The iBuyer isn’t going to move into a house to create memories, they are buying the house for one purpose — to flip it for a tidy profit. They aren’t looking to help the seller get the most for their home.
By Real Estate Coach and Speaker Darryl Davis, CSP
With the rise of iBuyer companies like Zillow who are working to essentially eliminate the role of the middleman (a.k.a. the real estate agent), how do we handle the common objection that buyers often have: “But I’ll get top dollar from these online sites that pay cash for my home to buy it before I even put it up on the market.”?
It may seem like a nice, tidy, convenient solution for homeowners that don’t want the “hassle” of listing their home traditionally, but it ends up being a very costly mistake!
How Selling a Home to iBuyers is Going to Cost Homeowners
Most of these iBuyer programs that make these kinds of offers to buy a home have a pricing chart which breaks everything down. Meaning – they aren’t even hiding their fees. Zillow, for example, spells out on their site what they refer to as a “service fee” of 6%. To be blunt, whatever they call it, it’s the equivalent of a real estate agent’s commission. Those sellers who are looking to save on the commission are going to be paying on way or the other.
But wait…there’s more!
They also charge an administrative fee of at least 2%. That’s a total of 8%, though sellers could pay even more than that!
That means that sellers are going to be paying a lot more than what they would pay a real estate agent, without any of the benefits to having one looking out for their best interests! Then, if the iBuyer decides they need to do repairs to the property, they will deduct the cost of making those repairs from the amount they are offering the seller.
This article in Marketwatch goes into detail about how homeowners can lose tens of thousands of dollars by selling to an iBuyer.
An iBuyer Is Really an iInvestor
A normal buyer is looking for a house to move their family into it and create great memories. It’s the place they are going to have birthday parties and have movie nights — they are going to build their life there.
The iBuyer isn’t going to move into that house to create memories, they are buying the house for one purpose — to flip it for a tidy profit. The fact is, they shouldn’t be called iBuyers, because they are more like iInvestors. However, they don’t want to advertise they are investors, because the connotations of that might not come across well to the everyday seller.
In other words, they’re in it for the MONEY
As iInvestors, do they buy homes to help HOMEOWNERS make more money? No! They are buying homes to help THEM make more money. So, if they are offering the seller something that sounds really good, maybe too good to be true, it isn’t. They aren’t committed to helping consumers, they are committed to buying properties for the best possible price for themselves, so they can turn around and sell it for a nice profit. That’s money right out of the pockets of the sellers.
Let there be no doubt that sellers will lose money to an iBuyer. They are doing business with a company that only has their own interests in mind, not their own. Its why sellers need to work with a real estate agent. Agents are the best line of defense for sellers who want to not only get a solid return on investment, but also want to make sure their interests are being take care of.
TIP: For more information about iBuyers, read “The Rise of the iBuyer and What Your Real Estate Agency Needs to Compete: An Interview” by Forbes.
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