This Halloween: Beware The iBuyers

Dated: September 29 2019

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September 2019

At A Glance

iBuyers — let’s call them what they are…FLIPPERS! Maybe they don’t have small signs on telephone poles or ads in the local throw-away papers boldly claiming “WE BUY HOMES FOR CASH” or the ever complimentary “WE BUY UGLY HOUSES”, but make no mistake, they are doing the very same thing but on a higher plane. They use algorithms and AI to facilitate their efforts. iBuyers are internet-based outfits that buy houses, seemingly fast and easy. In the current state of the market, it is almost never the best way for a seller to go, regardless of how desperately they need the sale to happen. We are going to share with you a bit about how these outfits work and why we feel you should be very cautious and even suspect of the offers they make. We will share with you how important it is to have your own representation in the form of an iBuyer Consultant in order to negotiate the best deal for you if this is the path you choose to walk.

A generation ago, if you needed to get out of your home quickly and sell out you may have considered equity purchase companies or even one of those “non-tech iBuyers” with the sign on the telephone pole. During the last run-up of the real estate market, flippers became all the rage. Now, today, they love the tech name “iBuyer”, but the business model hasn’t really changed at all.

How Do iBuyers Work?

Today, you go to sites like Zillow, Redfin, Opendoor, Offerpad, and Knock…[there are more popping up every day and it is just a matter of time before the gigantic brokerages and franchise-based real estate firms start offering their version], you complete an online application and, often without so much as a visit to the property, you get an offer. The offers are legitimate and you often close as quickly as possible in your state after you accept the offer. How do they do this? Simple, they apply an algorithm to the transaction. The algorithm will provide a valuation. The iBuyer puts a lot of trust in that calculation.

Why Should a Seller Beware of iBuyers?

Listen, please! Your home is your most significant asset. You want to extract the greatest benefit of equity you are able from the sale of your home. iBuyers are trying to make money. They achieve this through the undervaluation of your home and then encourage or entice you to sell it on the cheap.

Even in markets where iBuyers started and are trying to gain hold, 95% of the consumers will forego their offers and look for other options.

The bottom line, for you, the seller, is that the iBuyers need to make a profit. Even if they assess the value of your home appropriately, they will most certainly offer you substantially less and then fill the contract with fees and commissions. Statistically, these fees and commissions come to more than 11% of the offer price, which is already significantly lower than the current market value.

For the overall market, iBuyers are not only bad for the sellers but for the market as well. Picking up homes for less than the full market value causes devaluation in a neighborhood. You might say that when they place it back on the market, with minor repairs or improvements, that it will help the area. Fact is, it makes it harder for real buyers, end-users, to find affordable listings where they might be a bit handy to do the work themselves.

The enticement of fast money and convenience to a hard-up seller may seem attractive but make no mistake, their transaction comes at a higher cost to the seller in the form of inflated commissions, junk fees, and diminished value and, honestly, it is never worth it.

If you insist on going the iBuyer route, protect yourself! The McKenna Team of eXp Realty is your iBuyer Consultant. We represent you from start to finish. If your property qualifies for an iBuyer we reach out on your behalf to represent you all the way through the transaction. We offer your property to the Top National iBuyers, in addition to other large, home investors. Our goal is to provide you with an instant offer that leads to a fast, hassle-free sale.

Typically, the iBuyer will ask for photos and details of your home and then provide an offer. All offers are contingent on inspections. As we’ve stated, the offers are legitimate. We would then lead you through the process so that you are not alone in dealing directly with the iBuyer or Investor.

After we submit your property to all qualified iBuyers and Investors, the offer can come instantly or can take up to 48 hours. We will go over the offers and inspections to make sure you are completely covered and don’t leave money on the table.

Is There a Better Way to Sell Houses Fast?

It is our hope, particularly in this market, that you don’t consider the iBuyer route but know that we are fully capable of guiding you through the process. If you are sincerely in a rush to sell your home, you should consider The McKenna Team of eXp Realty as your full-service real estate professionals who are equipped to help you sell your home, fast, for the highest price, and under the most favorable conditions.

The McKenna Team at eXp Realty sells more than 125 homes a year and growing. Put our concierge-level service to work for you.

For a free consultation and valuation, call Cyndi at 631-287-6987 or email to
info@themckennateam.com

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Blog author image

Cynthia McKenna

I am a Licensed Associate Broker who has lived and loves all things real estate for the last 20 years! I have a proven track record of selling homes with a 1.53% list to sale ratio and days on market....

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