Disadvantages of OpenDoor & iBuyer Companies
Posted by Caylee Doiron
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The key reasons you shouldnt utilize an iBuyer company for the sale of your home:
You cant take advantage of the Sellers Market if you sell directly to OpenDoor or other iBuyer companies.
If youre not listing on the open market, you dont get the opportunity to have multiple Buyers interested in your property. This means missing out on the chance to make more money on the sale of your home.
iBuyer companies, like OpenDoor, make you one offer... their offer - with no competition and no insight provided to you as to whether their offer is good or not. They direct the entire sales process from offer to close.
The Sales Price
iBuyer companies are good at making money. Unlike when you utilize a Realtors services to sell your home, in which the Realtor has a fiduciary duty to you as their client, iBuyer companies represent their businesses interests. Not your interests.
They buy your home at a discount, then mark it back up to its fair market value price and sell it on the open market. This gives iBuyer companies the opportunity and ability to make money on both sides of the transaction through fees when purchasing the home from you, and the increase in value when they list the property on the open market (after youve sold your home to them).
The Fees...
On average, iBuyer services charge a HEFTY 7.5% transaction fee, for their services. For perspective, Realtors typically charge 6% to list your home on the open market and split that 6% with the Buyers Agent.
For companys like OpenDoor, theres a disclaimer on their website stating that fees can vary from 6% to 14%. They base their fee off of how long they believe it will take them to sell your home after purchasing it from you, the comparable homes for sale in the area, and your homes features.
Rushed Sales Process = Money Lost
This may be a little redundant, but iBuyer companies may take advantage of those unaware of the markets current pace and rates. They may initially offer you a good price, then they quickly tack on repair charges and fees, diminishing the proceeds you walk away with. Or, theyll initially offer you a price below your homes true market value, while still charging fees and deducting for repairs.
Repair Costs at Their Discretion
Ill be upfront on this. This makes NO sense in our current market. NONE.
iBuyer companies submit an offer to you, dictate the entire negotiations process (with you having no one representing you as the Seller), and more. Leaving the Seller responsible for all repair costs.
Being in a Sellers Market, many Sellers are not having to pay much towards repair costs or complete many repairs, especially when in a multiple offer situation. Even if repairs or the cost of repairs are requested during the selling process, a Realtor working on your behalf will negotiate for you (with all of their knowledge surrounding the industry, sales process, and your needs/interest in mind).
As the Seller, utilizing a Realtors services/knowledge can help to ensure youre not leaving an unnecessary amount of funds on the table.
The Closing Date **Guaranteed**
As a Seller in todays market, the guaranteed closing date should not be your main deciding factor in choosing whether or not to list your home on the open market (or to go with an iBuyer company). With the assistance and advising of a professional Realtor at your side, you will be informed of the best listing price (to maximize your opportunity of receiving traffic and offers) and how to prep/stage your home for listing (yes - you still need to prepare your home, even in a Sellers Market, to maximize your proceeds).
According to OpenDoors website, the closing period ranges between 10 - 60 days. In almost every multiple offer situation, the Seller is able to review each offer and choose the offer with a closing date that best fits their needs (or negotiate the closing date).
All in all, in todays market, selling your home to an iBuyer company can leave THOUSANDS on the table. They do not benefit you as the Seller. They are the BUYER. Call your trusted Realtor before speaking with an iBuyer company to review all of your options as a Seller!
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Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the HRIS.
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