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The scoop on iBuyers

By Matt Wilson How many of those letters do you get a week on someone wanting to buy your house for X amount and you don’t have to do anything but move out within 8 weeks? There are so many of these companies now that inundate your mailbox and email. Opendoor, Offerpad,,, Zillow (before they started losing millions), Homelight, Orchard and many more. They will promise you no repairs, sell it “as is”, not charge realtor commissions, no showings, make it super easy and THEN promise to pay you way more than your house is worth. They will make it so easy that you almost have to call to find out what is wrong with this. I will save you the call, everything is wrong with this. The biggest downfall is the money you leave on the table using these companies. The initial offer may look good but by the time you get to closing you are losing tens of thousands of dollars. Most of them have a service fee that they charge which ranges from 1-5%. The national average real estate commission is 5.8%. But they still charge their prices for repairs, older HVAC system and water heaters, roof damage, structural issues, and even cosmetic and other mechanical compliances. These fees can add up to an additional 5-10% off the sales price. We had a client get a bid from one of these companies that was $125k below what my comps told me the house was worth. This was the initial offer without repair concessions. When the house finally went to the open market for sale, it sold for almost $130K more than they offered. We went under contract in 4 days and closed 21 days later. The seller was basically being charged a $130,000 convenience charge. While the convenience charge to use an ibuyer can sometimes make sense, most sellers should never entertain this option and don’t. The ibuyers only make up about 1% of all real estate transactions and are getting smaller as the business model is so unpredictable. Many of these companies have changed their models and moved away from ibuying because they were/are losing too much money. Redfin recently announced a layoff of 13% of the company's ibuyer workforce. Opendoor is trading at less than half than it did at their peak in 2020 and losing money from selling homes they overpaid for during the crazy times of 2021 and the first quarter of 2022.

If you are thinking about using an ibuyer to sell fast, talk to a real estate professional first.

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