by Erik J. Martin, CTW Features
Eager to sell your home quickly without having to wait weeks for the transaction to close? Your best bet in this scenario is to find a buyer willing to pay cash. That’s not easy in any real estate climate, as homes are among the most expensive purchases consumers will make in their lifetimes and most Americans don’t have hundreds of thousands in liquid funds they can shell out. But there’s a particular type of cash buyer that can be appealing to many sellers: iBuyers.
“An iBuyer is an organization that uses technology to appraise and make home purchase offers. These companies typically have access to a wealth of property and lending data, market trend data, and an algorithm determining a property’s estimated worth within a few minutes,” explains Cody Rudolph, a real estate investor.
iBuyers are in business to find and purchase properties, improve them if necessary, and sell them for a profit. They offer an advantage over other cash buyers in that they can make offers automatically – sometimes within minutes – via their user portal or website.
Partnering with an iBuyer has its benefits and disadvantages. Regarding the former, you can cut through a lot of red tape and eliminate third parties by opting for an iBuyer.
“iBuyers purchase homes using cash, which can be an attractive option for sellers in many circumstances. For instance, if you need a quick sale for financial or other personal reasons – such as you are undergoing a divorce or you’ve inherited property that you need to sell quickly – this can be a good option,” says Omer Reiner, a licensed Realtor in Fort Lauderdale, Florida.
When you sell to an iBuyer, you also don’t have to worry about the seller getting approved for financing and closing on time or letting strangers come into your home via open houses and private showings.
“You can avoid the need to clean, potentially update, stage, host open houses and the sometimes-intrusive nature of traditional home selling,” says Holly Switow, a real estate advisor with Premier Sotheby’s International Realty.
On the other hand, you will seldom receive a higher price than if you had listed your property on the open market with a real estate agent/Realtor – the traditional route that typically fetches the highest sale price. You may be insulted by a lowball offer given by an iBuyer.
“Also, many iBuyers don’t purchase fixer-uppers. They typically focus on houses up to a certain price point and in good condition. Homes needing extensive work or more expensive homes likely won’t qualify,” adds Rudolph.
Finding an iBuyer isn’t difficult. These companies typically operate in every state and widely market their services.
“You will know if you have an iBuyer company in your market. You will receive postcards and phone calls saying, ‘Let us buy your home today,’” says Switow. “These are generally not the fix-and-flip companies that also purchase in different real estate markets.”
Switow recommends that sellers with plenty of time to find a buyer and those who don’t have much equity in their homes should likely avoid selling via an iBuyer.
“It’s better to sell your home traditionally by going to market on the multiple listing service. iBuyer models are not set up to offer the personal service, access to hundreds of websites, contacts, and marketing and negotiating strategies that traditional selling models offer using a real estate agent,” she adds.
Rudolph also recommends opting for the traditional selling route over an iBuyer.
“Inventory remains at an all-time low, and selling prices are still ludicrously high. If your home is reasonably priced and in halfway decent shape, you should have no problem selling on the MLS in short order nowadays,” he says.