Hey, I want to talk to you today about a term that is being thrown all around the real estate industry called the iBuyer. I don't know why the letter I is stuck in front of everything nowadays. I guess it's cool, right? Started with the iPod, iPhone. Now everybody wants to be I this, I that. Anyways, what is an iBuyer? An iBuyer is somebody who will give you a quote over the internet, over the phone and buy your house, cash, and seems to be really popular right now. But there's a few things to look out for when you're looking at an iBuyer.
So, we're talking about companies like Zillow, (they’re buying people's homes direct) Opendoor, Offerpad. There's several of them out there. Are they worth pursuing? Are they worth looking at? The answer is maybe. It really depends. Here's the thing, here's how they make their money.
1-First of all, they'll come in and they'll give you an offer that actually looks pretty
reasonable up front. It might be $10,000- $15,000 less than what your home is actually worth, but it looks pretty reasonable. And their whole pitch is, "Hey, no commissions we’ll close on your time schedule. You don't have to do showings, you don't have to do the traditional listing." So, you know, for 10, 15 grand, hey maybe that's worth it.
Here's where they make their money, though.
2- They don't charge commissions, but they do charge an experience fee! That, on average, is between 7% and 10%. When you look at a real estate commission, it averages between 5% and 6% so when you look at that, you end up paying more for their iBuyer experience right off the bat. So they offer you less, then they charge you a higher amount, a higher fee up front.
3-Then the third area where they make their money is they then come in after they've
made that initial offer and they will negotiate down repairs and they are ruthless. They don't care if they buy your home or the home down the street. Theirs is a number game. And so they will not be very negotiable on repairs. They'll give you their list of repairs and asked for much more than they're worth. So, on average, when a seller or a consumer sells to an iBuyer, they make about $30,000 less than when they sell their home traditionally with an agent, and that's counting in commissions and all the other things.
So, is it worth it to sell to an iBuyer? Like I said, it really depends. If you don't meet the
money and you'd rather just get out quick, hey, that might be an option. And if that is the case, let me know. I have investors all the time willing to pay under market value for your home. But, if making the most out of your home is important, and in today's market where it's a seller's market and things are selling quick anyways, let's sit down and talk about a traditional listing.
So, whether you want to sell to an investor, like an iBuyer, or you want to list traditionally, let's talk and we'll go over the numbers and see what works best for you.