It’s natural for your clients to want to sell their homes as fast as possible. That’s especially true if they’ve already moved to a new house and aren’t thrilled about the idea of paying two mortgages for months on end. In a perfect world, they can sell their old home and close on the new one within 30 to 60 days.
But sometimes, things don’t go quite that smoothly. As a result, a trend is gaining steam where home sellers use an iBuyer to speed up the sale process and eliminate stress. This practice can lead to almost instant home sales for sellers willing to forgo the traditional approach of hiring local real estate agents like you.
What is an iBuyer?
An iBuyer is an organization, investor, or program that will buy homes without going through the traditional steps to list or sell the house. Instant home-selling solutions like Opendoor, Zillow Offers, and Offerpad are examples of organizations that have led the iBuyer trend.
The iBuyer process is direct and mostly automated, which offers sellers an instant cash offer on their home, sight unseen. iBuyers view the home location and use algorithms and neighborhood real estate transaction data to determine home value.
They then make a cash offer to the seller quickly – even within 24 hours. The seller accepts or declines the offer and decides on their preferred closing date. Sellers love the quick turnaround. There are no listings, cleaning, inspections, repairs, open houses, or waiting on bidding wars.
Real Estate Agents vs. iBuyers
Wow, so if sellers can unload their home that fast for a nice chunk of change, why would they need you? Don’t worry – you’re still a valuable part of the real estate industry and don’t need to start looking at a career change.
The real estate and iBuyer methods each have advantages that you should make sure your prospective clients understand. In the end, it just comes down to what makes the most sense for the seller.
Since the iBuying trend is gaining more traction each year, it’s helpful for you to know why sellers would choose either a real estate agent or an iBuyer. That way, you’ll be prepared to answer any questions prospective clients may have. They’ll appreciate your guidance.
Pros of iBuyers
Speed – iBuyers can offer cash for homes quickly, typically within 24 hours. That’s much faster than the traditional selling route. Although during a “seller’s market,” real estate agents can often deliver higher offers just as fast.
Convenience – There are no repairs, upgrades, staging, showings, or open houses as part of this process. That eliminates stress for the sellers.
No Appraisal Contingencies – iBuyers pay cash for homes, so that means there is no risk of an appraisal delaying or preventing the sale.
Trade-In Options – This process allows for a seamless buy-and-sell process, which enables sellers to move without financial constraints.
Pros of Real Estate Agents
Lower Fees – Even if sellers include the commissions they’ll pay their agents, they’ll likely have less expense when it comes to fees and commissions.
According to research from real estate data firm Collateral Analytics, using an iBuyer costs more fees and results in a lower-priced sale than properties sold by traditional agents.
The report shows that iBuyers cost home sellers about 15 percent of a home’s sale price, while agents cost up to 7 percent. That’s a difference of up to $16,000 on a $200,000 home.
Profit Potential – Sellers are typically responsible for any needed home repairs. However, if the home needs only minimal maintenance and upgrades and is purchased quickly, selling through a real estate agent is often more profitable.
Real estate agents are typically well connected with other professionals in the industry. That is a plus for sellers because agents can direct them to dependable and reasonably priced contractors to quickly take care of the repairs.
Knowledge of Local Market – Computers and fancy algorithms are great, but they can’t always replace the value of human connection. As a local agent, you have a deep knowledge of the communities you’re selling in.
That gives your clients an advantage because they can rely on your expertise when correctly listing the home, deciding asking price, analyzing offers, and highlighting a home’s intangible attractions (location, school district, etc.).
Sale Eligibility – Because iBuyers rely on quick resale, they only make cash offers on homes they think will sell quickly. That means they are more selective, which could mean some sellers’ homes may not make the cut.
On the other hand, real estate agents will sell virtually any home that’s suitable for sale. You aren’t necessarily focused on what a home will sell for in the future or how fast it will sell. Your job is to sell it for your initial client for as much as you can. This approach is a little less cutthroat than choosing to sell only the homes that will sell within 24 hours.
Although iBuying is becoming more common in some parts of the country, it’s not an option everywhere. And it’s not always the best option for home sellers. As a local real estate agent, you can be an advocate for your clients to ensure that their approach yields them the results they’re looking for.
Yale, A. J. (2021, January 8). Study shows Ibuyers Cost Home Sellers thousands; is convenience worth the price? Forbes. Retrieved January 11, 2022, from https://www.forbes.com/sites/alyyale/2019/08/16/study-shows-ibuyers-cost-home-sellers-thousands-is-convenience-worth-the-price/?sh=315b5de82269
Brown, P. (2020, March 9). The Pros and cons of iBuying. RISMedia. Retrieved January 11, 2022, from https://www.rismedia.com/2020/03/06/the-pros-and-cons-of-ibuying/
Daniel Bortz has written for the New York Times. (2021, November 4). What is an iBuyer? An Essential Guide to ibuying: The pros, cons, and costs. Real Estate News & Insights | realtor.com®. Retrieved January 11, 2022, from https://www.realtor.com/advice/sell/what-is-an-ibuyer-a-guide-to-ibuying-pros-cons-costs/