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Traditionally, selling your home means contacting a real estate agent, who will market your home until you receive an offer. However, these days, iBuyers are looking to cut out the middle man and simplify that process. That said, working with an iBuyer may not be right for everyone.
With that in mind, I’ve listed three questions to ask when deciding whether working with an iBuyer is right for you. Read on below to get some clarity on what’s the best way for you to sell your home.
What is an iBuyer and how can one help me sell my home?
At its core, an iBuyer is a company that seeks to simplify the home buying and selling process using digital tools. As the seller, when requested, an iBuyer will use an algorithm to make you an offer on your home. You then have the option to accept or reject that offer.
If you accept the offer, you’ll then be under contract with the iBuyer. Usually iBuyers allow sellers the freedom to choose their own closing date. However, beyond that, working with an iBuyer is much like working with a regular buyer. Their offers are generally conditioned on inspections and you’ll likely be asked to make some repairs to the home.
After closing, you’ll be free to move into a new home, just like you would with a traditional sale. At that point an iBuyer will generally try to fix up the home and sell it to someone else for a profit.
Do I need (or want) to sell my home fast?
Generally, convenience is the main reason to use an iBuyer. Since iBuyers use algorithms to price to make their offers, in most scenarios, you should be able to receive an offer almost instantly. This can be very attractive if you need to make a move quickly.
In addition, as mentioned above, an iBuyer will typically give you the freedom to choose your own closing date, as long as it falls within the minimum amount of time they need to close on a home. If you need to move by a specific date, using an iBuyer may be a solid option.
Is convenience worth the cost?
However, it’s important to keep in mind that added convenience does come at a cost. According to a recent report by Mike Delprete, a real estate tech expert, iBuyers make their money in two ways: price appreciation and service fees.
For its part, “price appreciation” refers to the difference between the amount that the iBuyer offers you and the amount that your home ultimately resells for. Delprete’s report found that a median price appreciation of 3.3%, or $8,900 on a $270,000 house.
As far as service fees go, his research found that iBuyer fees typically amount to 7.5% of the home’s purchase price. That’s 1.5% higher than the traditional real estate agent commission.