Today David is talking about mistakes sellers make when considering using services from iBuyer companies like Opendoor and Offerpad. An iBuyer company is a company that will offer to pay cash for a property and will paint a pretty picture of an easy stressfree transaction. They advertise that the seller does not have to do anything to get their home ready to sell, they do not have to have showings and they can pick their closing date. While all of these things sound great, there are some details about these transactions that a seller has to be aware of. Below are 3 things a seller needs to look for when considering working with an iBuyer.
1. These companies ask a seller to put in information about their home and then within 24-48 hours, they will receive a price for their home. Sellers assume the price they are provided is the true market value of the property. In most cases, this price is not at market value. The iBuyer companies are in business to make money and the upfront pricing will be below market value. Always make sure as a seller you contact a real estate professional to obtain a market analysis so you are able to compare the 2 prices to see if as a seller you are getting the right price for your property.
2. When deciding to go with an iBuyer sellers do not know to look for extra fees that are charged to them for the purchase of the property. These companies could be offering a great price for the seller's home but the extra fees also have to be considered. Opendoor, for example, can charge anywhere from 6% - 12% commission. That is a lot of money that is coming off of the price that is given to the seller and this comes off the seller's bottom line. Another example is Offerpad charges a convenience fee of 2.5% on top of the commission. A seller also has to look at the fine print to see how much of the title fees the iBuyer is going to pay. For some of them, it is up to $2000 and that may not be enough to cover all of the title fees. A seller looking to use an iBuyer also has to consider repair costs. Once the home goes under contract, the iBuyer will send out an army of inspectors and go back to the seller with a list of items to be repaired or they will ask for a price reduction. If the seller was working with a real estate professional, they would handle the repair negotiation for the seller and could save the seller money by possibly not needing to make the repairs depending on the type of contract.
3. Sellers at times do not look at their bottom line number. Most sellers have a goal to net the most money possible. They need to make sure that at the end of the day they look at their net number. This is not the purchase price, this is the amount they will receive when they go to the closing table.
David strongly suggests consulting with a real estate professional. We have listing specialists that can help a seller review the quotes from the iBuyers and then work to find the best solution for the seller's needs. A listing specialist will be looking out for the seller to get them the most money for their property, and isn't that what all sellers are looking for?