Disadvantages of Selling with an iBuyer
Everything is being done online today, even selling your home. Companies like Redfin, OpenDoor, and Properly are gaining popularity, and many people are choosing to sell their property through this route. However, what works for one person might not be true for you. Let's look at 3 disadvantages of using these services to help you decide if it's right for you or not.
First, what’s an iBuyer in Real Estate?
An Instant Buyer (iBuyer) is a real estate company that buys houses directly from the homeowners for cash. The way it works is simple, after logging in to the buyer's website, you fill out an application. You'll receive an offer in cash from the company after a few days (some companies prepare an offer within 24 hours). If you are happy with the offer, you accept it. There will be paperwork and formalities following your acceptance of their offer. After that, you've sold your house!
Big buyers in the market today include Redfin, Opendoor, and Offerpad, but other smaller companies use a similar business model, and we're seeing more and more companies pop up.
1) Higher Transaction Fees and Deductions
Traditional real estate transaction costs are about three to six percent of the total cost of your home. With iBuyers, it can go up to as much as 13% of the price of your house. Also, if you choose the option of having the iBuyers fix your home, the cost of doing so will be deducted from the total sale price of your home.
2) Your House May Sell at A Lower Market Price
The primary strategy of iBuyers is to buy your house at a lower price than what it's worth in the market. This way, they can resell your home faster, with more profit for them. Typically an iBuyer will buy your house $15,000 less than its actual market price.
3) You Lose the Human Touch
If you choose the right Realtor to sell your house, you can do everything an iBuyer can do, but with a human touch. Your real estate agent can also answer questions you might have about selling your home and give you advice on possible new houses if you're looking for one. An agent also allows you to keep the equity of your house if you're looking for a new one. iBuyers doesn't give you this option. You'll likely sell for a higher price, and you'll have an expert guiding you through the process.
You can also negotiate the final price of your house with the help of a real estate agent, whereas, for an iBuyer, there is no room for negotiation. You either accept their price, or you don't.
Should You Use an iBuyer to Sell Your Home?
The way you want to sell your house depends on you and your needs. Suppose you are in a situation where you need to sell your home as quickly as possible; going with an iBuyer might be an option for you. But keep in mind that you pay higher fees, and you're selling your house at a lower market price. It's also worth taking current market conditions into consideration. If homes are already selling quickly, the need for iBuyer is even more limited.
An agent can sell your house at a price that you'll be happy with and provide you with all the services that an iBuyer can with a human touch.