Are iBuyers Telling You The Truth?
In the real estate world, we call them “iBuyers.”
Who are they?
First, it’s not the name given to people who buy Apple products – Hmmm, or maybe it should be!
You’ve heard about them. It’s Opendoor, Zillow, Offer Pad, etc. Mark Spain is known for marketing the “instant cash offer.” He’s merely getting a cash offer for your home from Opendoor and Keller Williams gets their “instant offers” from Offer Pad.
iBuyers are hedge fund companies who are playing in the real estate space, making claims that the traditional way of selling real estate is cumbersome, outdated and full of high real estate agent commissions. They boast that they offer a free home value estimate, they are cash buyers with no appraisal process. Moving is super easy, just pick your move-out date. They boast there’s no need for open houses, keeping your house in constant showroom form, no updates or improvements needed and no Realtor commissions.
Me clapping at their creative “seller pain point” marketing approach. They do a good job marketing, and I have to applaud that. What I can’t applaud is what they aren’t telling the public. They wrap their service in a pretty bow, but casually leave out the contents of what’s inside.
Here’s what they don’t tell you.
Some of which you can find out by simply reading the iBuyer terms and conditions on their website.
1. They DO charge a hefty Service Fee. It’s anywhere from 9%-15% or more of their offer price. This is for holding costs, the future buyer’s agent commission when they resell the house, listing risk cost and convenience charge.
**NOTE: They are charging you for the future buyer agent’s commission!!!!🤯
2. Inspection costs. They will send their inspector out to do an inspection of your house. If the roof, carpet, home systems (HVAC, hot water heater, etc) are close to life expectancy, they will charge you replacement costs. Plus any other repairs they deem necessary to sell your house. You are now potentially looking at an additional $10,000 or more deduction off their offer price to you.
**SIDE NOTE: These high-ticket repairs they are deducting you for do not always get done. Our buyer clients purchased a Zillow home where Zillow was concealing the fact the AC was not working. Long story, but Zillow’s repair tech fessed up when we caught him putting a hard start on the unit. He wasn’t expecting us to show up while he was at the house. We got Zillow to install a new unit. Another home had a 25-year-old roof and 20-year-old HVAC system. Both needed replaced. Zillow wouldn’t do it, so our buyer clients terminated the contract.
3. They charge you THEIR closing costs.
4. ALL home value estimates are FREE. If they aren’t, don’t interview that brokerage to sell your home.
Below are pictures of a real Opendoor offer we obtained for a client. They wanted to explore all options before deciding how they would like to approach selling their home. They decided to sell on the traditional market with us. Less than 6 days on the market and their home sold for $335,000. Opendoor was only giving them $310,000 before all their deductions.
I also did a net sheet breakdown of the Opendoor offer vs. Realtor sold net. It’s in the pictures below. Our clients would have left $36,065 on the table had they sold to Opendoor.🤦♀️ They probably would have left more on the table because who knows how much Opendoor would have charged them for inspection repair items.
I believe there’s a time and circumstance where the iBuyers will benefit a seller.
BUT, don’t let your house go for pennies just because your house is outdated or needs too many repairs and you don’t have the time, resources, or upfront money to get them done in order to sell for the highest price possible.
CALL US FIRST!
“We have a team of contractors and designers we work with that will do all the work for you AND you don’t have to pay for the work until you sell your house!!!! It’s really that simple!”
We provide our sellers with options:
1. We provide up to 4 iBuyer instant offers
2. What their house would potentially sell for on the open market
3. What their house would potentially sell for if they made repairs/updates
iBuyers are not as black and white as they appear. Scott and I believe that in order to make the best decision for your future, you have to have all the facts. We’ll give you all the transparency/truth/facts you need and deserve!