There is no question the real estate industry is undergoing some major changes. The biggest change we are seeing in our market is a wave of companies who are offering “Instant Offers” and “Guaranteed Offers” for your home. In the industry, we refer to these companies as iBuyers. These offers come from large, institutional investors. They have big advertising budgets targeting homeowners who do not want to go through the typical process of selling their home. iBuyers such as Zillow, OpenDoor, Offerpad, Knock and others will make you an offer, you pick the closing date and some will even help you move. Here is what you need to know:
- These Companies Charge Fees: Even though IBuyers do not actually list and market your home, they still charge fees for their service. I have seen these fees range from 6%-13%, but the average fee is 7%.
- Their Offer May Not Be Market Value: Keep in mind you will be selling your home to an investment company and they are looking to make money on the equity in your home. Most of the time, their offer will be below market value for your home. Convenience comes at a premium. If your goal is maximizing the value of your home, it would be wise to consult a REALTOR® before accepting any Instant or Guaranteed Offer.
- They May Renegotiate After Inspections: You may be surprised to learn that even if the iBuyer has made what appears to be a good offer they will do an inspection of your home once you accept their offer. Depending on the extent of repairs needed according to the home inspector, the iBuyer will request a price reduction from the seller in lieu of repairs needed on the home. Usually, these reductions are not negotiable and these price reductions can be in the 10’s of thousands of dollars! This price reduction can come late in the process once you are already under contract on a new home. If you decline to make the reduction, you risk losing your dream home while you go back to market.
- They Can Walk Away At Any Time: Read the contract very carefully. Their contract protects the iBuyer and when you sell to them there is no real estate agent representing your interests. Many of the contracts state that the iBuyer can terminate the contract at any time, up to and including the day of closing, without any penalty. You give up your right to sue them or collect the earnest money as damages.
Why sell to these companies? I believe that selling to an iBuyer may be the right decision for some sellers. If your home is in need of significant updating or has issues you cannot afford to remedy in the process of selling your home, these investment companies may be the right option. However, if you are a typical homeowner who has taken good care of your home, you are far better off selling your home with a REALTOR® who is an expert at property values, has your best interests at heart, and will maximize the profit of your home. We are still experiencing a shortage of inventory at certain price points and the market is still attractive for sellers. Always consult a REALTOR® during the process so you have all the facts and can make an educated decision when you sell your home. I am happy to serve as a consultant in the process of selling your home, please reach out to me at 404-372-4936 or firstname.lastname@example.org to discuss your options.