The Pros and Cons of Selling to an iBuyer

Are you better off selling to an iBuyer? The answer depends.

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What is an iBuyer? As a seller, should you consider doing business with one?

To answer the first question, an iBuyer is a catch-all phrase for an online real estate investor who’s looking to reduce transaction costs by purchasing digitally. They more or less rely on automated valuation portals instead of professional appraisers. Sometimes this can work to a seller’s advantage, while other times it can work to their detriment.

In the past, iBuyers would focus a lot on fixing and flipping properties, but nowadays more and more of them are fixing up houses and then using them as rental properties. This is one reason why our inventory has shrunk.

In any case, the benefit of selling to an iBuyer is it makes your transaction quick and easy. However, in almost every transaction I’ve ever researched involving an iBuyer, the seller lost money. In fact, studies show that when sellers sell to an iBuyer, they net an average of 11% less than they would have if they sold their home the conventional way with the help of a Realtor. This means if you were to sell a $300,000 home to an iBuyer, you’d leave $33,000 on the table.

Don’t sell to an iBuyer without first asking a real estate professional what it will sell for on the open market.

Even though iBuyers don’t charge a commission fee, they do charge a transaction or offer fee, and this can often be twice as much as a commission fee.

I recently came across a news story about a seller in Atlanta who got two offers from two iBuyer companies—one for $248,000 and one for $256,000. The seller decided to list their home on the open market, and when all was said and done, they sold it for $297,700. In all fairness, they did have to pay for some out-of-pocket repairs and discount the price due to an inspection issue, and that brought the final sale amount to $262,000, but that’s still more than what they would’ve gotten by selling to an iBuyer.

So you must ask yourself: Are you more interested in selling quickly or getting the most amount of money? Neither answer is wrong—it just depends on what your circumstances are. No matter what your answer is, don’t sell to an iBuyer without first asking a real estate professional what it will sell for on the open market. You’ll be sorry if you don’t, especially considering the rising prices in our market. Why do you think so many iBuyers are out there looking to buy homes at a discount? It’s a great investment opportunity for them. When it comes to your home sale, though, don’t sell yourself short.

If you have any questions about this or any other real estate topic or you’d like to know what your home is worth, don’t hesitate to reach out to me. I’d love to help you.