Selling a house can be overwhelming and intimidating, as well as involving a long and complex process. That anxiety-producing process can be shortened by using an iBuyer. But is selling your house to an iBuyer really all that it’s made out to be? Is the convenience really worth it? Let’s find out. Let’s examine what is an iBuyer and what you should watch out for when selling your house in Newark.
What Is an iBuyer and What Do They Offer?
The answer to the question “What is an iBuyer?” isn’t all that complicated, really. “An iBuyer is a real estate company that uses algorithms and technology to buy and resell homes quickly. The ‘i’ is for ‘instant’.” (It’s also sometimes said that the “i” stands for “Internet.”)
“When selling a home to an iBuyer, you may get a cash offer in as little as 24 hours — not technically instant, but lightning-quick compared with the sometimes weeks or months it can take to stage and repeatedly show a home.” So the huge upsides of selling to an iBuyer are speed and convenience. And up until recently, another huge plus was the cash offer, but some companies have put these on hold owing to the coronavirus situation.
Typically, you can also buy a home from an iBuyer. Their digital platforms allow viewing homes and scheduling tours from the comfort of your living room. In addition, buying from an iBuyer is usually quicker than a traditional transaction because you don’t have to work around the seller’s schedule and timeline.
The biggest players among iBuyers are names you’ve probably heard: Opendoor, Zillow Offers, and Offerpad. This status is “based on their real estate transaction volume from January to October 2019.” The first of these leaders, Opendoor launched in 2014. Offerpad followed a year later, and Zillow Offers in 2018.
Although iBuyer transactions remain just a fraction of the real estate market, the phenomenon is growing. For example, “Offerpad, Opendoor, RedfinNow and Zillow Offers purchased 1% of homes sold in 2019 across more than 200 U.S. metro areas, according to a Redfin analysis. That’s almost double the 0.6% of homes iBuyers purchased in 2018.”
Working With an iBuyer
To fully answer the question “What is an iBuyer?” let’s take a look at what working with an iBuyer involves.
Typically, iBuyers promote their ability to enormously expedite the home buying process, making it both fast and easily navigable. Following are the common steps involved in selling to an iBuyer:
- You submit basic property information to the iBuyer through the company website or app.
- Using this information, the iBuyer assesses the value of your home and makes you an offer.
- You accept or reject the offer.
- If you accept, an in-person evaluation is made, followed by a final offer.
- You accept (or not).
- The transaction is completed (or not).
Things to Watch Out for When Selling Your Newark House to an iBuyer
Now that we’ve answered the question “What is an iBuyer?” it’s time to get into the things to watch out for when selling your Newark house to an iBuyer. The most salient cons are as follows:
- You may be offered less than full fair market value. “iBuyers,” those in the know say, “ostensibly try to offer full market value, but they are usually on the conservative side. You can generally expect an offer slightly under your actual fair market sale price that you could achieve by listing traditionally.”
- There will be substantial fees. It’s through these fees – usually about 1.3% more than with a traditional sale – that iBuyers make the bulk of their money.
- The offer is not really guaranteed. “While the iBuyers may make an initial offer on your home, the terms can change after they inspect your home. Or they may elect to withdraw their offer altogether due to new information.”
- It’s hard to qualify. Currently, iBuyers operate in only a handful of real estate markets, and they are extremely selective about the homes they’ll buy.
There another thing to consider in fully grasping the answer to “What is an iBuyer?” And that is the difference between “hard” and“soft” iBuying.
Hard iBuying involves buying your house outright for cash. The iBuyer then typically renovates it and then flips it.
Soft iBuying, on the other hand, involves a service like a bridge loan.“These companies usually don’t buy your home outright. Instead, they help you buy your next home without having to move out from your current home.”
Sort It All Out With Your Agent
So, what is an iBuyer? These are online companies designed to buy and allow people to sell homes quickly to avoid the wait and uncertainty involved in traditional sales. It can be mighty tempting to get it all over with fast, but there are, as we pointed out, some major drawbacks to consider. Talk to your local agent to find out which route is best for you. To discover more, give us a call at (848) 299-4847.