We’ve all seen the iBuyer ads. “Get a great offer within 24 hours.” “Close quickly with no showings.” “Choose your closing date.” These are the enticements offered by iBuyers trying to woo those folks who are thinking about selling their home with promises of unbeatable ease and convenience. But at what cost? iBuying is short for Instant-Buying. These are real estate companies who buy homes without in-person contact. iBuying has exploded recently, and the big players include OpenDoor, Zillow Offers, Redfin, Offerpad, etc.
What are the Advantages of Selling my Home to an iBuyer?
There are certainly some advantages to selling to an iBuyer. The first is a Quick Sale. Let’s say you’ve just been transferred across the country and you have to be at the new job in a few weeks. Selling to an iBuyer means that you can close quickly, allowing you to move on. Second is No Showings, which is especially appealing to sellers with families and/or pets. Keeping your home show-ready and having to leave for showings can be daunting. The Flexibility offered by iBuyers allows you to choose a closing date that works for you, rather than a buyer.
It all sounds wonderful, doesn’t it? Or is it?
But What Factor is Most Important to You?
Ask any number of sellers what the most important thing is to them when selling their home and the vast majority will say Price. Most people want to maximize the return on their investment. Like any business, iBuyers are in it to make a profit. Their instant offers will most likely be less than what you might get in a typical sale, and their fees are substantially higher than the fees charged by a typical real estate broker…something that is noticeably absent from their flashy TV commercials.
A recent MarketWatch study found that, on average, sellers who sold to iBuyers made around 11% less than those who sold with a typical real estate brokerage.* A typical brokerage charges around 6% of the home’s final sales price while another study from Collateral Analytics found that, on average, sellers pay between 13% to 15% more in fees to an iBuyer**.
Essentially selling to an iBuyer is selling your home at a discount, as a trade off for the benefits mentioned earlier. The question to ask yourself is this; “Is the speed and convenience of a quick ‘no hassle’ sale worth the price of potentially losing tens of thousands of Dollars?”
Let’s look at some recent examples straight from the Arizona Multiple Listing Service (MLS).
**** N. 56th St, Phoenix
4/22/21 Purchased by iBuyer for $451,700
4/28/21 Listed by iBuyer for $481,000
4/30/21 Went under contract
6/1/21 Sold for $491,000
***** W. Del Rio Ct, Chandler
4/8/21 Purchased by iBuyer for $478,800
4/12/21 Listed by iBuyer for $541,000
5/13/21 Went under contract
6/11/21 Sold for $550,000
***** Ventura St., Surprise
4/30/21 Purchased by iBuyer for $453,300
5/8/21 Listed by iBuyer for $510,000
5/12/21 Went under contract
6/11/21 Sold for $545,000
It’s easy to see that the sellers in these examples left thousands of dollars on the table when they sold to iBuyers, not to mention that the 8%-12% they paid in fees actually resulted in a lower price than what is shown as the actual sales price.
Had these sellers listed with a traditional real estate brokerage, they could have sold their homes for much higher, likely within the same time frame given the current market, while paying far less in fees. In addition they would have had the advantage of working with a trained and experienced agent who would be working for them to get them the best price with the best possible terms.
Contact the Donnelly Group Today
Before you make the decision to sell your home to an iBuyer, potentially losing thousands of dollars, we recommend that you contact the Donnelly Group at 480-792-9700 or email us today. We would love to help you make the right decision.