Drawbacks When Using iBuyers

Technology-driven property companies using automated valuation models (AVM) to value a home and then make a purchase offer are known as iBuyers. A few recognizable names include Opendoor and Offerpad. If you’ve ever typed your home’s address into one of the online estimators on a site such as Zillow, you have used an AVM. These estimators are often used by mortgage lenders or insurance reps to get quick values. You may recall one of my blog posts, Tips for Conducting Property Searches on HAR and Zillow, that discussed some drawbacks and inaccuracies when using these online search tools.

How iBuyers Work?

iBuyers use automated algorithms to determine a home’s value and make a purchase offer within 24-48 hours. Everything about iBuyers is centered around being fast. iBuyers are ultimately interested in reselling properties for a profit as quickly as possible.

Spotting the Differences

Depending on the seller’s ultimate goal and plans, fast may not be to their best benefit.

For example, if the seller is looking for cash, fast, then using an iBuyer makes sense. If the seller wants to ensure they got the best offer on their home, working with a REALTOR® is a better way to go.
 
Working with an iBuyer: The process is to bring up an online application, honestly answer the questions, click to get the valuation, and decide if you will accept the purchase offer. Later you may learn the purchase offer may not include any guarantees and the offer is pending an evaluation by a home appraiser. Any needed repairs or applicable fees are deducted from the offer.

Working with a Realtor: When it’s time to list your home and determine your home’s value, your real estate agent will tap into multiple essential resources to get the best offer which considers:

• Condition and age of the home.
• The home’s finishes and customizations.
• The comps around the neighborhood.
• The market vibe for new development and community growth plans.
• Any needed repairs or upgrades.

All of these elements add layers of information to what we know about your home, it’s location near schools, shopping, medical facilities, and other prime interest areas. These unique factors are things an algorithm can’t always be able to accommodate when calculating a home’s value in the same way an actual person can do.  

Anticipating the Transaction Fees

Much higher transaction fees can be anticipated when using an iBuyer. Clients are paying a premium price for the rapid speed of the sale and the streamlined process. Fee schedules are set by each individual iBuyer company which allows for variations the fee amounts.

I invite you to reach out to schedule an appointment to start the conversation around selling your home. You can be assured you’ll come away with answers and information you can trust. I look forward to talking with you soon.

Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers, and citywide was the #2 Top Producing agent in 2020, #3 in 2021, and #2 in 2022. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region.