iBuyers are real estate companies that buy properties at a discount directly from home sellers and resell them for a profit to home buyers. They advertise catchy phrases like “Instant cash offer” or “get cash for your house today.” While this may sound attractive to someone who really needs to get out from under a mortgage or needs to move to start a new job, it’s a good idea to take a closer look and know what you’re getting into. So, we did some research for you.
How do iBuyer Programs Work?
iBuyers use an online valuation tool to give sellers a cash offer, as long as the property meets their eligibility requirements. You type in your address and the company – backed by investors – gives you a cash offer before seeing the property.
The eligibility requirements vary depending on the specific company’s home valuation tool which takes into consideration, the value, the age, and the location of the home. Condition is also a factor that applies after you have agreed to the original offer. The iBuyer relies on the seller’s need to close the transaction quickly, and they don’t offer sellers the highest possible selling price.
As we researched these programs we found multiple claims of fair market value. However, we also found discrepancies, as the true value of any property is based on home inspections and assessments, which is never done before an iBuyer offer if done at all. When a walk-through assessment is done, it is only to verify the home’s condition and identify if repairs are needed. If repairs are needed, the company will ask for a credit and deduct the costs from your net proceeds.
Our research suggests that the average offer from an iBuyer program is approximately 7% lower than the market value. Additionally, iBuyer programs apply commissions and fees that add 6%-12% of the sale price in costs (including the typical commissions to real estate agents) that reduce the net proceeds to an estimate of about 82% of fair market value.
iBuyers also offer a “trade-in” option to people who want to sell their current home and buy a new home at the same time. Because sellers normally don’t want to be responsible for two mortgages, they can sell their current property now, and secure financing and close on their new home. Overall, iBuyer programs are best suited for sellers who want a quick and easy transaction and do not want to deal with the process of marketing and selling their home in a traditional manner with an agent charging them 5 or 6% of the sale price to do it.
Some sellers like knowing what an iBuyer will pay for their home, so they have a safety net they can use if the traditional method is taking too long, not resulting in better offers, or is too time-consuming or disruptive to deal with.
How Does Everhome Compare?
Everhome’s Listed with Owner program offers a much different approach. Our goal is to provide sellers with all the tools needed to list and market a home – along with full service, licensed representation through the close of sale – for a low set fee.
See more about this in our article Where Should I List My Home? Everhome vs Zillow.
The seller shows their property and answers the buyer’s questions about the home. When a buyer wants to write an offer, Everhome takes over to handle the negotiations, purchase contract, mandatory legal disclosures and advisories, contract disputes, contingency removals, and the details of escrow and title.
In other words, Everhome provides the same marketing exposure and full-service representation that you would get from a full fee, full-service real estate agency charging you 5-6% of the sale price.
Based on 2020 data, Everhome saved the average seller $22,627 in commission fees, by charging a low set fee of just $3950.
We recommend this program to both first-timers and experienced home sellers who want to do the part of the transaction a home seller can and should do, but want a licensed professional to mitigate risk, and to handle the more critical elements of the transaction to sell their home for top dollar and the lowest possible fees (net the most for their home).
What’s the verdict?
Technology has given home buyers access to the same information available to agents to find homes they want to buy for many years, but not home sellers…until now.
With Everhome’s easy-to-use technology, home sellers can now list their house on the MLS (and thousands of other websites), just like an agent can, and then have a licensed agent handle the more complicated elements of the transaction.
iBuyer programs highlight the value of convenience vs the cost of price. Conversely, Everhome’s Listed with Owner program highlights the value of technology and service to get top dollar for your home with the help of experienced and licensed Realtors®, for a low set fee.
We can help you with both. Contact us to get quotes from participating iBuyers, and learn more about selling your home the Everhome Way and decide which option is best for your situation.
Everhome’s Listed With Owner program offers massive exposure and full-service representation to home sellers for a low set fee. To learn more, call (805) 379-3300 for a free consultation.