iBuyers - Big Mistake When You are Selling Your Home?
As the real estate business evolves, we have seen many attempts to change the way we buy and sell our homes. On-line evaluations (as inaccurate as they are) have been around for a while but now we hear about iBuyers.
These are companies that will buy your home and just give you a check to walk away. You don’t have to deal with people touring your home, counter offers or many other details of a typical transaction. Just press a button on your phone and get some money for your house. How easy is that?
All this sounds attractive until you delve into what it really costs you for all of this so-called convenience. The old adage about “There's no such thing as a free lunch” truly applies here.
The offer you get to purchase will NOT be at market value so you will be losing money right from the start.
A real estate agent, on the other hand, will market your home to a huge buyer pool in an effort to get you the most money.
iBuyers will not list your home on the MLS (Multiple Listing Service) or any of the internet platforms, so no other buyers get to compete for the purchase. By limiting the exposure to a large buyer base, you are prevented from getting the best possible price for your investment and ensuring big profits for the ibuyer.
In a recent survey, reporters found that ibuyers paid 6-18 percent less for houses than if sold with traditional methods.
The commission that an agent charges is always under pressure from sellers. iBuyers say they eliminate the commission, but just move it to another column and call it a service fee.
These can run as high as 13% of the sale price.
Wow...another huge hit to your pocketbook.
Next up will be repairs. When you sell with an agent, you will know if you have to spend money to fix some items for the new buyer. The truth is, you might be able to negotiate some of these costs to be split.
But not true for an iBuyer. They will simply charge you a fee that they decide and you’re stuck paying the bill. This fee usually shows up late in the transaction after you’ve made you moving arrangements and are not in a position to back out of the deal.
So, I don’t think we’re at the “Amazon Prime” kind of market where everything happens at the click of a smartphone, the transaction completed in a few hours and a check shows up on your doorstep from FedEx.
When selling your most valuable asset, you need to consider all the variables and choices. There are some people that absolutely need to make an immediate move where the iBuyer scenario makes sense, but most of my clients are not ready to give away their real estate profits and would rather stick with a more traditional approach.