The real estate market has been shaken up by “iBuyers” in recent years.
Companies like Zillow, Opendoor and Redfin are becoming buyers of homes and it could be coming to a city near you!
Ok, What are iBuyers?
iBuying is short for instant-buying, because it is an entirely online transaction that happens quickly. iBuyers are online real estate companies that only have online agents and buy your home without ever seeing it in person.
The big players in instant-buying are Open Door, Zillow Offers, Redfin and Offerpad – there are likely to be more coming in droves.
What Does This Mean for California Real Estate?
This could add even more buyers to a state where many markets already have too much demand and not enough homes on the market.
If these companies find enough sellers that want a quick cash offer, then this could make it even tougher for buyers to find homes.
Should You Use an iBuyer?
As a seller, the decision to use an iBuyer depends entirely on how quickly you want to sell your home and reduce inconvenience.
Here are some pros and cons of iBuyers to help you decide which choice is best for you.
You get cash quickly and you can do the whole transaction from the comfort of your home. No waiting on buyer approvals or going to real estate offices.
2. Quick Turnaround
Most iBuyers will make an offer and close within 10-14 days. Traditional real estate takes about 40-50 days to close, not including the time it took for the house to be on the market, discovered, toured and to accept an offer.
3. No Inspection Hassle
iBuyers judge homes from pictures online, evaluate what repairs will be needed and make an offer.
1. Transaction Fees
They charge higher fees, typically around 7% of the price of the home, but sometimes up to 13%. (realtors typically charge 6%). As you can see, there is a cost to cash and a quick close.
2. Lower Sales Price
iBuyers strategy is to offer below the market value of a home. When they buy it at a lower value than it is worth, they can turn around for a quick profit. On average, homeowners typically get about $15,000 less from an iBuyer than they would from another buyer.
3. Real Estate Agents Can do the Same Thing
Traditional agents can also sell homes quickly, but can’t control if it’s a cash offer or not. The good news about selling through an agent is that they often handle the negotiating and headaches that can happen during a deal.
Use Caution and Do Your Research
Ultimately, the decision is based on your needs as a seller so do your research and ask opinions.
If speed is the goal, then an iBuyer might be the right choice for you. Just keep in mind that you will likely get an offer for less than your home is worth, and have to pay more in fees as well.
Traditional agents are still what most sellers opt for. It’s typically how you can get the most for your home.
Have an agent check local comps and see what the differences are if you’re considering using an iBuyer!