If you’re thinking of selling your home, you may have heard about iBuyers. Despite their low market share (well under 1% each year), iBuyers have made headlines for their unique business model. Sellers are taking note of iBuyers, but many sellers aren’t exactly sure how iBuyers work or if they’re worth using.
We have the inside scoop on iBuyers and can help you decide if iBuyers are the right fit for you.
What Are iBuyers?
An iBuyer, which is short for instant buyer, is an entity that makes an offer to purchase your home immediately, typically without even a physical property tour. iBuyers use big data and predictive analytics to calculate an offer price based on the public information available online about your home and their models that estimate current property values for your local market.
You can sell to an iBuyer without ever listing your home on the market, staging your home, or scheduling showings. Once the iBuyer takes possession of the property, it will make cosmetic repairs and resell the home. From the iBuyer’s perspective, the process works almost like a fix-and-flip, but without any major renovation. iBuyers want to get the house resold as soon as possible without investing much time or money in renovation work.
What Are the Pros of Selling to an iBuyer?
There are several legitimate advantages of selling to an iBuyer, including:
No guessing game. You don’t have to wonder when your house will sell or the sales price. You’ll have the information upfront.
A quick sale. You have an offer instantly and can open escrow immediately.
No updating or staging is needed. Since your house won’t be competing on the open market with other homes, you don’t need to get it market-ready.
No showings. You won’t have to keep your home show-ready for weeks or months, and you won’t have to work your schedules around showings and open houses.
What Are the Cons of Selling to an iBuyer?
At this point, iBuyers might be sounding pretty good, right? But there are two major downsides to selling to iBuyers:
iBuyers will offer you less than the market price for your home. If you want a fair value for your home, you’re not going to get it from an iBuyer. Their business models require them to buy at a lower price so they can turn around and sell the house at market value.
They charge you a fee for selling to them. That’s right, you have to pay iBuyers to buy your home. The exact fees vary by company and market, but it’s generally on par with the amount you would pay in real estate agent fees to sell your home for top dollar.
Should I Sell to an iBuyer?
In a hot seller’s market like the Bay Area is experiencing today, there is very little upside to using an iBuyer. Homes in the Bay Area are selling in around 2 weeks, which means you’re inconvenienced by showings and uncertainty for a very short time. This alone de-values the iBuyer service to the point where it just doesn’t make sense to use one.
But these conditions won’t last forever. In the future, when homes are sitting on the market longer, you might want to consider an iBuyer service if you’re comfortable accepting less than your home is worth.
If, on the other hand, profitability is more important to you than convenience, you will always be better off listing your home on the open market with a well-qualified real estate agent. Seller’s agents have the local market knowledge, marketing strategies, sales experience, and negotiation skills to get you the best price for your Bay Area home.
So when you’re ready to sell for top dollar, contact Sequoia Real Estate to get an experienced real estate professional in your corner.