You might have heard of some relatively new real estate services like Offerpad, Opendoor and Knock.
They’re called iBuying services and the general idea is that they streamline the process of selling your home by making you a near-instantaneous offer to buy your property based on what they assess its value to be.
I recently decided to sell a condominium I’d owned for a long time in Atlanta, so I decided to give the iBuyers a shot.
I Sold a Home to an iBuyer and I Couldn’t Be Happier
I’ve been fascinated by the iBuyer market since it first started emerging. I just haven’t known whether it would be sustainable. The industry is very experimental and there are so many different players in it now, including:
Now, real estate agencies afraid of the iBuyers — or intrigued by them — are entering into joint ventures with them.
Why Are There So Many iBuyers All of a Sudden?
As a seller, I don’t sell many houses over a lifetime. The process is intimidating and I’m worried about my house selling because I don’t ever want to end up with two payments — the house I’m going to and the house I’m in.
There’s such anxiety about that in the marketplace that these iBuyers fill that breach.
How Do You Choose an iBuyer?
I went to all of the iBuyers to see who might be best to sell my condo. One of them wouldn’t even make an offer because they don’t do condos in my area. Another one offered a reasonable price, but what I would have netted was lower than what I was hoping to get.
Knock was experimenting with a method where they put your home for sale as a traditional real estate agent, but if it didn’t sell in a certain contracted number of days they would buy your home for 90% of what you had mutually agreed to list it for. I was happy with that number.
Knock’s algorithm had told them that the property would go under contract almost immediately — and it did in 15 hours, at list price.
The Knock agent I was working with told me it was no problem making me a guaranteed purchase offer because their algorithm had told them their was a 100% certainty my property was going to sell.
Knock is also doing something that’s another iBuyer emerging market where they buy the home you want to move to for you and rent it back to you while you’re trying to sell your house.
There’s a huge unmet, pent-up demand in the market for a seller to know that he or she can move on with their life. In return for that certainty, you give up some of the price you might have gotten for your home. It’s like paying for an insurance policy.
How Is Working With an iBuyer Different Than Working With a Traditional Realtor?
What was really different about working with an iBuyer is that they send in a professional whose job it is to see what at your place would hurt its ability to sell or the price that it would sell for.
They came in to look at colors and things that need repairing or upgrading. Then they came back to me with a list of things I could do to improve the condo.
In my case, they recommended new carpet, new paint everywhere, some minor repairs and a couple of new accessories they would like to see.
The price they recommended seemed very reasonable to me, so I accepted. Six days later, they had all of the work done and the property was on the market.
By providing so much volume to contractors and having the system they do, they got done in less than a week what would have taken me probably a month in dealing with subcontractors. And I’m pretty sure I paid less than I would have if I had taken that on myself.
The iBuyers have aligned their interests with the sellers’ interests, and that works for everyone.
Who Is an iBuyer a Good Fit For?
You should really consider an iBuyer if you are in a mid-market home — not at the bottom of the market and not at the top of the market — and you live in an area where a lot of the homes are similar. When that’s the case, the algorithms are going to be a lot more accurate when it comes to value.
This works for you if you’re willing to take a haircut on a price for your home in return for knowing that at a certain date you’re done with it.
If you want to maximize every dollar you can get for your home, iBuyers are probably not for you.
When you read as much as I have about iBuyers over the years, you figure out that people are completely polarized about them based on what their experience was. It’s a business method that only works in the right circumstances.
But there’s something else I found out: The price you’ll be offered by each iBuyer can vary tremendously. They each have their own algorithms and their own policies that can vary from city to city and neighborhood to neighborhood. You’ll want to try every one that’s available in your market.
The more you get quotes from, the better you’re going to be able to make a decision.