Should I consider one of those new iBuyer services?

In Sellers, FAQ's by Doug Phelps

For nearly a decade, the Denver metro real estate market has been a wild ride of record-setting activity. This year with COVID-19, this is even more true. We are here to help you prepare for what’s ahead.

Since March, home is probably something you have spent a lot of time in and thinking about. Maybe your dreaming of more space. Perhaps the thoughts are about downsizing. Or life has simply shifted priorities.

Maybe you are thinking about selling or buying.

If you are, it’s rather impossible to completely predict what is next in the next few months of 2020. Or even 2021 and beyond. This much we know — for years sellers have been in charge thanks to extremely low inventories of available homes. This forced buyers to compete against multiple offers at almost every price point.

As you think about what your future holds, what questions should you be asking? This blog series will explore several questions from both the seller and buyer points of view.

Seller Question:

Should I consider one of those new iBuyer services?

Answer from Doug:

Consider it? Sure. A savvy and smart seller needs to look at all the available options. iBuyer companies buy only homes that fit their precise criteria. Here is who they are and how they work:

iBuyers are well-funded real estate investors and venture capital companies that buy homes for cash at wholesale prices directly from an owner.  They quickly resell the property at full retail market value on the open market, typically for a substantial profit.  

A homeowner goes online and answers a few simple questions about the house. After you plug in your information, an algorithm comes up with a price. You accept it if you like it and name a closing date. An iBuyer’s instant offer is a base price that often gets lower after the home inspection.  Sellers know they must pay for repairs their iBuyer will make to their property, but many are surprised by the cost of improvements they would not have made on their own.  As those costs get higher in seemingly petty repairs, out-of-pocket costs, or both, the iBuyer’s offer price gets lower.

Their value proposition to a potential seller is ease, convenience, and certainty of closing. This “value” comes, however, at the expense of a healthy chunk of a seller’s equity. So, is selling your home to an iBuyer worth the cost?  Everyone wants to sell their property for as much as possible; in real estate and real life, time is money.  The answer comes down to each seller’s particular situation and what they value more: cash or convenience.