On paper, it doesn’t get much more convenient than unloading your property with an iBuyer. According to this new brand of real estate investors, your house can sell quickly with a minimal amount of hassle on your hand. However, selling your home to iBuyers also comes with its downsides.
As too many sellers in search of convenience discover too late, proposals made by instant offer platforms come with many hidden fees. They will likely affect your profit. So, is selling your house with an iBuyer worth it? Here are the costs you will need to keep in mind if you want to sell your property with a company like OpenDoor, Knock, or Redfin.
An offer below market value
As can be expected, iBuyers make offers significantly below the market value of the property. Not only do you pay for the convenience of a fast sale, but they also make their profit by reselling the building rapidly. A low-ball offer on their hand helps alleviate the risk of taking on the building.
Besides, iBuyers make their offers based on an algorithm. It uses the sale price of similar properties which sold recently in your area, and not on the actual value of the house. Depending on your location and the property itself, the difference between the offer and the market value could be even more significant.
An iBuyer charges higher commission rates
The typical commission rate for a transaction with a real estate agent hoovers around 5 to 6 percent. However, with an iBuyer, expect significantly higher commission rates. Some charge up to 12 percent depending on the company and the property.
iBuyers target in priority properties that are either in good condition or only need minimal repairs. Their goal is to put the building back on the market as quickly as possible. Extensive renovations could put their profit in jeopardy.
After you accept an iBuyer’s offer online, the company will send a representative to inspect the property. Depending on the condition of the house, they may rescind their offer. They may also charge you repairs cost significantly above market value.
Loss of equity
Your equity is the difference between the sale price of the house and the money that you owe, such as a mortgage. If yours is limited, you may want to reconsider selling your home to an iBuyer. Between the low purchase price and built-in fees, you may end up losing money. You should be particularly careful if you are upside down on your mortgage.
Is selling your house to an iBuyer worth it?
Despite the convenience promised by iBuyers, some estimate that up to 90 percent of the people who sell their property after requesting information from an instant offer platform do so with a real estate agent.
If you would like to explore alternative options to listing your house with a real estate agent, you can also sell your home directly to an investment company. They offer the speed and convenience of an iBuying company without the hidden fees. Rocking Porch purchases properties in Cherokee and Cobb County, including Woodstock, Marietta, Kennesaw, Acworth, Canton, and Roswell, no matter the condition. Contact us today to discuss how we may be able to help.