Selling my home to an iBuyer
Pros and Cons of Selling Your Home to an iBuyer
If you are a homeowner weighing the options of how to sell your home, this article is for you. No sugarcoating. For most, selling the family home is a stressful situation. It is an intrusion in your life and requires an investment of time and money. For those who want or need the convenience of having to do as little as possible, and don’t mind the additional expense, there is the option called the iBuyer.
Since the concept of the instant buyer is still relatively novel, you may not know anyone with firsthand experience. Before you decide, you probably want to look at the standard advantages that are touted by iBuyers vs. the more widely accepted method of listing your home with a real estate professional.
Using an iBuyer Saves Time
- You will not have to hire a real estate agent. Researching and selecting the best agent to sell your home takes up a chunk of time. It’s a critical choice that may affect your bottom line and your blood pressure!
But is this a time saver? The time you do not spend researching realtors is going towards researching iBuyer companies. You also have to consider that many sellers are going to spend time on both options because they will want to make a comparison on the home price offered by the iBuyer and the suggested market price from an agent.
- You will not have to declutter, clean, or stage your home. If housework is not your thing, not having to engage in a deep cleaning and organizing project may make using an iBuyer extremely appealing.
Is this a time-saver? You are still going to need to declutter your home when you pack. Unless you use an iBuyer that does not do an in-home evaluation, don’t you want your home to make a positive impression? Keep in mind that the final offer is made after the review. I can’t help but believe that a home that looks and smells good is going to generate a higher offer.
- You will not be required to fix anything because repairs are the responsibility of the iBuyer. It might be something significant, like an appliance replacement or minor as a nail hole in the wall.
Be aware that the cost of the repairs will be deducted from your proceeds at the time of closing. That means you pay. If you are handy, you can do many of the repairs yourself. If an appliance needs replacing, you can shop around for a sale or discount. But to be fair, not being responsible for fixing anything may save you time but, it will cost you.
Selling to an iBuyer is less stressful
- It will not be necessary to deal with showings. For some people, having strangers in their home looking in all the cabinets and closets makes them uncomfortable.
For busy families with kids and pets, it is not easy to keep a home looking “show-worthy.” Not to mention that when there is viewing, it can be a significant event to pack up the pets and the kids and get out, especially when it is a short-notice request.
For some sellers, this presents no problem, especially if they are empty nesters. But for those that feel very stressed about showings, not needing to have them is an advantage I cannot dispute.
Selling to an iBuyer is quick and efficient
- I can’t argue with this one. If you must have a fast sale, iBuyers can make it happen, even as quickly as 24 hours. Because it’s a cash sale, there is no waiting for a home inspection, an appraisal, or a buyer going through the underwriting process. The process gets an “A” on efficiency. However, if you have patience and can opt for a longer timeline, given the state of the market at present, homes are selling in record time using a real estate agent as well.
Selling to an iBuyer gives you more control over closing
- Depending on the company you work with, you could close up to 90 days after you accept an offer. The flexibility of a closing date gives you time to find another home, and with a guaranteed cash sale in your pocket, you become a desirable buyer to other sellers. It eliminates the pressure if you are unable to find something else to buy in 30-45 days and having to move into a rental or other alternate housing option should you fail to do so.
Disadvantages of Selling to an iBuyer
Above are the advantages touted by iBuyers. Some are indisputable advantages, others less so when you dig under the surface and draw a comparison to traditionally using a real estate agent. However, there are also a few distinct disadvantages to selling your home to an iBuyer.
Sellers using an iBuyer get less on the sale of their home
- The offer you receive from an iBuyer is going to be less than the fair market value of selling with a Realtor. The business model justifies the risk the iBuyer is taking in buying your home for resale. Sounds reasonable, but how much less?
That depends on several factors such as the age and condition of your home, the realtor you choose to work with you, the market conditions, and the iBuyer company. There is the argument that the handling fee of the iBuyer and the real estate commission cancel each other out, and a seller is going to pay closing costs in either case. But in addition to getting a lower offer price, there is the cost of repairs and other service charges you may incur.
The difference in the bottom line might be thousands of dollars or even tens of thousands. A study performed by MarketWatch concluded that selling with an iBuyer resulted in 11 percent less profit for the seller. Research data published by Collateral Analytics claims that sellers get 13-15 percent less. Here are examples for Atlanta from the MarketWatch study, which looked at 35 homes that rejected iBuyer offers and went on to sell on the open market.
- Average actual sold price - $293.11
- Opendoor offer - $256.838
- Offerpad offer - $240.813
- Estimated customer net Opendoor – $238,142
- Estimated customer net Offerpad - $222, 005
- Actual customer net open market - $271,420
- Offerpad difference – 18.2%
- Opendoor discount – 12.3%
There is no negotiating the offer with an iBuyer
- The offer process is pretty cut and dry. The offer from an iBuyer is a take it or leave it situation. There will be no opportunity to present a case for a higher price.
You are on your own
- When you list your home with a Realtor, you are gaining the benefit of his experience in selling homes. A real estate professional will be at your side through the entire process advocating for your best interest. When selling to an iBuyer, you are on your own, which can be challenging and overwhelming, especially when it’s your first experience selling a home.
While it’s always a good thing to have more choices for consumers, it also makes decisions more complicated. Sure, iBuyers are convenient and fast. There is no denying that fact. However, convenience may have a hefty price tag.