If you want to sell a home quickly, then working with an iBuyer could be the perfect fit for you. While they’re still a relatively new trend in the real estate world, market forecasts project that iBuyers could be the next big thing.
We are here to tell you exactly how they work, so you can stay ahead of the curve.
What is an iBuyer?
Basically, an iBuyer is a real estate investor or company that makes cash offers on homes within moments of learning about the listing. All of the offers are also made without actually seeing the homes. You call purchasing a home without seeing it first to inspect it “sight unseen” buying.
So, an iBuyer purchases homes sight unseen based on an automated valuation model (often called AVM) and other technology. To make the best offer, an iBuyer relies on data points from as many comparable home sales as it can. It then uses this data to formulate a competitive offer.
Companies like We Buy Ugly Houses, Zillow, Redfin, and more are currently using the iBuying system.
Why use an iBuyer?
There is a very particular kind of person who would benefit from using an iBuyer. For example, if you need to relocate for a job, you are a distressed seller (i.e. getting divorced or experiencing a family tragedy), or you have found your next home and want to quickly rid yourself of the one you have now, then this way of selling could be a perfect fit for you.
This because once you accept an iBuyer offer, you can close on a house in a matter of days.
Here is how the process works:
Submit an offer request.
You have to let the iBuying company know you want to work with them.
Receive and review offer.
Once you get your offer (which usually happens pretty quickly), you can look it over and decide if it is a good fit for you.
Get a home evaluation.
Since iBuyers rely purely data to place a value on your home, you might choose to confirm the offer price via a home evaluation or assessment. This will likely be at your own expense.
Choose a closing date.
Things can move rather quickly when working with an iBuying company. Homeowners usually see closing this quickly this as one of the major benefits of working with these buyers.
Pay closing costs.
Usually, when partnering with an iBuyer, your expected portion of the closing costs is included in the original offer. This includes things like title fees, taxes, and insurance. These are all the usual fees you would pay as a part of a sale.
However, sometimes when you work with an iBuyer, you also have to pay a service fee. If you use your own real estate agent, then you also have to pay them their commission as well.
How do you avoid iBuyer scams?
There are many “we buy houses!” scams out there.
To avoid being taken advantage of, it’s important to do your due diligence before partnering with any iBuyer Company.
A good rule of thumb is to never do business with a company that wants you to give them any money up front. You should never have to pay anything until closing day. And, even then, a third party (like a bank or title company) should be the one assisting in the exchange of funds.
What are the alternatives to iBuyer?
Using a flat fee Realtor is a good alternative to using an iBuyer. As mentioned, most sellers use the iBuyer option because it is cheap and quick. However, the quality of the sale can easily be compromised.
This is because an iBuyer is an investor. The company is buying your home not to live in, but rather to flip for profit. Because there is a certain amount of risk involved in purchases like this, some industry professionals estimate that the costs associated with the risk can increase the fair market value of a home up to 10%, when the average commission on a sale is only 5-6%.
So, to avoid this, you can work with a flat fee agent.
For example, at Clever, you only have to pay $3,000 for access to the help, support, and knowledge of a full service Realtor. The team can help you stage, list, and sell your home on whatever timeline you need to. The best bit is that you can do all of this without sacrificing any sort of quality.