Tag Archives: ibuyer

5 (Not So) Good Reasons to Sell Your House to an “iBuyer”

29 Wednesday Nov 2023

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Selling your house to an “iBuyer” may sound appealing, since it’s supposed to be quick, easy, and allow you to avoid having your house on the market and potential buyers and agents walking through your house. 

It may sound even more appealing given the recent news that Zillow –  an iBuyer company recently overpaid for a lot of houses. 

But, while selling to an iBuyer can be a good option for some people who simply need a quick, all-cash offer, it’ll come with some strings attached. 

So, let’s take a look at 6 not-so-good reasons you may want to go a more traditional route when selling your home: 

1. You like one-sided deals

One complaint people have had is that the iBuyer backed out of their deal without much recourse for the homeowner, due to clauses in the contract. They often require the seller to use a contract that the iBuying company has created. As you can imagine, if it’s their contract, they’re most likely going to build in some lop-sided language that tips it in their favor. 

2. You’d rather see someone else make a profit on your house

An iBuyer isn’t typically in the business of over-paying and losing money. Sure, they could make a mistake, but that’s not their intention. In order for it to make sense for them to buy your house, they need to pay you less than it will sell for on the open market, while also taking into consideration any other costs they may incur, like repairs, holding costs, and commissions they may pay. They’ll factor into your offer the things you may be trying to avoid paying for or save money on, taking the profit for themselves.

3. You don’t want to create competition for your buyer 

One of the biggest reasons to sell your house on the open market is to reap the benefits of as many buyers as possible competing for your house. While receiving multiple offers on your home and having buyers give you their highest and best offers may be a tad stressful, it’s that competition that’ll get you the highest price and best terms possible when you sell. If you sell to an iBuyer, you’ll never know what other buyers (or the iBuyer) may have offered you if they had some competition.

4. You’re the type of person who’d represent yourself in court 

Like a person representing themselves in court, you’ll be dealing with an industry insider who knows more than you do about the process. Beyond that, they’re typically armed with information on the market that they get from data they compile and algorithms they create. To put it simply; they have an information advantage.

5. You like hidden costs

While they may cite one of the biggest advantages to selling to them is that you won’t pay a real estate commission, there’s often more costs than meets the eye. It’ll vary from one iBuyer to another, and even from one deal to another, so just make sure you get them to tell you all of the fees, charges and costs up front. But the reality is, they won’t likely be able to tell you all of the potential costs up front before you sign a contract. 

While there are certainly situations where selling to an iBuyer may be beneficial, you’re usually better off putting it on the open market and getting as much exposure and competition for your house as possible, and therefore the best price and terms possible. In the least, before signing on the dotted line with an iBuyer, speak with a local agent to get a feel for how much money you may or may not be leaving on the table, and whether the convenience of selling to an iBuyer outweighs the costs.

Let’s discuss how we can sell your home for the most money – even after paying a commission. Kevin and Jennifer Hanley, REALTORs The Hanley Home Team of Keller Williams Realty Southside 904-515-2479 HanleyHomeTeam.com

Why “iBuyers” Are Failing (But Real Estate Agents Stand the Test of Time and Shifting Market Conditions)

16 Monday Jan 2023

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The term “iBuyer” probably isn’t something you think about until and unless you’re thinking about selling your house. But once you start thinking about it, there’s a good chance you’ll come across one of these companies who typically position themselves as innovators who are disrupting the real estate industry by offering an easier, less costly approach to selling a house. They use technology and algorithms to make an instant offer on your house, and promise a quick and easy process to close on the sale of your house in a matter of days.

While the market was “hot” over the past couple of years, most of them seemed to be thriving. There are still some out there who are functioning, but with the market suddenly shifting, many of them are either shutting down their operations entirely, or are at least pulling back on how many houses they’re buying. So, you might have a tougher time finding one who’ll buy your house if it’s an option you hoped to pursue. 

Why are they failing?

A recent article on TheRealDeal offered some objective insights into some of the reasons why iBuyers are on the brink of demise, including:

  • They were trying to treat homes as a commodity.
  • Many of them rely on investors who have lost patience and faith in their business models. 
  • They relied on selling related in-house or affiliated services—like mortgages, title, and escrow—in order to be profitable. 
  • While they factored in some potential economic changes, they weren’t prepared for a major shift in the market like we’re seeing now.

The article also mentioned that real estate agents will joyfully claim, “I told you, this would never work.” To be fair, many agents have been saying that all along, but not necessarily in a smug manner. They just know how complex the process is to buy and sell real estate, and could easily see how they were approaching the business wasn’t going to be sustainable.

Why agents stand the test of time and changing markets…

iBuyers aren’t the first industry “disruptors” to come in and try to change the industry with technology. There have been many companies and business models that hoped to do so, only to fail. And every single one of them comes in pretty much bragging that they’re going to end the need for real estate agents.

Yet every single time real estate agents come out the other end of these threats doing things the way they’ve always done them, while using technology in a way that enhances their services and process.

To suggest that agents shouldn’t be proud of doing that, and that they should be cheerleaders for companies who come into the industry belittling and berating what they do for clients is a bit much to ask. The reality is, they are in the trenches and just understand what many of these companies fail to recognize time and again, such as:

  • Houses aren’t commodities. There are so many differences from one house to another, and one area to another, it’s hard to buy and sell them in a simplistic, large-scale manner.
  • People aren’t commodities. In many ways, buying and selling houses isn’t about the brick-and-mortar product, so much as it is helping the people who are buying and selling them. It’s a complex, stressful, and emotional process and is often a person’s biggest asset or purchase in their life. Every single person and situation is different, and every house sale has several people involved in it.
  • They are self-reliant and self-driven. Oh, what an agent could do with a huge pile of cash from investors like tech start-ups often get! Many of the “disruptors” come into the market functioning with the use of capital they haven’t earned, and often operate at a loss. When investors lose their patience and faith, there goes the business. It’s out of their control. On the other hand, agents have to rely on their own money, patience, and faith to persist in this business, which they have full control over. They learn how to use a limited amount of money to build their business over time.
  • They don’t rely on selling you related services. While agents may have services that their brand offers or is affiliated with, they aren’t relying on clients using them to earn their income. (They actually can’t receive compensation when you use an affiliated service.) So they may offer you affiliated services to make your process smoother or easier, but they aren’t using them like many of the tech companies do as a means of making profit and being able to survive.
  • They’re always prepared for a market shift. That doesn’t mean they like it when a market shifts, but they’re certainly used to having to weather the changes. In fact, what many people consider “hot” or “good” market conditions are often the toughest for real estate agents. The past couple of years were no picnic for agents, despite the fact that many people probably considered it a great time to be one. In fact, there’s probably never a market that’s “easy” for agents; they all have their challenges.

Those are just a few of the reasons why agents are able to stand the test of time and changing markets, and why, as they state in TheRealDeal article: “The evidence proves that there’s more people using agents now than ever before. We’ve had billions of dollars come into this industry [to disrupt it through technology], but the gravitational field of the traditional industry and agents and expert advisors is really strong.”

The Takeaway:

Buying and selling real estate isn’t something most people want to (or should) do with a few quick clicks on their laptop. It’s a complex, emotional, and high-ticket purchase or asset that they need an expert advisor and advocate helping them with.

While agents are constantly being threatened by “disruptors” who are trying to change the industry by offering a short-lived tech solution, they stand the test of time and changing market conditions by incorporating tech that enhances their service and product, while embracing the challenges of a complex industry.

EXPERIENCE MATTERS….especially in today’s challenging market. Get in touch today and let our expert team navigate you through the home buying or selling experience. Kevin and Jennifer Hanley, REALTORs The Hanley Home Team of Keller Williams Realty Atlantic Partners Southside 904-515-2479 HanleyHomeTeam.com

Opendoor Loses in Court – Trust Your Real Estate Agent, Not an iBuyer

17 Wednesday Aug 2022

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When you’re selling your house, you want to make as much money as you can, as quickly as possible, and with the least amount of interruption to your life.

So when you come across an “iBuyer” company that offers to buy your house for fair market value, without having to put it on the market, and not having to pay real estate commissions, it can sound super appealing.

The problem is, going that route doesn’t necessarily end up making you as much money as you can!

Real estate agents have been warning consumers that iBuyer offers are often too good to be true, and that there are hidden fees and costs that end up costing the homeowner more than they would pay in commissions. To make matters worse, their offers are often for less than the owner would have received on the open market. 

Well, the Federal Trade Commission (FTC) has confirmed all of that, and more, when they took action and imposed a $62 million fine against the online home buying firm Opendoor Labs, Inc., for misleading sellers and “tricking them into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process.”

In addition to paying the fine, the FTC has also ordered Opendoor to stop deceiving potential homeowners and stop making baseless claims. But that doesn’t mean they’re necessarily out of the iBuying business, nor does it guarantee that they (or any other company like them) won’t deceive consumers again. In fact, it may just lead to a $46,517 fine according to the FTC press release. So, there’s still a chance you could be enticed by Opendoor (or another iBuyer) to sell directly to them, rather than go through the more traditional sales process, and list with an agent.

The problem is, when a company like this pits the consumer against agents and is supposedly trying to save them from agents, it can be hard to trust an agent warning you against that very company or type of offer. So if you aren’t fully informed, it may come across as a self-serving attempt on the part of agents to defend themselves and make money, rather than trying to truly warn and protect you. But knowing that the FTC has fined and sanctioned them ought to be fair and objective enough warning for you to trust your agent over an online company making an offer that sounds too good to be true.

The Takeaway:

If you’re debating whether to sell your house to an iBuyer, versus listing your house with an agent, make sure to interview a local real estate agent you trust before signing on the dotted line with an iBuyer. 

Listen closely to the warnings your agent is giving you, and truly analyze whether the claims and offer an iBuyer makes would net you more than listing on the open market with your local agent. If an offer from Opendoor or any other iBuyer still sounds better and more appealing, just keep in mind what the FTC recently found and fined them for. It’s probably too good to be true…

Get in touch today for a professional market analysis of your home from the Hanley Home Team. Kevin and Jennifer Hanley, REALTORS The Hanley Home Team of Keller Williams Realty of Keller Williams Realty Atlantic Partners Southside 904-515-2479 HanleyHomeTeam.com