Before you sell to an iBuyer, consider this option’s pros and cons.
“Should I sell to an iBuyer or list my home on the open market?” I receive this question often, but the truth is that there’s no one answer. That’s why I want to compare the pros and cons of selling to an iBuyer and listing with a real estate agent.
In case you don’t know, an iBuyer is an investor who will purchase your home with no questions asked at a price that allows them to make a profit. They usually approach you through postcards, billboards, or social media, and the biggest pro of working with one is that your sale will be easy. You won’t have to do any showings, you won’t have to do any preparation, and you can close whenever is most convenient for you.
That sounds pretty great, but there are a few things you should look out for when working with an iBuyer. You may think you get to skip paying an agent’s commission when you work with an iBuyer, but many of them charge you a convenience fee of around 6% of the sales price. That sounds a lot like a commission to me.
Some iBuyers also count on inspection concessions to get a discounted price. Their initial offer might be 100% of your asking price, but after their inspection, they could ask for a significant price drop. We’re currently in a seller’s market, so it is unlikely that buyers on the open market will ask for major concessions after an inspection.
“Convenience fees can equal or eclipse commissions. ”
One of the best benefits of listing on the open market is that you tend to sell your home for more money. This is especially true in our low-inventory market. Your agent’s job is to market your home to as many buyers as possible and create a multiple-offer situation. You’ll be able to dictate terms and negotiate from a position of strength.
Meanwhile, iBuyers don’t bring any competition with them. Instead of multiple offers, you only have one. This is why iBuyers can get away with convenience fees and inspection concessions—they aren’t competing with anyone else. iBuyers can be a great option for some situations, but I always recommend my clients try the open market first. If things don’t work out, an iBuyer will always be there.
If you have questions about today’s topic or anything else, please call or email me. I am always willing to talk!
