Technology has produced tremendous advances in industry, medicine, information management, agriculture and communications. The idea of widespread tele-conferencing was thought of as super-futuristic just a couple of decades ago, for instance. Yet culture and commerce are so adapted to the latest devices and cloud storage that the thought of turning back is now unfathomable. Even the process of selling a house can now be hastened and simplified because of applied computer capacities. In fact, this latest electronic phenomenon in real estate conveyance is growing in usage and might just change the nature of the business for many years to come.
How Do iBuyers Work?
iBuying is a web-based process. A person who wants to sell a piece of property accesses the "iBuyers" website and enters some standard information about the house: address, number of rooms, age etc. With this data in hand, the iBuyer applies an algorithm that quickly calculates home values and issues an offer price for the house. The "i" in iBuyer refers to the instantaneous nature of the response. Should the seller accept the offer, the iBuyer may follow up with an inspection to determine if any repairs are necessary. These would be made at the seller's expense.
Why Do People Use iBuyers?
In most cases, sellers employ iBuyers because they need to sell swiftly. They might be required to move by an employer, approaching a mortgage default and want to avoid foreclosure or are selling a family home and don't have time. The motivators may be many and varied, but the urgency factor is common among iBuyer customers. Going the traditional realtor route, a seller can wait an average of 60 days. Those who opt for an iBuyer can sometimes close the sale in a week.
What Is Wrong with Going to an iBuyer?
The drawbacks of using an iBuyer go to the nature of the business. These companies are essentially investors that flip properties -- buying below home values and selling high. What a seller gets in a rapid transaction is paid for in a lower sales price. Thus, sellers must weigh the expediency of the sale against the less-than-ideal size of the proceeds check. Another negative is the fact that iBuyers are still new and not ubiquitous across the United States. So, this avenue may not yet be open to many eager sellers.
iBuyer Transaction Types
The iBuyer pattern described above is one approach -- the simplest -- in which this largely electronic process pans out. These companies also work with sellers who wish to purchase new properties simultaneously. They make offers to sellers of homes in which their clients are interested. Alternatively, the iBuyer can offer sellers loans to finance a new house before the predecessor house sells and a new mortgage secured. This is known as a bridge loan. With these options, iBuyer sellers have flexibility in making decisions about where and when they will go.
Is an iBuyer Right for Me?
A few questions help to decide whether an iBuyer is the appropriate way in which to sell a house:
- How urgent is the immediate sale of the house?
- Are offers that fail to match home values worth the speed in which a sale takes place?
- Does the iBuyer know the area and neighborhood, thereby discerning the highest price that is reasonable?
Traditional realtors can give a certain degree of personal attention that algorithms do not. Using one is great...if you have the time.