Pros and cons of selling your home to an iBuyer
As with any sales process, there are definitely pros and cons to iBuying. Many say that one of the biggest cons of selling to an iBuyer is that offers are below market value, taking away from the seller profits. However, Mike Del Prete, a global real estate tech strategist, recently conducted a study that found iBuyers actually pay close to fair market value, with a median offer price of 98.6% of the automated valuation model (AVM) value of a $270,000 home.
While there are certainly times when the iBuyer purchase price is significantly below the fair market value, most of the time they are close to the home value.
The largest benefit for most sellers is the convenience of having a cash buyer who can close quickly. They don't have to wait for inspections, appraisals, or loan underwriting, which could take 30-45 days. Most closings can happen in just a few weeks with lower closing costs because it's a cash closing. Sellers are also not responsible for having to renovate or improve the property, keep it tidy and in clean "showing condition," or leave work around a showing schedule.
A perceived benefit of selling with an iBuyer is avoiding having to pay real estate agent commissions, which for the seller is typically 6%. However, some programs do charge a listing fee for their services which can be higher than the typical real estate commission. It's important to do your due diligence on the specific program's service charge, commission, or fees to determine what you'll actually pay and if the service outweighs the potential cost.
A con of iBuying is that it's not available everywhere and the companies are selective on the type of homes they buy. I recently had a condo in St. Petersburg, Florida for sale by owner and decided to see what I could get on Offerpad, a cash offer iBuyer. After completing the form, I was notified that Offerpad declined to make an offer stating the home didn't meet their buying criteria. While it may seem like an appealing option for selling your home, it's dependent on your home's location, condition, and property type.
Is iBuying worth it?
No matter how you sell your home, with a real estate agent or an iBuyer, there will always be advantages and disadvantages with the transaction. It's up to you to determine if it makes sense to sell or buy your home with an iBuyer or if a traditional real estate transaction is better suited for you. There is no cost to getting an offer with these programs to see if selling to an iBuyer makes sense. If you do decide to sell your home to an iBuyer, make sure to read the fine print and understand what costs or fees are involved and what responsibilities both parties have in the transaction.