We’ve all seen the commercials with the couple on a front porch saying “Our house sat on the market for a year. Then we listed our home ourselves and sold within days.” It’s the same story over and over, but is it really true? The rise in iBuyers has left many people wondering “Is that right for me?” Before jumping into why iBuyers are absolutely not for everybody, it is important to know exactly what an iBuyer is and is not.
An iBuyer is basically a company or investor that places an offer on your home based on an algorithm. Once they have purchased the home, the company then resells it for a profit. While this may not initially sound like a bad thing, especially to a motivated seller it does have plenty of drawbacks as well.
A typical broker will charge typically 5-7% of the sale price for your home. It is clearly laid out in your contract and along with closing costs, a seller is generally not asked to pay for anything else. However, with an iBuyer there are multiple fees that may or more often not disclosed upfront. Typically, with an iBuyer, a “convenience fee” of 6-9.5% is the first requirement for a seller. They also require sellers to pay for fees typically paid for by the buyer. In total, iBuyer’s fees range from 7-10% of the selling costs. Which is a lot of money compared to a traditional broker.
The purchase price when selling your home to an iBuyer may have some surprises as well. Remember, their goal is to resell your house for money. Their offer will not be market value for the home, it will be significantly less. As shown in a study by Collateral Analytics. The difference in the purchase price and market value was as much as 7%. This means that potentially your home will already be purchased for up to 7% of what would be a fair price, you will pay up to 10% of the selling price in fees. And the costs of using an iBuyer are still not complete.
Along with charging a convenience fee and offering you below market value iBuyers typically also credit your home with repair costs. Which if your home is in disrepair and you are unable to do the repairs yourself it does sound like a feasible solution, however, some sellers have reported the repair costs going as high as $300 to simply replace 3 lightbulbs in the home. All of these repair “expenses” are costing you money, way more than what it would take to have fixed yourself.
All in all, using an iBuyer is rarely the correct choice for anybody. With sellers losing tens of thousands to these platforms based on false promises an agent will always be your best choice when preparing to sell your home.
I am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.
Certified Residential Specialist | Real
Mountain Valley Real Estate