iBuyer- 5 Things You Should Know About Instant Home Offers
Will Open Door, Zillow, Offer Pad and Knock take over the Real Estate industry? These companies are offering cash for your home- when you tell them about your house and send them pictures of the house. When I found out Zillow was entering the iBuyer market; I thought to myself is Zillow is going to be stiff competition or will Zillow put the other companies out of business? You’re probably thinking to yourself; this is a great idea, I can sell my home quickly. My second thought was, how are these companies making money and are they profitable? iBuyer is not big in Delaware, Pennsylvania, and Maryland yet, but I am sure it’s coming. Here are a few things you should know before considering the instant offer option.
1. Consider The Cost
The fees associated with the instant offer transaction is too high to make it worthwhile. Each of these companies will already be offering less than your house is worth. On top of the low-ball offer (purchase) price, there is also the holding costs (the amount you pay them while they’re waiting to sell your property). There is also the customer experience fee, acquisition cost and repair costs. The average price is to sell your home the non-traditional way will end being between 6%-11%. To put in perspective, if you decided to sell your house for a lot less than the market value and accepted an instant offer for $300,000, you’d still need to subtract $18,000-33,000 for fees.
2. No Negotiating
The costs are non-negotiable with instant offers. Currently, the only wiggle room is with the offer (purchase) price, and that’s if you send them an appraisal showing your house is worth a lot more than they’re offering. They will not make you an offer for the appraised value, but they’ll probably increase their offer price. When you’re selling your home with a traditional Realtor, the buyer and the seller can negotiate on price, repairs, and fees. You will not get this going the iBuyer route.
3. The Experience
What is the entire iBuyer process from start to finish like? You will not easily find reviews, because this Inman article claims they’re being hidden. If you work with a Realtor, you’ll at the very least have someone working for you and on your behalf. It is the Realtor’s responsibility to have your best interest at heart. Think about it, who benefits from the instant offer process (hint, Open Door, Offer, Knock & Zillow)? When you work with a Realtor, the seller, buyer, buyer’s, agent, seller’s agent and the economy all benefit from the transaction.
4. The Only Reason To Consider Instant Cash Offer
The only good thing about the instant home offer is, once you accept the offer, you get to pick the closing date. I believe there is a market for the instant offer service. It is for people who are in pre-foreclosure or foreclosure and have a lot of equity to lose. It is not for people who need to move abruptly, need the funds from the sale of their home to purchase another. There are bridge loans and other options for those scenarios/situations.
5. Real Estate Is A Local Industry
In my opinion, there will be innovative ideas and new technology in Real Estate, but nothing can replace the need and want of the personal aspect of real estate. Evaluating a property accurately is also important to make sure the deal is fair; having a knowledgeable and experienced Realtor to call for answers or direction is crucial in preventing costly mistakes. Ask yourself, is the convenience of picking a quick closing date worth the price