Should you use an iBuyer?
By John Jennings, Purplebricks REALTOR® | May 9th, 2019
The home buying season is rapidly approaching, and sellers are anxious to get their homes on the market. Before listing their homes, many are taking a moment to pause and evaluate the rapidly changing real estate landscape. This year, for many sellers, there is a new option: the iBuyer.
What is an iBuyer?
An iBuyer is a company that makes an offer instantly. Have you ever seen the yellow signs handwritten in a black sharpie that read, “We buy houses fast?” That is essentially an iBuyer, but with billions in backing from investors.
The goal of the iBuyer is to expedite the process of selling a home and remove the guesswork. Rather than list a home, endure multiple showings and open houses, negotiate repairs and navigate the 30-day escrow process, an iBuyer will purchase your home directly from you.
What are the costs and benefits?
The benefit to the seller is a fast and predictable sale. An iBuyer allows homeowners to “instantly” liquidate accrued equity in a home. This can be beneficial for sellers needing a quick sale. However, that speed comes with a hefty price tag. The cost of convenience can come with a 10-14% percent “transaction fee.”
Is it right for you?
So how does the cost of using an iBuyer compare to other options in the marketplace? Let’s say a home sells for $400,000. A traditional agent charging 6 percent would cost the seller $24,000 in commission. With a 10% transaction fee from an iBuyer (in place of a traditional commission), that number jumps to $40,000. Compare that to a full-service brokerage like Purplebricks who only charges a low, fixed fee of less than $6,000 to list your home no matter the home price. Even when added to the recommended commission paid to the buyer’s agent (around 2.5% or $10,000), the seller can save thousands and still receive a full-service experience. According to Zillow, after researching companies that provide instant offers, 9 out of 10 sellers opt to use something other than an iBuyer.
If you are thinking about selling your home this year, consider your options. Are houses selling quickly? How convenient is the added cost of using an iBuyer? Is the offer being made with your best interests at heart, or is it based on profit margin expected by investors? There are many different brokerages to choose from: red brokerages, blue brokerages, yellow brokerages, and purple brokerages. Whatever option you select, take time to understand the costs and make sure the choice leaves you with the most green in your bank account.
Curious to see how much you can save when selling your home with our low, fixed fee? Check out our instant savings calculator here.
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