When the time comes to sell your home, there are several decisions you’ll be faced with – including which type of transaction works best for you. Should you hire a licensed real estate agent, sell your home without an agent, or work with an iBuyer? Chances are you’ve considered the first two options. However, you may never have thought about an iBuyer before and probably have a variety of questions regarding what iBuyers are and how they work. Don’t worry, we’ve got the answers for you.
Before you list your home for sale, you should know all your options. Learn how selling to an iBuyer differs from the traditional home sale process and when you should consider selling your home for a direct cash offer.
What is an iBuyer?
An iBuyer (short for instant buyer) is a real estate company that purchases a house from a homeowner in a quick cash transaction, makes any necessary improvements to the home, and then resells it. iBuyers offer quick and flexible closing dates since they purchase your home with an all-cash offer.
With iBuyers, the home selling process is typically faster and much easier. iBuyers take away the hassle of a traditional sale, such as finding the right listing agent, preparing your home for sale, hosting open houses, and finally choosing the right offer. Additionally, there’s more certainty when you sell your house for cash, as you don’t have to worry about a buyer’s financing falling through.
Note that iBuyers may not be available in every market. It’s best to research your local housing market before deciding to sell your home to an iBuyer.
How is selling your home to an iBuyer different from a traditional sale?
When you sell your home to an iBuyer, many of the traditional aspects of selling your home are skipped. For example, you don’t need to stress about preparing your home for sale. You’ll be able to forgo tasks like staging your home, upgrading your curb appeal, or scheduling any maintenance on your home. Additionally, you don’t have to find a listing agent to sell your home.
In a traditional sale, you’ll have to put your home on the market before receiving any offers. To receive an offer from an iBuyer, it may be as simple as requesting an offer from their site by providing required photos and information about your home. Your offer is typically based on your home’s value and the information you provide. Many iBuyers use this information in addition to a home valuation tool to help generate your offer. Depending on the company, you may receive your offer in a matter of days.
One of the benefits of selling your home to an iBuyer is the ability to close at your convenience. You may be able to close as quickly as 10 days, or as long as 90 days. Unlike a traditional sale, this allows you to close when it works best for you. For those buying and selling at the same time, this can be especially helpful if you’re trying to avoid a second mortgage or gap financing.
What are the costs of selling a home to an iBuyer?
If you’re considering selling your home to an iBuyer it’s important to know how much it can cost compared to a traditional home sale. When you sell your home on the market, the seller typically pays both the buyer’s and seller’s agents’ commission. Commission costs can vary from 4.5-7% of the final sale price of your home. You may also be expected to pay closing costs which can range from 2-5% of the home’s sale price. However, you may spend more to sell your home if you make pre-listing repairs and upgrades, hire a stager, or professional cleaning service.
On the other hand, selling to an iBuyer can cost anywhere from 6-14% of the final sale price. However, there are several reasons for these costs. Many iBuyers will offer you an initial price for your home, then deduct fees and closing costs. Depending on the iBuyer you work with, these fees may be selling fees, convenience fees, and repair fees and can range from 5-13%. These fees can fluctuate based on housing market conditions or how many repairs are needed on your home.
When you sell your home to an iBuyer you’ll also be expected to pay closing costs just as you would in a traditional home sale as you prepare for closing, which covers title, escrow, and taxes. These costs are typically 1-2% of the final sale price.
Why sell your home to an iBuyer?
There are several reasons why you may want to sell your home fast using an iBuyer rather than sell your home in a traditional sale. Let’s take a look at some of the common reasons why selling to an iBuyer may be a good option.
You are relocating: If you’re relocating to a new city and need to sell your current home quickly, selling to an iBuyer may be a good option. You can sell your home fast without the hassle of going through the home selling process while you’re in the middle of a move or living in another state.
You have inherited a home: If you’ve recently inherited a home, it’s possible you don’t have the resources to maintain the home or don’t want to turn it into a rental property. If you’re planning to sell an inherited house, selling it quickly to an iBuyer might be the right option.
You have an investment or rental property: If you’re struggling to find a new tenant to occupy your investment or rental property, a quick cash transaction might be the solution you’re looking for.
You need to access your home’s equity ASAP: Depending on your financial situation, it may be necessary to access your home’s equity fast. If this sounds like you, then accepting an all-cash offer from an iBuying company might be the right choice.
You need money for a downpayment: If you’re moving, it’s possible you need to tap into your current home’s equity to make a downpayment on a new home. In this scenario, selling your home to iBuyers might be the best way to make a stronger offer on your next home.
Keep in mind that these are just a few of the reasons why selling your home to an iBuyer may be the best route to take. You should always consider your personal circumstances, and seek the advice of a real estate agent or financial professional if you’re not sure.
Are there cons of selling your home to an iBuyer?
When you’re deciding on the best way to sell your home, there can be some reasons why selling to an iBuyer may not be the right fit.
An increase in cost: As previously mentioned, the costs of selling to an iBuyer can sometimes be more than what you’d pay in a traditional home sale. If you’ve recently updated your home or aren’t in a rush to sell, listing your home on the MLS may be a better option.
iBuyers are not in every market: While selling to an iBuyer may be the best option for you, it’s possible that they may not operate in your area. Not all iBuying companies buy homes in every market, so it’s always important to check for iBuyers in your area before settling on the idea.
Miss out on a potential bidding war: You lose the ability to incite a bidding war on your home if you sell your home to an iBuyer. This may be a con, especially in a seller’s market where bidding wars are more common and there are more buyers than homes for sale. If you’re not in a rush and want to sell your home for as much as possible, working with an experienced real estate agent may be a better option.
Your home may not be eligible: Depending on the iBuying company you work with, they may have different qualifications your home must meet in order to receive an offer. These eligibility requirements may be a minimum home value or depend on the current condition of your home.
Recent iBuying behavior
Many iBuying companies paused buying homes in 2020 during the Coronavirus pandemic that shut down much of the world’s economy, but have since begun to purchase homes again. According to a recent Redfin study, iBuyer home purchases have increased 20.6% in the first quarter of 2021. Raleigh, NC, and Charlotte, NC were the top markets for iBuyers purchasing homes during that period. However, if you’re thinking about selling your home to an iBuyer soon, just keep in mind that iBuyers do not serve every market.
Key takeaways about selling your home to an iBuyer
Selling your home to an iBuyer may be the right fit if you need to sell your home quickly, you require access to your home’s equity, or you just don’t have the time to prepare your home for sale. Whether you choose to sell your home to iBuyers or in a traditional sale, it’s important to weigh all the pros and cons and your own personal situation to make your home selling process a breeze.