Selling to an iBuyer can be risky. Many people see it as a fast solution for an old or run-down property, which it can be, but it comes with a cost. Selling your home to an iBuyer could cost you thousands of dollars. iBuyers don’t buy every home. It’s always best to check an iBuyer’s eligibility criteria upfront. iBuyers need to purchase properties slightly below FMV to make a profit.
With an iBuyer, sellers are required to pay for repair costs they may not agree with.
An iBuyer’s instant offer is a base price that gets lower after the home inspection. Sellers know they must pay for repairs their iBuyer will make to their property, but many are surprised by the cost of improvements they would not have made on their own. As those costs get higher, the iBuyer’s offer price gets lower, sometimes requiring frustrated sellers to pay thousands of dollars in seemingly petty repairs, out-of-pocket costs or both. Sellers who want more control over what they spend on repairs may want to think twice before selling to an iBuyer.
You pay NOT to play on the open market.
The average real estate agent commission is about 6 percent of a home’s sale price, while iBuyer service fees vary by company and market. According to an analysis of transaction data for the largest iBuyer, the average service fee falls somewhere between eight and nine percent, but it can get up to 12 percent in riskier markets. iBuyer service fees generally earn investors a small profit of 5.5 percent, but it may still cost sellers more than working with a real estate agent.
I know you see all the ads, especially at this time of year, for internet brokerages about selling your home with a guaranteed offer, no hassle etc. They offer your home to investor based companies that will offer to buy your home for thirty to forty percent off you current home’s value.
This may work for people that have to sell quickly and don’t care about equity and just want to unload a problem home due to probate or debt from a home they own.
These iBuyer companies, that you see advertised, are national data companies that sell your information to real estate agents and mortgage agents. In other words, they make money off you, the agents and mortgage officers who pay them for leads. They collect you data from state tax records or they just make them up, because in some states these companies do not have access to tax records. The information they collect off you, they sell to companies that collect that data and turn around and sell that data as leads through lead companies.
We recommend that you use a local Realtor® to sell or buy your home. They will use local mortgage companies, close with local closing attorneys, that keeps your money local, pays local taxes which helps the local community and helps the local economy. If your goal is to get as much money for your home as you can, it may be best to work with a Realtor®. We do not sell your data. All your information is kept confidential. Realtors® are paid commissions upon performance with your transactions. Our service are free to Buyers, Sellers pay all purchasing commissions.
Let’s take a look at some of the larger ones that you see all the time through TV ads and social media.
Zillow is a corporate national data company based in California that is buying up as much real estate information sites that they can nationally. They want all that data to sell to agents and mortgage companies, etc. They charge for leads as much as $700 a month for your information once you click in and fill out their information forms.
People use their site because it is an easy, popular site to search for homes. In their disclaimer their Zestimates can be off as much as 65%. They pull their information from tax records, which in some states they do not have access to.
OpenDoor is a national data corporate site which sells your data to data companies and leads to agents. They offer an instant cash offer for your home. They advertise no showings, close quickly, three days to move, local moving service. They claim there are no commissions. What there is though are fees. Fees that can run from six percent to thirteen or more percent depending on the Selling/Buying package you choose. They charge for the moves, remodeling of your home. They roll the cost into your new home mortgage through their mortgage companies and they take that out of you equity from selling your previous home. Those moving companies, contractors and national mortgage companies pay for their business to OpenDoor.
Knock is a national corporation data company owned by Inman News based in California. They sell real estate marketing content to real estate agents for an annual fee. They collect your information and sell it just like the others. They offer no fees from agents (agents are paid by commissions for performance, not fees) for services. They offer non-competitive offers, twenty five thousand in repair cost and roll that over into your mortgage, lend you money for down payment all for fees they charge. Those moving companies, contractors and national mortgage companies pay for their business from Knock.
Redfin is a national data company based in California that performs basically the same way. They promise to sell your home for a discounted commission, but you have to purchase your new home through them to get that discount. They sell your information to data companies. They also hire local agents to find you a new home, but charge a thirty percent referral fee from the brokerage at closing. They recommend that you use their mortgage companies and their closing attorneys which they also make referrals from.
Mark Spain is a local real estate firm that promises no hassle listings, no showings and they can close in 21 days. They guarantee an offer in hours. They use a local investment companies to offer you thirty to forty percent off your current home’s value, after an evaluation (appraisal basically). If you don’t qualify or turn their offer down, they turn around and hand you off to one of their agents which they charge a hefty referral fee. They spend a ton in advertising so you see and hear them a lot here locally.
When you hire a local professional Realtor®, you get the local knowledge and experience. You also are helping the local economy, just your agent alone will hire dozens of local people to help in your needs. We have the best professional partners in the business and they are all local. We will get the most value for your home that we can. We can help with the purchase of your new home at no cost to you being the Buyer. Our company, The Wagner Team at Keller Williams has the best major national marketing packages being the largest real estate company in the world. Keller Williams has been rated the best overall real estate brokerage firms in business. We can make your buying and selling experience as smooth and easy as possible with no gimmicks or extra hidden or tack on fees.