No matter what their personal motivation for selling, all homeowners have the same over-arching aim: “to make as much money as possible for as little headache as possible,” maintains Rebecca Hidalgo Rains, managing broker, Berkshire Hathaway Home Services Arizona.
But individual sellers put varying weights on either side of that equation. In the past few years, “iBuy” firms have proliferated, catering to sellers willing to sacrifice some dollars for a quick and easy sale.
Basically, iBuyers collect reams of residential sales data, and analyze it to determine whether buying a home, spending a certain sum for updating, can then be re-sold relatively quickly.
It’s similar concept to flipping, but iBuy firms take a corporate approach, heavy on data analysis to make purchase decisions. Operating in multiple states, iBuyers are also distinct from flippers or local franchises like “We Buy Ugly Homes”. Indeed, homes targeted by iBuyers need some quick updating, not extensive renovation.
Two big iBuyers, RedfinNow, and Zillow Offers, shut down recently because slower price escalation makes profits less certain.
But since, “There are always sellers who want to move quickly,” iBuyers like Offerpad, Opendoor, and Express Offers, are persisting, says College of William & Mary professor Michael Seiler. In a recent study, Seiler and other academics determined that iBuy sellers made about 4.9% less. If sellers learned that their home re-sold for 10% or more than they received, they experienced regret – until learning what improvements were made.
By inputting an address at an iBuyer website, homeowners can see if they’re even extended an offer. Many homes aren’t in areas where the iBuyer operate, or the home isn’t a good candidate.
Whether or not an owner finds an iBuyer is interested, he should consult local experienced real estate agents, adds Hidalgo Rains, since they have the local expertise to advise on the likelihood that you can sell conventionally at a certain price within a certain time frame. Agents also know iBuy contacts.