What Are iBuyers?
The real estate landscape is always changing. One of those changes is the rise of iBuyers and the rejection of the traditional real estate process (with the use of a Realtor or Real Estate Agent). Both iBuyers and Real Estate Agents share the same goal of assisting in the sale of homes; however, their processes are wildly different.
Let’s start with identifying how each of the two operates.
How Real Estate Agents and Realtors Work
Real Estate Agents and Realtors are traditionally crucial to any housing transaction. These are the individuals who will help you list and coordinate the sale of your home and who will coordinate and negotiate for the purchase of a home. Real Estate Agents are the facilitators in these real estate transactions and are experts in negotiations, pricing, repairs, staging, showings, open houses, and much more.
During the sale process specifically, Real Estate Agents will work with their “sellers” and will advise on all aspects of the selling process, such as assessing the home’s value and providing insight into the price, advising on staging the property, and coordinating showings and open houses.
The Real Estate Agent will then review offers to buy the property with the sellers, help them compare offers, and ultimately negotiate on the seller’s behalf throughout the closing process.
How iBuyers Work
iBuyers are the newest entrant into the real estate world. The immediate difference between iBuyers and Real Estate Agents is the speeds at which they operate. iBuyers provide sellers an option to sell their homes nearly immediately and are ready with cash offers.
The iBuyer model is an automated and direct way to sell your home. Unlike the traditional method of waiting for offers, negotiating, and a sometimes long and arduous closing period, iBuying offers an incredibly fast option to sell your home for cash.
An iBuyer can analyze the location of the property or home for sale, then, based on algorithms (including recent neighborhood real estate transactions), will determine the home’s value. Then, a cash offer will be presented to the seller, which they can then choose to accept or not, and if they do, they can also decide on the date of closing (giving the current owners enough time to move out and find a new home if necessary). Because the offer from an iBuyer is nearly instant, the sellers are not obligated to make any kinds of repairs or upgrades, and they do not need to worry about the hassle of open houses, staging, or cleaning in a traditional transaction.
Pros and Cons of A Traditional Sale
- Finding a Realtor: There are lots of Real Estate Agents and Realtors to choose from. Oftentimes you can ask for recommendations from friends and family, or search online on sites like Yelp. Interviewing and finding a Real Estate Agent who is a good fit can take time, but it is important.
- Preparation and Listing: Before you can even list your home for sale, your Realtor will need to assess your home to help come up with an appropriate and competitive listing price. During this time, your Real Estate Agent may also recommend upgrades, home repairs, staging, and cleaning, all to help boost the value and readiness of the home for showings. These can all take time and resources but can help ensure you get top dollar for your home.
- Offers: Once you have received and reviewed offers with your Real Estate Agent and selected a buyer, there is still a lot of time before your home is sold. According to Ellie Mae data, the average time for a home sale to close is 47 days. This means the total time it takes to sell your home the traditional way can be several months. However, this also means you have the opportunity to negotiate and select the best-valued offer. Using the traditional Real Estate Agent method is oftentimes more profitable for the seller.
Pros and Cons of An iBuyer Sale
- No 3rd Parties: One of the main differences in the iBuying process is the lack of a Real Estate Agent or Realtor in the transaction. The home value is calculated automatically based on data and does not require nearly as much as the traditional home selling process. Oftentimes iBuyers will even purchase homes without ever seeing it since walkthroughs and inspections are not necessary.
- Offers: The iBuyer model can also move much faster, with cash offers being presented within 24 hours in many cases. This means there is no time spent waiting to list the home, no waiting for open houses, buyers, or offers. This process can be as close to instantaneous as possible.
- Eligibility and Timing: one thing to consider is that not every home is eligible and must meet the iBuyer’s criteria, which can include location, home condition, property type, and more. However, unlike in the traditional model, the sellers are not responsible for any repairs or upgrades, which again lends itself towards a lightning-fast transaction. Also, instead of the buyers setting the closing date like in a traditional real estate transaction, instead, with the iBuying process, the seller can set the date that is most convenient for them.
- Cost and Speed: While the speed and streamlined nature of this process may be alluring, it is important to remember that there are potentially higher fees associated with this process. iBuyers can charge service fees ranging between 6%-10% on top of transaction fees. For those who are looking to get top dollar for their home, the iBuying route may not be for them and instead may find greater fiscal value in the traditional real estate process.
The debate between iBuyers and Real Estate Agents/Realtors will likely continue as iBuying is continuing to grow in hot real estate markets. While ultimately, both of these models will reach the same result in getting your home sold, the timing, cost, and effort will vary between the two processes. It’s important to evaluate your goals and figure out what is a priority in the sale of your home when choosing between an iBuyer, or a Real Estate Agent or Realtor.
Please let us know if you need a Real Estate Agent referral; we know experienced Real Estate Agents in most major markets throughout California and Texas. You can reach our team here, by phone at (855) 855-4491, or by email at [email protected].