How to Sell Your House ASAP with an iBuyer

3 years ago 87

Looking to move? We will pay instant cash for your home! Call You might have seen that kind of offer on a billboard or a homemade sign posted to a telephone pole. The concept has been around for...

Looking to move? We will pay instant cash for your home! Call

You might have seen that kind of offer on a billboard or a homemade sign posted to a telephone pole.

The concept has been around for years. Want to sell your home fast? Theres usually someone willing to buy it as long as youre willing to take less than market value.

The latest take on this type of house flipping is called iBuying an automated, online method of selling your home quickly. Many companies in the online real estate industry, like Opendoor, Redfin, Offerpad and Zillow have jumped in the iBuyer game, with mixed results.

For Zillow, the results were disastrous.

The company shut down its iBuyer program, Zillow Offers, in late 2021 after buying thousands of homes above asking price and losing $304 million.

So what does that mean for the iBuying business?

Joshua Roberson is a lead data analyst at the Texas Real Estate Research Center at Texas A&M University. In an article he recently wrote for Barrons, Roberson said, iBuying is here to stay, but its not for everyone, nor is it likely intended to be.

If youre looking to sell a home, and considering using major iBuyer companies like Redfin or Opendoor instead of a local real estate agent, here are a few things to consider.

Who buys ugly houses anyway? Heres the process behind those roadside signs.

The Pros and Cons of iBuying

Some benefits of using an iBuyer:

Low Hassle

iBuying is convenient. Unlike in a traditional real estate transaction, when selling to an iBuyer you dont need to worry about staging and glamming up the curbside appeal. You dont have to worry about giving up your Sundays to open houses or leaving every time the real estate agent wants to show. You simply sell your home to the iBuyer, and they take care of the rest after youre gone.

Quick Sell

The uncertainty of selling a home is one of the most difficult aspects of the process. You dont really have the cash to buy a new home until you sell your old home, right? But you still want to look for that new home to get an idea of whats available. And what if you find that perfect house before youve sold your old housewhat, then? This is even more complicated if youre making longer moves to different states or across the country. An iBuyer takes all those variables out of play. The iBuyer makes an all cash offer, which is usually good for at least a week, you accept or reject it and move on.

Very Predictable

You know youre going to get an offer. You know when youll get an offer, and when youll have to move. You know exactly when the movers need to arrive. You dont have to worry about the purchasers refinancing falling through. You dont have to oversee a bidding war or haggle with the buyers agent (though you can negotiate with the iBuyer). The iBuying process is very clear cut and takes a lot of stress out of the selling process.

Some reasons you might want to reconsider using an iBuyer:

Uncertain Sales Price

iBuyers use algorithms, called an automated valuation model, to determine a houses value. Theyll tell you they offer fair market value, but its hard to really know if thats true. In Zillows case, they actually overpaid for a lot of homes during the pandemic, but that seems to have been an exception in the iBuyer business model. iBuyers will want to purchase your home at lower cost so they can turn it around and make a profit quickly. So, usually, youll be accepting a lower offer than if you sold through a real estate agent.

Some Restrictions

Youll need to be in a real estate market an iBuyer is interested in, and youll also need to have the right type of home an iBuyer wants. The right type of home is dependent on the market and what qualifies as a typical home in that area. iBuyers tend to focus more on larger cities, so if you live in a rural part of the country you may be out of luck.

Other Costs

With an iBuyer, youre trading convenience and speed for the possibility of a lower offer, paying more fees, and taking another hit if your house needs repairs. One study said that iBuyers typically charge a service fee of anywhere from 6% to 9%, which is several percentage points higher than licensed real estate agents charge. Also, after you accept an iBuyers offer, theyll do an assessment on your house. Any repairs needed could be taken out of the final sale price.

Should You Use An iBuyer Instead of a Real Estate Agent?

Thats a question only you can answer.

Though Zillow has closed its iBuying program, other iBuyers like Opendoor, Offerpad, and Redfin are still out there going strong. Youll likely enjoy the convenience an iBuyer offers, but that will come at a price.

Do your research and weigh the pros and cons to determine if an iBuyer is right for you. Selling your home is one of the biggest financial transactions youll ever make, so make sure you know what youre getting into whether you use a traditional real estate agent or an iBuyer.

Pro Tip

Three questions to ask real estate agents before hiring one.

Robert Bruce is a Senior Writer for The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.


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