What to do? You have a job offer in a distant city and need to get youself and your family moved there fast … You are really concerned about COVID-19 being spread throughout your home by “Lookers” … You really do not like the ongoing inconveniences of the typical listing-sale process. Is an iBuyer service the solution?
Who are iBuyers and what are the circumstances where these services make sense?
If you watched recent NFL playoff games, you saw the intrusive, in-your-face 72Sold ads. And just like with a circus barker hawking something you like, if you are considering a different home situation, it may seem like a good thing to do.
As a Realtor®, I must say … under some circumstances, it is! I also say … tread very carefully here.
For example, the two statements prominently made in 72Sold ads … Our price is typically above comparable sales … Our Price is typically above appraised value … are NOT feasible. How could a business survive buying most properties at silly high prices? They couldn’t … and they don’t!
What is an “iBuyer”?
Answer … a corporate buyer of residential real estate.
iBuyer … Instant-Buyer … All cash … Simplified selling process
iBuyer companies are trying to provide for housing part of what Amazon provides for retail sales … quick, easy delivery … except charging a premium price for the convenience, rather than a volume discount as with Amazon.
This is an update of a posting nearly two years ago that you can read here … https://homes-phoenix-az.com/ibuyers-future-or-fizzle/
The business models of these companies vary greatly. Some are essentially “flippers” … buy low to sell higher rather quickly. At the other extreme are those that provide a “transition” service … they buy the home you want and allow you to move in. Then they list and sell your current home, after which there is a settlement and the title to the new home is transferred to you. More commonly, an iBuyer simply provides a very prompt sale of your property at a price closer to market than the low-volume flippers. A few iBuyer companies offer a menu of the various versions of these services from which you can choose.
A “transition” service may seem particularly tempting if your property is likely to be difficult to sell. However, such difficulties are likely to result in prohibitively high fees for the service, and that’s if the iBuyer company will offer the transition service to you at all.
Although iBuyers do not operate in all cities, nearly all iBuyers operate in metro-Phoenix, which is the most-active iBuyer market in the USA. This is a very active, very effecient housing market and the Arizona selling process is as streamlined as any in the U.S.
But even here, not all homes “qualify” for services by iBuyers. The most common requirement is that you, the owner, have significant equity in the property. A chunk of that equity is usually the plum iBuyers are after. Zillow seems particularly selective.
So … do you need to sell and move in a hurry? Are you really annoyed by strange people in your home? Or severely concerned about COVID-19 issues from people in your home? Do you not want to bother with fix-ups that you know are going to be needed? Are you looking for a super easy transition from one home to another?
Selling your property through a traditional listing with a Realtor® may NOT eliminate your special issue. Within the iBuyer community, there may be a company who’s business model provides a solution.
In every case, the tradeoff will be the cost.
If solving your unique problem is worth the extra cost of an iBuyer, then that’s the logical way to go.
That there will be no extra cost, as implied in those “72Sold” ads, is very rarely, if ever, the case.
And if you explore any iBuyer option, or even several, do NOT commit to using the service, even mentally to just yourself, based on the initial presentation. Trust this … the ultimate deal will vary significantly from that initially presented.
The most insidious trick iBuyers use is with repairs demand. 10 days after Acceptance, the time period in the AAR contract for inspections, the iBuyer submits a BINSR list that’s a mile long, commonly with much of it being very trivial items. It’s just a lever to towards a lower price. To prepare for this iBuyer trick, insist on a 5-day inspection period as a term in the purchase agreement. If the iBuyer refuses that, reject the offer. If the iBuyer agrees to a 5-day inspection period then plays this trick, you can respond with No! to the repair demands and will have minimized your time off-market if the iBuyer cancels the deal.
And always have an indepth discussion with a Realtor®, or several, so you know what the extra cost, extra time and/or transition issues actually are. Plus, the Relator® may actually have a solution to your issue.
A full-service Realtor® at a discount is very likely the best solution, except only for the most unique problems.
I must also add that the offer by a Realtor® to buy your home if it doesn’t sell in an exceptionally short time after listing, should be evaluated in the same light as any other iBuyer offer.
OpenDoor was the original iBuyer company, currently does the largest volume of transactions and has the widest selection of service choices. For an extensive review of OpenDoor and comparison to other services, click the following link … https://www.realestatewitch.com/opendoor-reviews-and-how-it-works/
To summarize that review, here are some exact words snipped from it:
- Opendoor is as close as it gets to an all-purpose “one stop shop” for the U.S. real estate market
- But that kind of service isn’t cheap
- If price is a concern, one option to consider is a full-service agent that offers a lower commission fee.