While iBuyer companies continue to make news, Opendoor, Knock, Offerpad , and Redfin might not be as formidable, or as good a deal, as the current press makes them out to be.
“IBuyers are companies that offer homeowners cash for their houses. The companies typically do minor repairs and maintenance, then try to quickly relist the home and sell it for a profit. Homes can reappear on the market within a matter of weeks or months, but the key is to buy and sell a lot of houses and do it quickly.”
These companies use property valuations to make relatively quick offers sight unseen, and they typically close in a few days. Convenient as that might sound, there are several reasons instant home purchases aren’t good for sellers, including inaccurate valuations, lowball offers, and fees adding up.
To put things further into perspective, Forbes explained the following:
If you purchased your home for $400,000 with 20 percent down, you showed up to closing with $80,000 of your own money, which is also your equity. If the value of your home remains the same and an iBuyer offers you $380,000 for your home — a 5 percent discount to fair value — you will lose $20,000 on the value of your home, plus pay a 5 percent commission (an additional $19,000).
When consumers are informed, traditional agents usually win
When buyers fully understand the costs associated with working with an iBuyer, they normally choose a traditional agent. Zillow reports that 90 percent of its Instant Offers are rejected in favor of working with a traditional agent.
By the same token, Redfin CEO Glenn Kelman says, “Most customers who get a Redfin Now offer don’t take it.”
Other cracks in the iBuyer model are showing up on Yelp. While reviews of traditional brokerage models are easy to find on Yelp, Inman reported that the 500 Opendoor and Offerpad Yelp reviews are buried where no one can find them through Yelp’s online search tool or through Google search.
Needless to say, many of the reviews are scathing and could turn off most buyers who are thinking of using this model.
So while Ibuyers are the current “sexy beast” and getting much of the news in real estate there is a reason the vast majority of their offers don’t work. Sellers like you realize they can net more with a traditional agent like myself. Interested in learning how to put the most money into your pocket when you sell – give me an email at mike.stott@mac.com or a call at 770-726-1454
