The pros and cons of the rise of iBuyers
Phoenix real estate has undergone serious technological change since the start of the pandemic. The most notable change is that agents are quickly moving from in-person presentations to FaceTime tours, 3D tours, and virtual open houses to continue serving customers during the Arizona shutdown. Another digital modification that is becoming increasingly popular is the rise of iBuyer, an internet marketer who uses Automated Valuation Model (AVM) technology to appraise a home and send an instant offer. Examples of iBuyers are sites like Opendoor, Offerpad, Redfin Now, or Zillow Offers, which will buy a home view without being seen. It sounds simple and hassle-free, but like everything, there are pros and cons.
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Cash offers have many advantages most of the time. However, cash offers are not suitable for all sellers. Handheld ads, also known as off-market ads, sell for 6-20% less than those placed on MLS, confirming that sellers don’t always have limited exposure in this market financially. An iBuyer may offer what appears to be a generous price, but sellers are likely to benefit financially from listing the home on the open market, which usually generates competition in this low housing inventory environment. Accepting a cash offer from an iBuyer before listing the home on the open market will also eliminate the possibility of a bidding war.
Another downside of iBuyers is the high transaction fees. IBuyers charge a lot of money to make a purchase, not to mention the hidden fees. Typically, a seller considers a fee of 7 percent of the price of the house, but sometimes that figure can go up to 13 percent. This is much higher than the cost of closing and commission for traditional real estate sales. For an average commission of 6%, realtors can offer experienced advice, make presentations to other experts (moving companies, painters, lawyers, etc.), help negotiate a fair price for the house, and help out. sellers find a new home, which doesn’t come easy.
On the other hand, iBuyers are low risk. Traditional buyers often need financing, which adds time and risk to the sale of your home. This precious time out of the market could end in a loan denial or an inability to close because the house was not valued for the contract price. These issues don’t exist with iBuyers because they pay cash and don’t have to worry about funding or reviews. Additionally, cash offers often guarantee a quick close and streamline a quick transaction, which is great if a seller wants to get rid of their home quickly. Many iBuyers also allow sellers to choose their closing date (within reason).
Ultimately, there is no one-size-fits-all approach when it comes to considering a traditional sale or working with an iBuyer. It is important that salespeople take the time and consider all of the options. As iBuyers become more and more popular, it is equally important for real estate agents to continuously prospect, develop long-term relationships with clients and offer tangible benefits to clients that they will not find anywhere. go elsewhere.
Trevor Halpern is North & Co’s No.1 Independent Agent, based in Phoenix. and founder of the Halpern Residential real estate group.