What are iBuyers, and is it a good idea to sell your home to such a company? Let’s discuss the facts.
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You’ve probably been hearing the term “iBuyer” thrown around a lot these days. But what is an iBuyer, and why does it matter to you as a home seller?
In short, an iBuyer is a company that will buy your house outright for a reduced price. These companies promise a quick, convenient experience, but this isn’t always the outcome they deliver.
HomeVestors, the company that puts out those ‘We Buy Ugly Houses” signs, was among the first businesses in this real estate niche. They purchased low-end homes at 40% to 50% below market value, offered a fast, all-cash closing, and sold them for a profit. When they began franchising the business, they even developed their own valuation program that skewed home values based on their own profit margins.
Today, the iBuyer industry has been completely transformed—and not necessarily for the better. Current iBuyer companies are backed by massive corporations. As such, they’re no longer only targeting distressed homes. Now, their goal is to convince any seller within the $100,000 to $500,000 price range they can connect with that the experience they offer is superior to listing on the open market.
Most sellers would agree that selling their home for 20% below market value is far from what they would call “convenient.”
These companies still offer convenience, but most sellers would agree that selling their home for 20% below market value is far from what they would call “convenient.” In fact, most iBuyers today offer an escrow period between 30 and 60 days. This is no faster than what you would experience on the open market.
The one benefit that does come with selling to an iBuyer is that you won’t have to prepare your home for showings.
The question sellers must ask themselves is whether they find this particular benefit more appealing than being able to earn top dollar.
Working with an agent in a traditional home selling experience may require slightly more effort, but doing so will help you net 12% more (on average) than you would get from working with an iBuyer. And when it comes to a home worth hundreds of thousands of dollars, a 12% increase is quite a big difference.
If you have any other questions about this or any other topics related to real estate, feel free to give me a call or send me an email. I look forward to hearing from you soon.