Here’s what you should know about iBuyers
If you’ve paid attention to the real estate industry at all lately, you may have noticed the increased popularity of iBuyers, or online investment firms that buy and sell properties. And they do it quickly. By leveraging algorithms, they swiftly determine the value of a property and extend an automated offer. Sounds great if you’re selling and need to move fast, right? That may be true, but there are several things you should know and understand about iBuyers before jumping all in.
When a property value is automated, it can be an inexact science
IBuyer algorithms are proprietary but typically depend upon the local market and properties that have sold in the recent past. But if a nearby property with outdated décor is stacked against your pristine property with tasteful upgrades, it isn’t apples to apples, even if the bed and bath ratios match. Investments made in your property and the condition of the home could go unnoticed, which is tantamount to leaving money on the table.
A fast sale may or may not be ideal for you
Because iBuyers typically generate an offer quickly, it’s possible for a home seller to get on the fast track to closing. And that’s great if you’re looking to move quickly, for whatever reason: a new job, a big move, a change of life that necessitates moving fast. But for the average seller, the expedited timeline could pose some problems. If it’s the market is tight on inventory, as it is in our region, you may not see much additional benefit to the iBuyer timeline.
Dealing with a single buyer isn’t always for the best
When an iBuyer extends an offer, because of the speed, it’s typically the only offer on the table. And keep in mind the value of your home is being set by an investment firm, not by you, not by the market. Is one offer enough for you? If not, listing in the traditional housing market will offer much wider exposure and the potential for competition when it comes to offer time.
Selling with an iBuyer comes at a price
IBuyers typically charge a commission and also can bid low to account for the risk they believe they are incurring by offering instant liquidity. As a seller, it’s helpful to think of an iBuyer as a wholesaler: they want to buy low and sell for a profit. That may be a smart business model, but if you’re selling your home, and aren’t making money off bulk sales, you potentially bear the burden.
Traditional market or iBuyers? The choice is yours.
When it’s time to sell your home, the ideal sale will be as unique as the reasons for wanting to move. It’s important to consider the many factors that play in to the complex world of real estate to determine whether it’s better to work with an iBuyer or a traditional real estate sale model. Getting a second opinion is always helpful, and talking with a Realtor can give you great insights into the potential for your property and its true market value.