Should you choose an 'iBuyer'?
Selling your home, huh? You've heard the 'war stories' from your friends; the hours of cleaning and re-painting, maybe some repairs or updates their agent asked them to make to assure a higher selling price. How about the inconvenience of 'showings' - people walking through your home, opneing your private closets and seeing all your stuff? They had to take the kids and dogs out while a showing was going on. Not to mention the waiting for a decent offer. If their agent was good at their job, the price was right on their house so maybe they didn't have to wait that long, right?
Maybe your friends got their home sold, maybe they didn't. YOU certainly don't relish going through what you heard they did.
So what's this 'iBuyers' thing you're hearing about? Sounds GREAT to get money right away, not have to fix up anything, and you can move on with your life without your stuff exposed to strangers! Awesome, right?
An 'iBuyer' is most always an 'investor' or a company run by an investment group. Let's read the definition: "investment [in-vest-muh?nt]: the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value." That means they NEED to MAKE MONEY on the house they buy from someone. Let's take a look at that scenario:
Say your house is worth on the real estate market about $350,000 (once you declutter and maybe fix a couple things). If you go with a real estate firm, maybe the commission rate would be 6% (3% for each side). You'd maybe invest $3,000 in some fixes before listing on the open market. In Texas, closing costs (the costs to actually get the title and deed transferred to the new owner) might be around $3300, and add in whatever amount of property tax you'll owe at that date (that won't change no matter WHO buys your property). Commission would be $21,000.
- Sale Price: $350,000
- less commission -$21,000
- less title cost -$3,300
- less improvements -$3,000
Total of $322,700 net (before prop taxes) give or take.
The iBuyer is NOT going to pay you $350,000. They most likely WILL offer at least 10% less, along with taking 'repair fees' as well (some make YOU pay a dollar amount for THEM to make the repairs). Some take ALOT off for any repairs they feel they must do to make your home sellable in their eyes. Usually those are not negotiable. Alot of iBuyers will still charge you a 'commission' (often called a 'service charge' and/or 'buyer broker charge') that may reach to 12%.
Investment companies are not looking out for you; why would they? They usually have a bunch of folk in the corporation that expect the company to MAKE MONEY, not give it to you.
In what instance might an 'iBuyer' be the right choice for a seller? Here are a few:
- Divorce - ugly ones that need immediate sale of the property
- Death - Probate may require immediate liquidation of assets to the will holders.
- House in poor condition - You may have trouble selling this one on the market if you don't have any funds to help spruce it up.
- House not salvageable - Maybe only the land is worth any money. Not sure how many iBuyers want to deal with this, though.
- Witness protection program - You gotta go NOW! Ok, seriously I'd bet the governemtn would take care of the house issue somehow.
- Quitclaimed property - Maybe someone just let you have the property for some reason, and you want to make a quick buck.
Is it worth avoiding what really are small inconveniences to put LESS money in your own pocket? Are we really a society of instant gratification such that time and effort cost more to you than the money you COULD have made?
Talk to a real estate agent or two. Don't be scared of us. We are out to help you get the most you can. Yes, partly because WE get more when you do, but not enough more that we should be misleading you in the value of your home. Always get a few opinions before you choose who you want to work with.
And be educated on 'iBuyers'...they're not particularly there to help you.