All industries are exposed to disruption, and the real estate industry is not immune. The advent of Uber and Lyft were disrupters to the taxicab industry, and they have taken a sizable chunk of the market since their entrance. iBuyers represent a disruption to the real estate model, but disrupters aren’t all successful or equal. I think this one, however, has it’s place in the industry and will have staying power, but only for a small segment of the industry.
This article (and the video) does a decent job explaining it, but here are the salient points for you to consider.
- An iBuyer is an organization that will make you an offer on your home based on local market statistics crammed through an algorithm. The offer will usually be somewhere between 5-15% below market value.
- If you accept their offer (they don’t negotiate), they will then have the home inspected, and this is often where the deal starts to get hinky. There is no negotiation here either. They will provide you a list of items that they want addressed and you either fix them, agree to reduce the selling price for the total cost of repairs, or walk away.
- Understanding that iBuyers are looking to turn a quick profit on your home, they can’t pay the net equivalent to market value, so the criteria above is not too surprising.
So, is dealing with iBuyers a good move or not? Well, that depends. If time and the inconveniences of selling your home far out weigh price and profit, then yes, this may be for you. But be ready to lose quite a bit of the equity you’ve gained in your home. If you’re looking to get the most out of your home, then the traditional real estate model is probably the more advantageous way for you to go. Check out the article for more detail, and let me know if you have any questions or comments!