Selling Tovs. Working with a National iBuyer Company
If you are determined to sell your home direct without hiring an agent, you have two viable options…professional home buyers like Resideum (we buy houses in Atlanta)…and iBuyer companies like Opendoor. Before you choose, it is important to understand the differences between these two types of home buyers.
What is an iBuyer?
For those of you unacquainted with the term “iBuyer”, an iBuyer is a business that uses use big data, technology and analysis tools to establish a “fair market offer” for your property without ever having visited it. They have a website and tons of internet and other marketing trying to direct potential customers to submit their property addresses on-line for a quick or immediate purchase offer. By having the potential customers come to them online and using tech to crunch the numbers, they can provide a near-instantaneous offer for your home, allowing them to scale fast and accommodate tremendous volume.
iBuyers sprung up around 2014 with Opendoor being the pioneer and first to offer this type of homebuying option. Others followed…some, like Offerpad, are similar in approach while others such as Knock and Zillow offer the same service but with slightly different motivations.
The Typical iBuyer Business Model
- Consumers sign up on the iBuyer’s website and submit their home’s details and perhaps pictures.
- The iBuyer then utilizes technology and data to come up with a ‘fair’ cash offer for the home
- If the homeowner accepts the offer, then a Zillow representative will come out and physically inspect the home to verify condition. WARNING! (It is at this point that the iBuyer’s initial offer may be adjusted based on its inspection findings).
- Revised offer – In some cases, few if any revisions are made but typically, the final offer price for purchase will be revised for “repairs” or “condition” items found at inspection.
- If the revised offer is accepted by the owner, then the iBuyer proceeds to closing and purchases the property, then invests some money in doing some minor upgrades and cosmetics to improve the appeal of the home before they re-sell it.
- Closing dates can be chosen from between 7-90 days after contract signature
- iBuyer then re-lists the homes (usually within 90-days) and flips them for a small profit
iBuyers – The Good, The Bad…And The Ugly
- iBuyers provide a home seller a fast, efficient way to sell their houses
- Their initial offers can often be pretty competitive
- “Final” offers regularly get revised by tens of thousands of dollars below initial offers
- iBuyer’s Inspectors are often hired guns and quality varies…neither thorough nor reliable
- The reasoning for reductions in price can be inconsistent with actual condition or difficult to substantiate in many cases
- iBuyers’ personnel often aren’t helpful, local, or knowledgeable of the market. Many are not even true “Real Estate” people.
- When you combine the iBuyer’s fees (6% to 14%) and the “Revisions” to their offers after inspections, what seems like a good deal maybe isn’t.
Can You Negotiate With iBuyers?
The simple answer is No. Like other tech-driven, non-people-dependent industry disrupters, most iBuyers won’t negotiate with you. They say they are giving you their “best offer upfront”, eliminating the need for negotiation and helping make the process more streamlined and hassle-free for sellers.
- If you have a “fixer-upper”, your home likely won’t qualify. Unlike traditional “flippers”, Zillow and other iBuyers are not looking to renovate and remodel homes. They are looking for houses in good condition that just need a little TLC or cosmetic work to make marketable again. They operate on slim margins, but do greater volume than a traditional home investor would.
- iBuyers are generally only interested in buying specific types of homes. They want homes that are relatively new, in good condition, and that are within what they consider to be “high opportunity” markets where the chance of a quick re-sale is possible.
Unlike professional home buyers like Resideum, who make money buying homes “as is” and renovating heavily to add value and bring the home up to market value, iBuyers only buy homes that are in good condition and try to only make only minor repairs. If your home needs work…perhaps more than just minor repairs, then an iBuyer likely won’t buy your house.
Comparing iBuyers with Atlanta’s Professional Home Buyer, Resideum
|Opendoor||Offerpad||Zillow Instant Offers||Redfin Now||SOLD to Resideum (Atlanta’s Local Buyer)|
|Commissions / Fees:||6% to 14% average is paid by you, the seller||6% to 10% on average is paid by you, the seller||Yes (percentage not available)||6% to 12% on average is paid by you, the seller|
|Who Pays Closing Costs?:||N/A||1-3% paid by you, the seller||N/A||1% paid by you, the seller||– We pay all costs|
|Inspection?:||Yes, An Opendoor representative will do an assessment of your house.||Yes, A Redfin representative will come look at your house.||Yes, A Zillow evaluator will complete a 2-hour inspection.||Yes, A Redfin representative will come look at your house.||– We won’t ask for repairs|
|Repairs/Cost?:||Repair costs deducted from sales price||Repair costs deducted from sales price||Repair costs deducted from sales price||Repair costs deducted from sales price|
|Average Days Until Sold:||10 to 60 days, you choose||8 to 60 days, you choose||7 to 60 days, you choose||7 to 60 days, you choose|
|Showings?:||No||No||Yes, utilities need to be on||Yes, utilities need to be on||(Just Us) No need to tidy up.|
|Is the Offer Negotiable?:||No||No||No||No|
Want to Get Your Own, All-Cash Offer from Your Local, Professional Home Buyer?
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