cash as well, and if they are getting a mortgage, the Realtors will review documents for a potential buyer in advance.
• Inconvenience: The Realtor can prepare you for how the process works and set expectations. Understanding how much work is needed in advance to get a higher price is important.
• Timing: Understanding how the process works and timing is important, and Realtors explain this as well. The iBuyer pushes they can get this done quickly, but the reality is most sellers also will need some time to get prepared for a move. With a traditional buyer, the timing of closing, seller leasing the home back from the buyer, and other details all are negotiated. The seller is always in control.
You can sell your home easily to one of these institutional buyers or a local investor (there are many), but the “fees” for the convenience of this is a lower sales price for your home, costing you thousands, sometimes tens-of-thousands in dollars and likely other costs they don’t promote on their commercials.
Be an educated seller and do your research. Speak to an experienced Realtor who works your area/neighborhood or who is referred to you by a trusted family member/friend to see what they see in the marketplace. Realtors are experienced in working with sellers in getting them a higher sales price and explaining the process and some of the inconveniences may not be that hard to work with.
Realtors are not computers. Realtors are your neighbors and they can help and, more importantly, they are on your side, which is even more important during these trying times.
(With inputs from JHVOnline)